NRDY 10-K & 10-Q changes, risk factors and insider trading

Our offerings continue to evolve,evolve (for example, we recently rebuilt certain components and functions of our platform and products on new, AI-native codebases), and we may not achieve our expected financial and operating results in the future. Further, we cannot assure you that our newer products and services, or any other products and services we may introduce or acquire, will be integrated effectively into our business, achieve or sustain profitability, or achieve market acceptance at levels sufficient to justify our investment.

Our ability to fully integrate these new products and services into our platform or achieve satisfactory financial results from them is unproven. Because we have a limited operating history and theThe market for our services, including newly built products and services, is rapidly evolving,evolving and it is difficult for us to predict our operating results, particularly with respect to our most recent offerings. If the markets for a direct-to-consumer or an institutional, online learning platform do not develop as we expect or if we fail to address the needs of these markets, our business may be harmed. Some of our offerings have only been meaningfully integrated into our broader platform recently and thus have a limited operating history.

We expect to continue to make investments in the building and expansion of our business and platform and anticipate that our cost of revenue and operating expenses may increase. Additionally, as a public company, we incur significant legal, accounting, and other expenses. We may not succeed in increasing our revenue sufficiently to offset any higher expenses, and our efforts to grow the business may prove more expensive than we currently anticipate. We may incur losses in the future for a number of reasons, including for the reasons set forth as other risks described herein. We may encounter unforeseen expenses, difficulties, complications and delays, and other unknown factors as we pursue our business plan and our business model continues to evolve. While our revenue has grownthe potential to grow in recentfuture periods, this growth may not be achieved or sustainable and we cannot assure you that we will be able to achieve profitability.

We may be exposed to claims and losses, including class action lawsuits, brought by or on behalf of our Learners, Institutions, or Experts, which could have a material adverse effect on our business. We have written contracts with Learners, Institutions, and Experts (either directly or through related and affiliated entities) that establish the terms and conditions of the relationships memorialized therein. Learners, Institutions, and Experts could seek to challenge those terms and conditions, including but not limited to: network access, usage by minors, recorded sessions, taxes, integration with other policies, confidentiality, content, restrictions, arbitration, disclaimer of warranties, limitation of liability, indemnification, third-party beneficiaries, non-solicitation provisions, non-disclosure provisions, non-exclusivity, non-disparagement, governing law/choice of law, jurisdiction, venue, notice requirements, affiliate marketing, other platform activities, contract termination (including early contract termination), authority, installment payments, subscriptions, refunds, minimum billing, redemptions, guarantees, compensation (and adjustments/additions thereto), independent contractor status, insurance, intellectual property rights, and economics of the relationships (noting that some of these items apply solely to Learners, some apply solely to Institutions, some apply solely to Experts, and some apply to two or more).

We may incur fines and other losses or negative publicity with respect to these problems. Additionally, these claims may give rise to litigation, which could be time-consuming and expensive. New employment and labor laws and regulations may be proposed or adopted that may increase theour potential exposure of employers to employment-related claims and litigation by the Experts on our platform. There can be no assurance that the corporate policies we have in place to help reduce our exposure to these risks will be effective or that we will not experience losses as a result of these risks. There can also be no assurance that the insurance policies we have purchased to insure against certain risks will be adequate or that insurance coverage will remain available on reasonable terms or be sufficient in amount or scope of coverage.

The process of identifying new products and services (for example, we recently rebuilt certain components and functions of our platform and products on new, AI-native codebases) that will be a good fit for our platform is complex and time-consuming. Because of the initial reluctance on the part of some Learners or Institutions to embrace a new method of delivering their learning experience, the process to attract and engage a new Learner or Institution can be lengthy. We invest significant resources in these new offerings and there is no guarantee that we will recoup these costs. We will be providing access to our platform at no cost for several years for some Institutional customers, and we may not recoup this investment through increased contracts with Institutional customers. As a result, we may ultimately be unable to recover the full investment that we make in a new offering or achieve our expected level of profitability for the offering.

