Nerdy Inc. · NYSE:NRDY
Nerdy — TPG Pace Tech Opportunities — SPAC Merger (May 2021)
70 slides from Nerdy's SPAC merger presentation, May 18, 2021
Slide 1: Analyst Day Presentation + Q1 Results Addendum
Filed by TPG Pace Tech Opportunities Corp. Pursuant to Rule 425 of the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934 Subject Company: TPG Pace Tech Opportunities Corp. Commission File No.: 001-39595 Analyst Day Presentation + Q1 Results Addend
Slide 2: Disclaimer
2 Disclaimer This Presentation has been prepared by Nerdy (the “Company”) and TPG Pace based in part upon market information and statistics provided by These non-GAAP measures are in addition, and not a substitute for or superior, to measures of financial performance prepared in accordance various t
Slide 3: Wisdom is not a product of schooling (Einstein quote)
3 “ Wisdom is not a product of schooling, but a lifelong attempt to acquire it. - Albert Einstein © Nerdy / TPG Pace Tech Opportunities Corp. 2021 3 “ Wisdom is not a product of schooling, but a lifelong attempt to acquire it. - Albert Einstein © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 4: Connecting
4 4 4 © Nerdy / TPG Pace Tech Opportunities Corp. 2021 connecting © Nerdy 4 4 4 © Nerdy / TPG Pace Tech Opportunities Corp. 2021 connecting © Nerdy
Slide 5: Flagship Business: Leading platform for live, online instruction
5 5 Flagship Business: Leading platform for live, online instruction 1 4.7M+ hours 2020 Live Instruction Hours 1 3,000+ subjects broadly distributed across diverse audiences Legacy Businesses: 1. Leading online instruction platform in the United States claim based on live hours in 2020 and subject b
Slide 6: The Impact of Live, Personalized Learning
6 The Impact of Live, Personalized Learning 50th percentile 15th 84th percentile percentile 1 2 standard deviations of improvement 2nd 98th percentile percentile Multiple academic studies have PROVEN the effectiveness of live instruction on improving Tutoring Effect learning results PERSONALIZED and
Slide 7: Live Learning Platform in the $62bn Market
7 Live Learning Our personalized live, Independent Tutors online platform is well 1 positioned in the $62bn direct-to-consumer learning market Offline Online <10% of learners think the quality of instruction is better pre-recorded than 2 it is live Asynchronous Learning 1. Projected. Technavio, US Pr
Slide 8: A Comprehensive Learning Destination
Small Group Classes Average 5-15 participants Adaptive Self Study Adaptive Self Study Assessments & Practice Problems Assessments & Practice Problems One-on-One Personal Instruction Large Group Classes 500-50K participants 8 A Comprehensive Small Group Classes Small Group Classes Learning Destinatio
Slide 9: Nerdy by the Numbers
9 Nerdy by the Numbers 9 $35M +100% 68% 2 1 Total Revenue Online Revenue Growth Gross Margin Q1-21 Q1-21 YoY Growth Q1-21 +67% +186% 3 4 Active Learner Growth Online Session Growth Q1-21 YoY Growth Q1-21 YoY Growth >3x 68 >500K 5 6 LTV/CAC 2020 Paid Learner Avg. NPS Score Learners Accessed Free Clas
Slide 10: Learning's Digital Transition is Happening Now
10 Learning’s Digital Transition is Happening Now at a Faster Rate than Previous Online Adoptions 1 1 Global Learning Digital Share (%) U.S. E-Commerce Digital Share (%) 5x 5x 73% Are more likely to use 30% online learning compared to CAGR 2 a year ago 92% Plan to use online learning 2 services goin
Slide 11: COVID Impact and Recovery
11 COVID Impact and Recovery 2020 2021 and Beyond Created Short Term Challenges Headwinds Turn to Tailwinds Some schools went to optional grading, many We expect consumer need for supplemental help to standardized tests and professional exams were grow as students look to catch up academically. susp
Slide 12: COVID-19 Recovery Nationwide Inquiry Growth
12 COVID-19 Recovery 1 Nationwide Inquiry Growth Nationwide Re-opening has led to accelerating growth in inquiries for Nerdy solutions Growth in “open” areas has accelerated at higher rates than areas that have remained closed and are still predominantly using online or hybrid learning Re-opening is