Our continued growth and profitability depends on our ability to successfully scale up our existing and newly launched offerings. As we continue aggressively growing our business, we may require new employees. If we cannot adequately recruit, train, or retain these new employees, we may not be successful in acquiring potential Learners or Institutions for our offerings, which would adversely impact our ability to generate revenue. Additionally, the Learners or Institutions in our offerings could lose confidence in the knowledge and capability of the Experts on the platform. If we cannot quickly and efficiently scale up our technology to handle growing purchases and utilization and new offerings, the Learners’ or Institutions’ experiences with our platform may suffer, which could damage our reputation among Experts, Learners, and Institutions.

We have grown rapidly in recent years and expect to continue to invest in our growth for the foreseeable future. If we fail to manage this growth effectively, the success of our business model may be compromised.

In recent yearsyears, we experienced rapid growth in a relatively short period of time. Our revenue grew from $103,968 thousand in 2020 to $190,231 thousand in 2024. Our rapid growth has placed, and may continue to place, a significant strain on our administrative and operational infrastructure and other resources. Our ability to manage our operations and growth may require us to continue to expand our marketing and sales personnel, technology team, finance, accounting, legal, and administration teams, as well as our infrastructure. We may be required to refine our operational, financial, and management controls and reporting systems and procedures. If we fail to efficiently manage this expansion of our business, our costs and expenses may increase more than we plan and we may not successfully expand our customer base, enhance our platform and technology-enabled services, develop new offerings with new and existing customers, attract a sufficient number of new customers in a cost-effective manner, attract a sufficient number of qualified Experts in a cost-effective manner, satisfy the requirements of our existing customers, respond to competitive challenges, or otherwise execute our business plan. Although our business has experienced significant growth in the recent past, we cannot provide any assurance that our revenue will continue to grow at the same rate in the future.

•effectively recruit, onboard, motivate, and retain new employees, including in software engineering, data science, product, design, marketing, sales, and customer service, while retaining existing employees, maintaining the most important aspects of our corporate culture, and effectively executing our business plan;

We believe that our existing cash balances and current borrowing capacity under our term loan will be sufficient to meet our minimum anticipated cash requirements for at least the next twelve months. We may, however, need to raiserequire additional funds to respond to business challenges or opportunities, accelerate our growth, develop new offerings, or enhance our platform. If we seek to raiserequire additional capital, it may not be available on favorable terms or may not be available at all. Lack of sufficient capital resources could significantly limit our ability to manage our business and to take advantage of business and strategic opportunities. Any additional capital raised through the sale of equity or debt securities with an equity component would dilute our stock ownership. If adequate additional funds are not available if and when needed, we may be required to delay, reduce the scope of, or eliminate material parts of our business strategy.

Many jurisdictions have or are considering enacting privacy or data protection laws or regulations relating to the collection, use, storage, transfer, disclosure, and/or other processing of personal data. Such laws and regulations may include data residency or data localization requirements (which generally require that certain types of data collected within a certain country be stored and processed within that country), data export restrictions or international transfer laws (which prohibit or impose conditions upon the transfer of such data from one country to another), requirements that companies implement privacy or data protection and security policies or requirements that companies grant individuals certain rights, such as the right to access, correct, and delete personal data stored or maintained by such companies, be informed of security breaches that affect their personal data, or provide consent to use their personal data for other purposes. While we have implemented various measures intended to enable us to comply with applicable privacy or data protection laws, regulations, and contractual obligations, these measures may not always be effective and do not guarantee compliance. Additionally,Moreover, privacyin the event that personal data is unlawfully accessed or acquired, the majority of states and many jurisdictions have laws that require institutions to investigate and immediately disclose the data breach to impacted individuals, usually in writing. In addition to costs associated with investigating and fully disclosing a data breach in such instances, we could be subject to substantial monetary fines or private claims by affected parties and our reputation would likely be harmed. Privacy or data protection laws and regulations also may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another; and may conflict with one another, other requirements, or legal obligations, or our practices. Further, the existence and need to comply in certain markets could impact our ability to make our platform available in those markets (without taking additional compliance steps). Cultural norms around privacy or data protection also vary from country to country and can drive a need to localize or customize certain features of our platform in order to address varied privacy or data protection concerns, which can add cost and time to our development of new features and platform enhancements.

We depend on major vendors for services including but not limited to hosting, discovery, advertising, delivering content, and more. In addition to proprietary technologies, we also rely on third-party tools and platforms for delivering certain products and services. These tools include third-party AI technologies. These vendors and other third parties could change their rules, cost structure, marketing programs, and/or algorithms from time to time and any such changes or any loss of access or rights to use certain technologies could adversely impact our ability to generate revenue or deliver paid products and services.

In addition to risks related to license requirements,addition, use of certain open source software (including open source software that relies on or incorporates generative AI) can lead to greater risks than use of third-party commercial software, as the original developers of open source code generally do not provide warranties (with respect to, for example, non-infringement or functionality) or indemnities or other contractual protections. Our use of open source software may also present additional security risks because the source code for open source software is publicly available, which may make it easier for hackers and other third parties to determine how to breach our website and systems that rely on open source software. Further, our use of any AI tools that use or incorporate any open source software may heighten any of the foregoing risks. Any of these risks could be difficult to eliminate or manage.

We use machine learning and AI throughout our business. As the regulatory framework for machine learning technology and AI evolves, our business, financial condition, and results of operations may be adversely affected. The regulatory framework for machine learning technology, AI and automated decision making is evolving. It is possible that new laws and regulations will be adopted in the United States and in non-U.S. jurisdictions, or that existing laws and regulations may be interpreted in ways that would affect the operation of our platform and the way in which we use AI and machine learning technology. Further, the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations. Several jurisdictions have enacted or are considering measures related to the use of AI and machine learning in products and services. ForAny example,such the proposed EU Artificial Intelligence Act (“EUAIA”)regulations could impose onerous obligations related to the use of AI related systems if passed into law. Such regulations, and others that may be passed in other jurisdictions, may require us to change our business practices for compliance, or else be subject to regulatory action and/or fines.

We are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. OurBecause we are no longer an emerging growth company, our independent registered public accounting firm will not beis required each year to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until. we are no longer an emerging growth company. At such time, ourOur independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed, or operating.

When evaluating our internal control over financial reporting, we may identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404. If we identify any material weaknesses in our internal controls over financial reporting or we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting once we are no longer an emerging growth company,reporting, investors may lose confidence in the accuracy and completeness of our financial reports. As a result, the market price of the Class A Common Stock could be materially adversely affected.

We are a holding company and have no material assets other than our ownership interest in Nerdy LLC. We have no independent means of generating revenue or cash flow. To the extent the funds of Nerdy LLC are legally available for distribution, and subject to any restrictions contained in any credit agreement (including the Loan Agreement) to which Nerdy LLC or its subsidiaries is bound, we intend to cause Nerdy LLC (i) to make generally pro rata distributions to its unitholders, including Nerdy Inc., in an amount generally intended to allow the Nerdy LLC unit holders to satisfy their respective income tax liabilities with respect to their allocable share of the income or loss of Nerdy LLC, based on certain assumptions and conventions, and (ii) to reimburse Nerdy Inc. for its corporate and other overhead expenses. In the future, we may be limited, however, in our ability to cause Nerdy LLC and its subsidiaries to make these and other distributions to us due to restrictions contained in any credit agreement to which Nerdy LLC or any of its subsidiaries is bound. To the extent that we need funds and Nerdy LLC or its subsidiaries are restricted from making such distributions under applicable law or regulation or under the terms of their financing arrangements or are otherwise unable to provide such funds, our liquidity and financial condition could be adversely affected.

If we fail to satisfy the continued listing requirements of the New York Stock Exchange (“NYSE”), such as the corporate governance requirements or the minimum closing bid price requirement, NYSE may take steps to delist our Class A Common Stock. Such a delisting would likely have a negative effect on the trading price of our Class A Common Stock and could impair our stockholders’ ability to sell or purchase our Class A Common Stock when they wish to do so. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our Class A Common Stock to become listed again, stabilize the market price or improve the liquidity of our Class A Common Stock, or prevent future non-compliance with the listing requirements of NYSE.