Slide 13: Improving Access to High Quality Learning Resources
13 Improving Access to High Quality Learning Resources Free Live Online Classes Free Assessments & Practice Tools 20M+ 3M+ 2 Practice Problems Hours of Free Live 1 taken in 2020 Instruction in 2020 We provide multiple, high quality learning resources completely FREE of charge. Our resources improve
Slide 14: Founder Led, Seasoned Management Team
14 Founder Led, Seasoned Management Team with deep technology and direct-to-consumer experience Jason Pello Chuck Cohn Ian Clarkson Heidi Robinson Adam Weber Dan Lee Founder, Chairman & CEO President & Chief Operating Officer Chief Financial Officer Chief Product Officer Chief Marketing Officer Chief Analyt
Slide 15: Meet the Learners & Experts
15 Meet the Learners & Experts © Nerdy / TPG Pace Tech Opportunities Corp. 202115 Meet the Learners & Experts © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 16: Our Two-Sided Network: Learners and Experts
16 Our Two-Sided Network: Learners and Experts Learners Experts Audience Breakout Key Motivations Diverse population servicing learners across lifecycle Professional/ K-8 High School College/Grad Adult Helping Supplemental Flexibility & 1 % of Net Sales by audience People Learn Income Convenience Ke
Slide 17: What Sets Us Apart
17 What Sets Us Apart © Nerdy / TPG Pace Tech Opportunities Corp. 202117 What Sets Us Apart © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 18: Our Right To Win
18 Our Right To Win Quality, Live Scaled Multiple Online Personalized Superior Instructors Selection Formats Experience Value Purpose-Built Operating System for Learning © Nerdy / TPG Pace Tech Opportunities Corp. 202118 Our Right To Win Quality, Live Scaled Multiple Online Personalized Superior Ins
Slide 19: Competitive Advantage: Quality Experts
WHAT SETS US APART Competitive Advantage 19 COMPETITIVE ADVANTAGE Quality Experts What We Do We have built a sizeable network of top Experts nationwide. Instruction is delivered through our online platform, reducing geographic limitations on finding quality Experts in any subject Why It Matters Exper
Slide 20: Competitive Advantage: Scaled Selection
WHAT SETS US APART 20 COMPETITIVE ADVANTAGE Scaled Selection What We Do Scaled quality live instruction available in 3,000+ subjects - ability to identify and build supply of Experts across thousands of topics Live 3,000+ Instruction Why It Matters subjects Learners: Can learn large number of subjec
Slide 21: Competitive Advantage: Multiple Format Online Destination
21 COMPETITIVE ADVANTAGE Multiple Format Online Destination Small Group What We Do Classes Average 5-15 participants Single online destination covering multiple learning needs across LIVE and asynchronous One-on-One Personal Instruction Why It Matters Convenient and accessible via our online platfor
Slide 22: Competitive Advantage: Personalized Experience
WHAT SETS US APART 22 COMPETITIVE ADVANTAGE Personalized Experience AI-Powered Learner/Expert Matching Both learners, struggling with the same subject, are intelligently matched to the instructor who best fits their specific needs What We Do Personalization across multiple touchpoints Introvert Low mo
Slide 23: Superior Value for Both Sides of the Network
23 Superior Value for Both Sides of the Network Value for Learners Value for Experts Better Experience Strong Income Potential, Less Hassle Hand-picked experts, tech-enabled tools, multiple Significant earnings without effort to find new customers learning formats Flexible Schedule Convenient Work whe
Slide 24: How We Do It
24 How We Do It © Nerdy / TPG Pace Tech Opportunities Corp. 202124 How We Do It © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 25: An Operating System Engineered For Learning
25 An Operating System Engineered For Learning Adaptive Learning Layer Matching Layer for Curation Layer AI HI Artificial Intelligence Data Lake for Human Interaction © Nerdy / TPG Pace Tech Opportunities Corp. 202125 An Operating System Engineered For Learning Adaptive Learning Layer Matching Layer