We operate a platform fornext-generation live onlinetutoring learning.and intervention platform that leverages the power of human expertise with advanced artificial intelligence (“AI”) to personalize learning, accelerate student achievement, and empower educators. Our mission is to transform the way people learn through technology. Our purpose-built proprietary platform leverages technology, including artificial intelligence (“AI”),AI, to connect students, users, parents, guardians, and purchasers (“Learner(s)”) of all ages to tutors, instructors, subject matter experts, educators, and other professionals (“Expert(s)”), delivering superior value on both sides of the network. Our comprehensive learning destination provides learning experiences across numerous subjects and multiple formats, including Learning Memberships, one-on-one instruction, small group tutoring, large format classes, tutor chat, essay review, adaptive assessments, and self-study tools. Our flagship business, Varsity Tutors LLC (“Varsity Tutors”), is one of the nation’s largest platforms for live online tutoring and classes. Our solutions are available directly to Learners either directly through Learning Memberships (“Consumer(s)Consumers”), as well asand through education systems (“Institution(s)Institutions”). Our platform offers Experts the opportunity to generate income from the convenience of home, while also increasing access for Learners by removing barriers to high-quality live online learning. Our offerings include Varsity Tutors for Schools, a product suite that leverages our next-generation live tutoring and intervention platform capabilities to offer high-dosage tutoring and our online learning solutions to Institutions. We have built a diversified business across the following audiences: K-8, High School, College, Graduate School, and Professional.

We have experienced in the past, and expect to continue to experience seasonal fluctuations in our revenue and earnings due to Learner and Institutional spending and consumption habits, and the timing of the academic year. Historically, we experience lower than normal revenue during the summer when schools and universities are typically out of session in the United States (the “U.S.”) and when people travel for vacations and holidays. Due to seasonality, comparisons of our historical quarterly results of operations on a sequential basis may not provide meaningful insight into our overall financial performance.

“Active Member(s)” is defined as the number of Learners with an active paid Learning Membership as of the datedates presented. Variations in the number of Active Members are due to changes in demand for our solutions, seasonality, testing schedules, the extension of Learning Memberships to additional Consumer audiences, and the launch of new membership options. As a result, we believe Active Members is a key indicator of our ability to attract, engage, and retain Learners. Active Members exclude EduNation Limited, a company incorporated in England and Wales (“First Tutors UK”), as well as our Institutional business. Our Active Member count as of December 31, 20242025 was lower when compared to December 31, 20232024 primarily due to aoperational higherchallenges mixthat we are actively addressing through the appointment of lowera frequencynew LearningChief MembershipsOperating duringOfficer 2024.in 2025 to drive enhanced operational execution and systematic process improvements. We also rolled out new Learner and Expert platform user experiences in the fourth quarter that we believe will re-accelerate growth.

“Active Experts” is defined as the number of Experts who have instructed one or more sessions in a given period. Active Experts also includes our Institutional business, but excludes First Tutors UK. The following table summarizes Active Experts for the periods presented. Our Active Expert count during the year ended December 31, 20242025 was primarily driven by higher Institutional active Expertsdecreased when compared to the prior year period,period. whichThis reflectsdecrease thewas continuedprimarily scalingdue to lower Consumer Active Experts as a result of our Expert incentives, which has promoted utilization of the highest quality Experts by encouraging them to work with more Learners and develop deeper relationships that allow for increased revenue-generating opportunities, coupled with lower utilization of tutoring sessions in our Institutional business.business as a result of lower bookings. We believe our Active Expert count at December 31, 2025 is sufficient to meet our near-term growth objectives.

The following table presents the Company’sour revenue by businesscategory categoryof Learners for the periods presented.

Sales and marketing expenses for the year ended December 31, 2025 included non-cash stock-based compensation and restructuring costs of $1,321 thousand and $193 thousand, respectively. Sales and marketing expenses for the year ended December 31, 2024 and 2023 included non-cash stock-based compensation of $2,345 thousand and $2,795 thousand, respectively.thousand. Excluding these impacts in both periods, sales and marketing expenses increaseddecreased $3,625$10,669 thousand, or 5%.15%.

General and administrative expenses include compensation for certain employees, support services, product and development expenses intended to support continued innovation, and other operating expenses. Product and development costs were $43,928$41,338 thousand and $40,859$43,928 thousand for the years ended December 31, 20242025 and 2023,2024, respectively, ana increasedecrease of $3,069$2,590 thousand. Product and development costs include compensation for employees on our product, engineering, and design teams who are responsible for developing new and improving existing offerings, maintaining our website, improving efficiencies across our organization, and third-party expenses.

Interest IncomeIncome, net

Interest income was $1,073 thousand for the year ended December 31, 2025, compared to $3,104 thousand for the year ended December 31, 2024, compared to $3,377 thousand for the year ended December 31, 2023.2024. This decrease was driven by lower interest income on our cash balances during the year ended December 31, 2024.2025 and by interest expense related to our outstanding borrowings under our term loan that was originated in November 2025.

Our effective income tax rate was (0.170.26)% and (0.160.17)% for the years ended December 31, 20242025 and 2023,2024, respectively. Income tax expense recorded during the years ended December 31, 20242025 and 20232024 represents amounts owed to state authorities. The following table presents a reconciliation of income tax expense with amounts computed at the federal statutory tax rate for the periods presented.

As of December 31, 20242025 and 2023,2024, we had cash and cash equivalents totaling $52,541$47,895 thousand and $74,824$52,541 thousand, respectively. We have incurred cumulative losses from our operations, and we may incur additional losses in the future. Our operations have historically been financed primarily through cash on hand and capital contributions. To the extent we continue to generate negative operating cash flows, it is possible that we may have to finance future operations primarily or in part from cash on hand.hand or from our Term Loan (as defined below). If cash on hand or from our Term Loan is not sufficient to fund our business, we may also need to implement significant cost-containment measures or explore additional financing alternatives. However, there can be no assurance that additional financing would be available to us on acceptable terms, or at all, or that any cost-containment measures we implement would be sufficient or effective in reducing losses or preserving liquidity.

Our•Debt, cash requirements under our contractual obligationsInterest, and commitmentsOther consistDebt-Related primarily of lease arrangements.Obligations. See Note 1512 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report for information on our lease obligationsdebt and the amount and timing of future payments.principal, Asinterest, ofand Decemberother 31,payments 2024,related weto hadour noTerm debtLoan; obligations.and

Cash used in operating activities for the year ended December 31, 20242025 increased $8,043$3,243 thousand when compared to the same period in 20232024, asprimarily due to lower revenue and gross marginmargin, coupledthe withpayment investmentsof a legal settlement of $2,000 thousand, and changes in ourworking Institutionalcapital. salesThese organization and product development to drive innovation and support our continued growthimpacts were partially offset by favorable changes in working capital primarily related to fluctuations in the timing oflower sales and collectionsmarketing ofand receivables.general and administrative expenses.

Cash used in investing activities was $6,863$5,370 thousand and $6,887$6,863 thousand for the years ended December 31, 20242025 and 2023,2024, respectively. Cash used in investing activities related to capital expenditures primarily for the development of internal useinternal-use software and information technology (“IT”) equipment.

Cash usedprovided inby financing activities for the year ended December 31, 20232025 was $1,940$19,499 thousand,thousand. whichWe relatedreceived toproceeds transactionof costs$20,000 paidthousand infrom borrowings under our Term Loan. In connection with entering into the warrantLoan Agreement and earnoutthe transactions.borrowings under our Term Loan, we paid $501 thousand of deferred financing fees. We did not have any financing activities during the year ended December 31, 2024. For additional information on the warrant and earnout transactions, refer to Notes 1, 4, and 13 within “Notes to Consolidated Financial Statements” in Part II, Item 8 of this report.

We do not have any incremental costs to obtain or fulfill a contract that requirerequires capitalization. We elected as a practical expedient, not to disclose additional information about unsatisfied performance obligations for contracts with customers that have an expected duration of one year or less.

Revenue earned through Learning Memberships is recognized from one-on-one instruction and small group tutoring as performance obligations are satisfied. Given the customer receives benefit from the completion of each session (as Learners are not obligated to meet with the same Expert for a minimum number of sessions), we concluded each one-on-one or small group tutoring session is a separate performance obligation. Revenue is recognized and deferred revenue is relieved on the date services are delivered to Learners in an amount that reflects the consideration we are contractually entitled to receive in exchange for those services.