Slide 26: Data Lake
26 Data Lake Our proprietary data Student preferences Expert interviews An expansive and integrated data set to drive the Expert pipeline algorithms powering our personalized Site interactions interventions Session outcomes Expert assessments Web inquiries Student >80M Phone assessments conversation
Slide 27: Curation Layer: Identifying the best experts
27 add measurements to in focus tutors Curation Layer Identifying the best experts With our rich database of past learning interactions, we’ve identified the critical traits, knowledge, and experience that highly correlate to better outcomes 4.9/5 68 1 2 Expert Rating NPS Score Better Experts = Bette
Slide 28: Matching Layer: Selecting the best expert
28 Rating Match Quality – considering over 100 factors Sample Data set (Experts) ● Sessions per student motivation cohorts ● Sessions per requested subject ● Standardized test math score ● Standardized test science score ● (+ more data points) Jason Priya Sarah Sample Data set (Learners) Matching La
Slide 29: Adaptive Learning Layer
29 Continuous Personalized evolution across Learning Plan ASSESSMENT learning journey Adaptive Adaptive Learning Layer ASSESSMENT ASSESSMENT Learning Plan Personalizing the learning path to mastery Learning Plan evolves 40% more likely to renew after completing an 1 assessment The system adapts afte
Slide 30: Growth
30 Growth © Nerdy / TPG Pace Tech Opportunities Corp. 202130 Growth © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 31: We're Building from Strong Growth Foundations
31 We’re Building from Strong Growth Foundations 1 2 3 Active Learners Online Sessions Sessions Taught per Active Expert (‘000s) (‘000s) +186% +67% +60% Q1-21 YoY Growth Q1-21 YoY Growth Q1-21 YoY Growth 1. Active Learners defined as the unique number of Learners attending a paid online one-on-one s
Slide 32: Multiple Vectors to Drive Sustainable Growth
32 Multiple Vectors to Drive Sustainable Growth Targeted M&A International Expansion New product and pricing Product Innovation solutions Self-guided diagnostic tests, practice problems, and study Self Study materials Free live classes with celebrity instructors drive top of funnel Large Format Clas
Slide 33: Growth via New Subjects
33 GROWTH VIA NEW SUBJECTS 1,000’s of Potential Professional Subjects Tackling a sizeable opportunity in the Professional segment 1 Professional Hours Consumed CURRENT TOP SUBJECTS NCLEX SERIES 65 Nursing Uniform Investment licensure exam Advisor Law Exam CPA PRAXIS Certified Public Teaching licensur
Slide 34: New Learning Formats
NEW LEARNING FORMATS 34 $62 bn FORMAT GROWTH 1 Projected U.S. direct-to-consumer learning market size in 2024 Classes revenue increased 185% in 2H 2 2020 , with significant ONE-ON-ONE upside remaining 1 $24 bn We’re well positioned vs. legacy offline options: Wider subject selection Higher quality ins
Slide 35: Multi-format usage driving $/Learner
35 Multi-format usage 1 1st Year Net Sales / User by # of Formats Used is driving $/Learner One-on-One growth Large Group +89% Classes $/Learner 4 formats vs. one-on-one Adaptive Self Study Small Group Classes 1. Net sales is a non-GAAP measure representing client purchases inclusive of payments due
Slide 36: LTV Expansion Accelerating
36 1 LTV Expansion Accelerating Q1 Q2 2 2 +13% +24% 2020 2020 LTV expansion driven by multi-format 2019 2019 engagement and higher consumption Recent cohorts’ initial LTV significantly higher than historical periods Elapsed Quarters Elapsed Quarters 2H 2020 Cohorts surpassed in one quarter the LTV of
Slide 37: Building a full funnel approach to new Learner growth
37 Building a full funnel approach to new Learner growth Brand (~1/3 of spend) Leveraging StarCourses and high reach channels to build awareness, establish trust, and generate word of mouth Performance (~2/3 of spend) Data and tech-enabled approach to organic and paid search to drive highly efficient
Slide 38: Brand Building: Large Format StarCourses