Revenue is recognized from one-on-one instruction and small group tutoring as performance obligations are satisfied. Given the Institutions receive benefit from the completion of each session (as Institutions are not obligated to meet with the same Expert for a minimum number of sessions), we concluded each one-on-one or small group tutoring session is a separate performance obligation. Revenue is recognized, and to the extent cash for the purchase of services by Institutions is collected in advance (at one time or in installments), deferred revenue is relieved on the date services are delivered to the Institutions in an amount that reflects the consideration we are contractually entitled to receive in exchange for those services. For Institutions that do not pay in advance, we typically invoice these Institutions on a monthly basis for each session provided, with amounts recorded to accounts receivable, net of any related allowance for credit losses.

Expenditures for fixed assets are capitalized and primarily include costs related to software developed or acquired for internal useinternal-use and purchases of IT equipment. Maintenance, repairs, and minor renewals are expensed as incurred. Depreciation of fixed assets other than capitalized internal useinternal-use software is calculated on a straight-line basis over estimated useful lives of one to seven years and is included in “General and administrative expenses.” When fixed assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the statements of operations.

We capitalize certain costs, including stock-based compensation, associated with software developed or obtained for internal useinternal-use and website and application development. We capitalize development stage internal and external costs. These costs are capitalized when management has authorized and committed project funding and it is probable that the project will be completed, and the software will be used as intended. Once the software is ready for its intended use, it is placed into service and such costs are amortized on a straight-line basis within “Cost of revenue” in the Consolidated Statements of Operations, generally over a four year estimated useful life of the related asset. Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed as incurred. Costs incurred for enhancements that are expected to result in additional material functionality are capitalized and amortized over the estimated useful life of the upgrades.

We recognize the cost of services received in exchange for awards of equity instruments based on the grant-date fair value of equity awards. That cost is recognized straight-line or graded (when applicable) over the period during which the employee is required to provide service in exchange for the award - the requisite service period. Any forfeitures of stock-based compensation are recorded as they occur. The grant date fair value of the restricted stock units was determined based upon the closing price of our Class A Common Stock on the date of grant. The grant date fair value of the stock appreciation rights, restricted stock awards,rights and stock options was determined using the Black-Scholes Model. The grant date fair value of the Founder’s Award wasand market-based performance restricted stock units were determined using the Monte Carlo Option Pricing Method.

As of December 31, 2023,2025, we were no longerare a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. An entity is a “smaller reporting company” based upon the following criteria: (i) the market value of our shares of common stock held by non-affiliates is less than $250,000 thousand as of the prior June 30, or (ii) our annual revenues are less than $100,000 thousand during the prior fiscal year and the market value of our shares of common stock held by non-affiliates is less than $700,000 thousand as of the prior June 30. We will remain a smaller reporting until our next determination date in 2026.

In addition to the information set forth elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”), and the risk factors set forth below, you should carefully consider the risk factors we previously disclosed in our Annual Report on Form 10-K as of and for the year ended December 31, 2025 (the “2025 Annual Report”), filed with the SEC on February 26, 2026. ThereExcept as set forth below, there have been no material changes to the risk factors previously disclosed in our 2025 Annual Report. These risks could materially and adversely affect our business, financial condition, results of operations, and cash flows. However, these risks are not the only risks we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business, financial condition, results of operations, and cash flows.

We operate a next-generation live tutoring and intervention platform that leverages the power of human expertise with advanced artificial intelligence (“AI”) to personalize learning, accelerate student achievement, and empower educators. Our mission is to transform the way people learn through technology. Our purpose-built proprietary platform leverages technology, including AI, to connect students, users, parents, guardians, and purchasers (“Learner(s)”) of all ages to tutors, instructors, subject matter experts, educators, and other professionals (“Expert(s)”), delivering superior value on both sides of the network. Our comprehensive learning destination provides learning experiences across numerous subjects and multiple formats, including Learning Memberships, one-on-one instruction, small group tutoring, large format classes, chat, essay review, adaptive assessments, and self-study tools. Our flagship business, Varsity Tutors LLC (“Varsity Tutors”), is one of the nation’s largest platforms for live online tutoring and classes. Our solutions are available to Learners either directly through Learning Memberships (“Consumers”) andand, historically, through education systems (“Institutions”). Our platform offers Experts the opportunity to generate income from the convenience of home, while also increasing access for Learners by removing barriers to high-quality live online learning. Our offerings includehave included our legacy Varsity Tutors for Schools, a product suite that leveragesleveraged our next-generation live tutoring and intervention platform capabilities to offer high-dosage tutoring and our online learning solutions to Institutions. We have built a diversified business across the following audiences: K-8, High School, College, Graduate School, and Professional.