38 BRAND BUILDING Large Format StarCourses ✔ Large format live class can accommodate 500-50K+ students ✔ Offered completely free of charge ✔ Format attracts new users, retains existing users, & drives brand ✔ 500K+ registrants, 3M+ class enrollments in 2020 100+ StarCourses taught 58 celebrity partn
Slide 39: Establishing a Lasting Brand, Founded in Trust
39 Establishing a Lasting Brand, 1 Brand Awareness Founded in Trust >2x 64% 31% This Year 2020 2019 Aided Awareness 87% 90% Believe Varsity Tutors offers Believe Varsity Tutors is a 2 2 high quality instruction brand they can trust 1. Survey of general population, 1,000 Parents of K-12 learners. Con
Slide 40: Building Scale
40 Building Scale © Nerdy / TPG Pace Tech Opportunities Corp. 202140 Building Scale © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 41: Aiming to Build One Hundred, $100M Businesses
41 We’re Aiming to Build One Hundred, $100M Businesses by Scaling Live Personalized Learning © Nerdy / TPG Pace Tech Opportunities Corp. 202141 We’re Aiming to Build One Hundred, $100M Businesses by Scaling Live Personalized Learning © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 42: Our Platform is Designed to Power Growth and Scale
42 Our Platform is Designed to Power Growth and Scale Scale Faster w/ Generalizable Capabilities Scale Smarter w/ Machine Learning Scale Leaner w/ Process Automation © Nerdy / TPG Pace Tech Opportunities Corp. 202142 Our Platform is Designed to Power Growth and Scale Scale Faster w/ Generalizable Ca
Slide 43: Scaling Faster: Generalizable Capabilities
43 Scaling Faster: Generalizable Capabilities Enabling Faster Product Expansion Opportunity There is significant opportunity across our addressable TAM to extend reach across new segments with our >3x multi-product format strategy Average new initiative 1 consumption growth Leveraging Generalizable C
Slide 44: Scaling Smarter: Machine Learning
44 Scaling Smarter: Machine Learning for More Personalized & Efficient Consultation Opportunity Nearly 2/3rd of customers prefer at least some level of 1 personal consultation when looking for learning help 41% Reduction in sales cost 2 Application of Machine Learning as a % of revenue (2H 2020 vs. 2
Slide 45: Scaling Leaner: Process Automation
45 Scaling Leaner: Process Automation to Reduce Expert Curation Costs Opportunity To deliver a great learning experience, you must effectively test an Expert’s subject matter expertise and teaching capabilities 1.2% 1 Expert acquisition cost Application of Process Automation (as a % of Revenue 2H 20
Slide 46: Powerful and Reinforcing Growth Flywheels
46 Powerful and Reinforcing Growth Flywheels More Learners Expert Platform More opportunities deliver more earnings & quality interactions for 1` top experts. Our end-to-end +67% Active Learner growth seamless experience makes the whole process more convenient >80 Million 2 68 NPS Score Usable data
Slide 47: Financials & Outlook
47 Financials & Outlook © Nerdy / TPG Pace Tech Opportunities Corp. 202147 Financials & Outlook © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 48: Our Monetization Model
48 Our Monetization Model 3M+ 7M+ Large Group Classes Free # of Free Class Learning 2 3 >500K Sessions Interactions Adaptive Self Study Typical Order (Hours) Typical $/Hour Paid 5-20 $10-$45+ Small Group Classes 87K 9-50 $45-$75+ One-on-One 1. Paid Active Learners defined as the unique number of Lea
Slide 49: Revenue Growth Rates YoY
49 Revenue Growth Rates YoY We’ve Built An Agile And Resilient Business School and testing center closures related to the pandemic significantly impacted the business throughout 2020 Completed multi-year transition to 100% online in Q2 2020 New product innovation and increased 1 2 adoption of online
Slide 50: Nerdy Seamlessly Transitioned to 100% Online
50 Nerdy Seamlessly Transitioned to 100% Online 1 1 Quarterly Online Revenue 2H and Annual Online Revenue 100% YOY 51% YOY 87% YOY 67% YOY 30% YOY 78% YOY 15% YOY 1. Online learning format revenue, defined as one-on-one online revenue and online group classes revenue and excludes in-person revenue.
Slide 51: Gross Profit Margin
51 Gross Profit Margin Gross Margin Improvements Driven By Product Expansion Shift toward 100% online improved margins Growth in Classes expected to produce future gross margin expansion Note: Quarterly financial information is unaudited. © Nerdy / TPG Pace Tech Opportunities Corp. 202151 Gross Profit
Slide 52: Investments in Technology and Automation Drive Efficiency
52 Investments in Technology and Automation Drive Efficiency Sales Expense % of Revenue Operations & Fulfillment Expense % of Revenue Note: Quarterly financial information is unaudited. © Nerdy / TPG Pace Tech Opportunities Corp. 202152 Investments in Technology and Automation Drive Efficiency Sales Ex
Slide 53: Cash Flow Improvement Through Technology & Operational Efficiency
53 Cash Flow Improvement Through Technology & Operational Efficiency 1 Free Cash Flow Multi-year effort to improve unit level economics and free cash flow Proven ability to become self sustaining supports increased growth investments to capture massive opportunity 1. Free Cash Flow (“FCF”) is a non-GA
Slide 54: Historical Seasonality and TPG Pace 2021 Forecast by Quarter
54 Historical Seasonality and TPG Pace 2021 Forecast by Quarter Historical and Forecasted Quarterly Seasonality as a % of Annual Revenue Annual Revenue Q1: 23-25% Q2: 20-23% Q3: 23-25% Q4: 28-31% 33% YOY 30% YOY 31% 50% 41% YOY YOY YOY 30% YOY 1 2 1. Q1 2020 In Person Revenue accounted for $5.7 mill
Slide 55: TPG Pace 2021 Forecast by Quarter
55 1 TPG Pace 2021 Forecast by Quarter Revenue growth driven by multi-format strategy One-on-one strength provides durable base growth. Classes and Professional offerings continue to grow rapidly as we scale Targeted marketing investments extend reach to drive Active Learner growth Significant invest
Slide 56: Q1 2021 - Delivering Results Ahead of TPG Pace Forecast
56 Q1 2021 - Delivering Results Ahead of TPG Pace Forecast 1` Revenue growth driven by Learner and engagement growth, as Learners increasingly adopted our multi-format approach to delivering personalized learning Margin expansion primarily driven by the transition to delivering instruction 100% onli
Slide 57: Q1 2021 - Continued Momentum and Strong Growth
57 Q1 2021 - Continued Momentum and Strong Growth 1 2 3 Active Learners Online Sessions Sessions Taught per Active Expert (‘000s) (‘000s) +186% +67% +60% Q1-21 YoY Growth Q1-21 YoY Growth Q1-21 YoY Growth 1. Active Learners defined as the unique number of Learners attending a paid online one-on-one
Slide 58: TPG Pace Forecast
58 1 TPG Pace Forecast Rapid digital acceleration is expected to provide tailwinds to support durable growth Gross margins expansion driven by mix shift to 100% online and Classes Efficient performance marketing coupled with “big swing” marketing investments expected to drive awareness and new custom
Slide 59: Attractive Long-Term Growth and Strong Operating Leverage
59 Attractive Long-Term Growth and Strong Operating Leverage Long-Term 1 1 1 1 2021F 2022F 2023F Targets Revenue 33% 43% 35% 25-30% Growth 70% 71% 72% Gross Margin 75-80% Tech, Product & G&A 30% 26% 21% 15-20% % Revenue 2 (5%) (2%) 5% Adjusted EBITDA Margin 25-30% Long-term opportunity for growth ex
Slide 60: Transaction Overview