“Active Member(s)” is defined as the number of Learners with an active paid Learning Membership as of the date presented. Variations in the number of Active Members are due to changes in demand for our solutions, seasonality, testing schedules, and the launch of new membership options. As a result, we believe Active Members is a key indicator of our ability to attract, engage, and retain Learners. Active Members excludes our Institutional business. While our Active Member count as of MarchJune 31,30, 2026 was lower when compared to MarchJune 31,30, 2025, itthe wasrate higherof thandecline ithas wasnarrowed insequentially anyfor quarterfour afterconsecutive March 31, 2025quarters and we believe the recent rollout and continued advancement of our new Learner and Expert platform user experiences will result in positive growth by the end of 2026.

“Average Revenue per Member per Month” (“ARPM”) is defined as the average Consumer Learning Membership subscription revenue per member per month as of the date presented. Variations in ARPM are primarily due to changes in the mix of Learning Memberships sold and pricing changes. We believe ARPM is a key indicator of the value we provide to our customers. ARPM excludes our Institutional business. ARPM as of MarchJune 31,30, 2026 was higher when compared to MarchJune 31,30, 2025, primarily driven by price increases enacted in February 2025.

“Active Experts” is defined as the number of Experts who have instructed one or more sessions in a given period. We believe Active Experts is a key indicator of our ability to service Learners and provide Experts with revenue-generating opportunities. Active Experts includes our Institutional business. The following table summarizes Active Experts for the periods presented. Our Active Expert count during the three and six months ended MarchJune 31,30, 2026 decreased when compared to the prior year period.periods. This decrease was primarily due to lower Consumer Active ExpertsExperts, asdriven a result of our Expert incentives, which has promotedby utilization of the highest quality Experts by encouraging them to work with more Learners and develop deeper relationships that allow for increased revenue-generating opportunities. We believe our Active Expert count at MarchJune 31,30, 2026 is sufficient to meet our near-term growth objectives.

The following tabletables presentspresent our revenue by business category for the periods presented.

Sales and marketing expenses for the three months ended MarchJune 31,30, 2026 and 2025 included non-cash stock-based compensation of $257 thousand and $330 thousand, respectively. Excluding these impacts, sales and marketing expenses decreased $1,914 thousand, or 14%. Sales and marketing expenses for the six months ended June 30, 2026 included non-cash stock-based compensation and restructuring costs of $296$553 thousand. Sales and marketing expenses for the threesix months ended MarchJune 31,30, 2025 included non-cash stock-based compensation and restructuring costs of $344$674 thousand and $193 thousand, respectively. Excluding these impacts, sales and marketing expenses decreased $1,387$3,301 thousand, or 9%.12%. ThisThese decreasedecreases waswere driven by AI-enabled productivity gains and reduced investment in our Institutional business.

General and administrative expenses include compensation for certain employees, support services, product and development expenses intended to support continued innovation, and other operating expenses. Product and development costs were $9,175$9,764 thousand and $10,734$10,683 thousand for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $18,939 thousand and $21,417 thousand for the six months ended June 30, 2026 and 2025, respectively. Product and development costs include compensation for employees on our product and engineering teams who are responsible for developing new and improving existing offerings, maintaining our website, improving efficiencies across our organization, and third-party expenses.

General and administrative expenses for the three months ended MarchJune 31,30, 2026 included non-cash stock based compensation and restructuring costs of $5,682$3,596 thousand.thousand and $882 thousand, respectively. General and administrative expenses for the three months ended MarchJune 31,30, 2025 included non-cash stock based compensation of $7,208 thousand. Excluding these impacts, general and administrative expenses decreased $953 thousand, or 5%. General and administrative expenses for the six months ended June 30, 2026 included non-cash stock based compensation and restructuring costs of $9,278 thousand and $882 thousand, respectively. General and administrative expenses for the six months ended June 30, 2025 included non-cash stock based compensation and restructuring costs of $7,244$14,452 thousand and $455 thousand, respectively. Excluding these impacts, general and administrative expenses decreased $2,479$3,432 thousand, or 12%.9%. We are applying AI systematically across the tech stackstack, helping drive durablecontinued cost reductions and improved unit economics.

Interest expense for the three and six months ended MarchJune 31,30, 2026 was $660$672 thousand and $1,332 thousand, which was driven by our outstanding borrowings under our term loan that was originated in November 2025.

Interest income for the three months ended MarchJune 31,30, 2026 was $368$325 thousand, compared to interest income of $462$365 thousand in the same period in 2025,2025. ThisInterest decreaseincome for the six months ended June 30, 2026 was $693 thousand, compared to interest income of $827 thousand in the same period in 2025. These decreases were driven by lower interest income on our cash balances during the current period.

As of MarchJune 31,30, 2026 and December 31, 2025, we had cash and cash equivalents totaling $44,698$38,424 thousand and $47,895 thousand, respectively. We have incurred cumulative losses from our operations, and we may incur additional losses in the future. Our operations have historically been financed through cash on hand, debt financing, and capital contributions. To the extent we continue to generate negative operating cash flows, it is possible that we may have to finance future operations primarily or in part from cash on hand or from our term loan. If cash on hand or from our term loan is not sufficient to fund our business, we may also need to implement significant cost-containment measures or explore additional financing alternatives. However, there can be no assurance that any financing would be available to us on acceptable terms, or at all, or that any cost-containment measures we implement would be sufficient or effective in reducing losses or preserving liquidity.

Cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 decreased $4,664$6,964 thousand when compared to the same period in 2025, due to higher revenue and gross profit, coupled with lower sales and marketing and general and administrative expenses. These impacts were partially offset by higherlower workingInstitutional capitalbookings and by interest payments of $537$1,087 thousand made in connection with our term loan that originated in November 2025. Cash used in operating activities for the threesix months ended MarchJune 31,30, 2025 was impacted by the payment of a legal settlement of $2,000 thousand.

Cash used in investing activities was $1,182$2,714 thousand and $1,175$2,333 thousand for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Cash used in investing activities for both periods related to capital expenditures primarily for the development of internal use software and IT equipment.

Cash used in financing activities for the threesix months ended MarchJune 31,30, 2026 was $250 thousand as we paid deferred financing fees previously incurred in connection with our term loan that was originated in November 2025. We did not have any financing activities during the threesix months ended MarchJune 31,30, 2025.

Our loan agreement includes customary representations and warranties and covenants associated with our term loan. Such terms include (1) covenants concerning financial and other reporting obligations, and (2) certain limitations on indebtedness, liens, investments, distributions (including dividends), share repurchases, collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, and deposit accounts. Such covenants and limitations on indebtedness include (but are not limited to) that we must maintain the greater of (i) $15,000 thousand of Qualified Cash (as defined in the loan agreement) or (ii) Qualified Cash that results in Remaining Months Liquidity (as defined in our loan agreement) of at least 6 months. Additionally, our outstanding borrowings must not exceed certain multiples of our TTM Contribution Margin. If at any time, the outstanding borrowings exceed the required multiple of our TTM Contribution Margin, we will be required to immediately repay principal until the outstanding borrowings are less than the applicable multiple. Our ability to access the maximum borrowing capacity under our term loan will require our future TTM Contribution Margin to exceed historical levels. As of MarchJune 31,30, 2026, we were in compliance with these covenants.

Certain statements in this report may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions, or strategies regarding the future, including our expectations with respect to: revenue and active member growth; enhancing the Learning Membership experience; grossAI-enabled marginproductivity and operating leverage; return on sales and marketing investments; changes to our marketplace infrastructure systems; simplifying our operations model while growing our business; or the sufficiency of our cash to fund future operations. Any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “approximately,” “believes,” “contemplates,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “outlook,” “plans,” “possible,” “potential,” “predicts,” “projects,” “should,” “seeks,” “will,” “would,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Our financial condition, results of operations, and cash flows may differ materially from those in the forward-looking statements as a result of various factors, including:

•risks associated with our ability to acquire and retain customers, operate, and scale up our Consumer and Institutional businessesbusiness;