60 Transaction Overview © Nerdy / TPG Pace Tech Opportunities Corp. 202160 Transaction Overview © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 61: Investment Thesis
61 Large TAM Ripe for Disruption Leading Direct to Consumer Platform for Learning Attractive Unit Economics Scalable Technology Platform Network Effects and Data Create Deep Competitive Moat Investment Thesis Business is at an Inflection Point. Re-Opening Driving Business Acceleration Creating Positi
Slide 62: Sources & Uses / Pro-Forma Valuation
62 Sources & Uses / Pro-Forma Valuation Sources & Uses (Illustrative) Post-Transaction Ownership (Illustrative) Sponsor PIPE Investors 5% 9% 1 FPA Investors 9% Existing Nerdy Shareholders 1 51% SPAC IPO 26% 2 Post-Transaction Valuation (Illustrative) 1. Includes unvested employee options and equity
Slide 63: Defining Nerdy's Public Comparables
63 Defining Nerdy’s Public Comparables Asynchronous Consumer Facing Direct-to-Consumer Learning Platform Digital Gig Economy Learning for Adult Learners Platform Platform ▪ Leading learning internet ▪ Leading asynchronous, ▪ Leading freelance digital platform in North America recorded lessons learnin
Slide 64: Operational Benchmarking
64 Operational Benchmarking 2022F Avg. Revenue Growth: 27% 2022F Avg. Gross Margin 70% Sources for third-party information: SEC filings, S&P Capital IQ as of 5/4/2021. © Nerdy / TPG Pace Tech Opportunities Corp. 2021 64 Gross Margin Revenue Growth64 Operational Benchmarking 2022F Avg. Revenue Growth
Slide 65: Valuation Benchmarking
65 Valuation Benchmarking Avg.: 13.3X 47% Discount to Peers Avg.: 19.3X 48% Discount to Peers Sources for third-party information: SEC filings, S&P Capital IQ as of 5/4/2021. Nerdy valuation multiples assume $10 per share. © Nerdy / TPG Pace Tech Opportunities Corp. 2021 65 2022F EV / Gross Profit 20
Slide 66: Anticipated Transaction Timeline
66 Anticipated Transaction Timeline Event ▪ Transaction Agreement Executed January 2021 ▪ Transaction Announced March 2021 ▪ Preliminary Proxy Materials Filed with the SEC April 2021 ▪ Analyst Day May 2021 ▪ Q1 Earnings Release ▪ Mail Final Proxy Materials to TPG Pace Shareholders ▪ Set Record Date
Slide 67: Financial Appendix
67 Financial Appendix © Nerdy / TPG Pace Tech Opportunities Corp. 202167 Financial Appendix © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 68: 2019 - 2020 Quarterly & Annual Financials
68 2019 - 2020 Quarterly (unaudited) & Annual Financials 1. Active Learners defined as the unique number of Learners attending a paid online one-on-one session or a paid online class in a given period. Amounts exclude Legacy Businesses and VT+. Learners in thousands. 2. Adjusted EBITDA excludes Non-
Slide 69: Non-GAAP Reconciliations
69 Non-GAAP Reconciliations (unaudited) 1 1 1. Non recurring items in 2020 are related to a recorded loss for an office sublease and transaction related costs. 2021 includes one-time non-recurring items related to the expected forgiveness of a Promissory loan. Note: Quarterly financial information i
Slide 70: Illustrative Fully Diluted Share Count
70 Illustrative Fully Diluted Share Count 1. Assumes treasury share method for public, FPA, and private warrants. 2. 9.0 million public warrants issued as part of PACE IPO with strike price of $11.50 and redemption price of $18.00. 3. 3.0 million FPA warrants to be issued with strike price of $11.50