Slide 1: Analyst Day Presentation + Q1 Results Addendum
Analyst Day Presentation + Q1 Results Addendum May 2021 © Nerdy 2020. Confidential and proprietary. 1
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
Slide 4: Nerdy
44 © Nerdy / TPG Pace Tech Opportunities Corp. 2021 © Nerdy
Slide 5: Leading platform for live, online instruction
5 Flagship Business: Leading platform for live, online instruction 4.7M+ hours 2020 Live Instruction Hours 1 3,000+ subjects broadly distributed across diverse audiences 1 Legacy Businesses: 1. Leading online instruction platform in the United States claim based on live hours in 2020 and subject bre
Slide 6: The Impact of Live, Personalized Learning
6 The Impact of Live, Personalized Learning 50th percentile 15th 84th percentile percentile 2 standard deviations of improvement 1 2nd 98th percentile percentile Multiple academic studies have PROVEN the effectiveness of live instruction on improving Tutoring Effect learning results PERSONALIZED and
Slide 7: Our personalized live, online platform is well positioned in the $62bn market
7 Live Our personalized live, Learning online platform is well Independent Tutors positioned in the $62bn 1 direct-to-consumer learning market Offline Online <10% of learners think the quality of instruction is better pre-recorded than it is live2 Asynchronous 1. 2. Projected. Technavio, US Private T
Slide 8: A Comprehensive Learning Destination
8 A Comprehensive Small Group Classes Learning Destination Large Group Classes Going beyond one-on-one to meet more learning needs A continuous, multi-format learning experience One-on-One Personal Instruction Adaptive Self Study Assessments & Practice Problems One-on-One Small Group Classes Instruc
Slide 9: Nerdy by the Numbers
9 Nerdy by the Numbers $35M +100% 68% Total Revenue1 Online Revenue Growth2 Gross Margin Q1-21 Q1-21 YoY Growth Q1-21 +67% +186% Active Learner Growth3 Online Session Growth4 Q1-21 YoY Growth Q1-21 YoY Growth >3x 68 >500K LTV/CAC5 2020 Paid Learner Avg. NPS Score6 Learners Accessed Free Classes 2020
Slide 10: Learning's Digital Transition is Happening Now at a Faster Rate
10 Learning’s Digital Transition is Happening Now at a Faster Rate than Previous Online Adoptions U.S. E-Commerce Digital Share (%) 1 Global Learning Digital Share (%)1 5x 5x 73% Are more likely to use 30% CAGR online learning compared to a year ago2 92% Plan to use online learning services going fo
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
12 COVID-19 Recovery Nationwide Inquiry Growth1 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 3M+ 20M+ Hours of Free Live Practice Problems2 Instruction1 in 2020 taken in 2020 We provide multiple, high quality learning resources completely FREE of charge. Our resources improve ac
Slide 14: Founder Led, Seasoned Management Team
14 Founder Led, Seasoned Management Team with deep technology and direct-to-consumer experience Chuck Cohn Ian Clarkson Jason Pello 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. 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 & % of Net Sales by audience 1 People Learn Income Convenience Ke
Slide 17: What Sets Us Apart
17 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. 2021
Slide 19: Quality Experts
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 Expert quality is critical to delivering a gre
Slide 20: Scaled Selection
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+ Why It Matters Instruction subjects Learners: Can learn large number of subjects on our platform
Slide 21: 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: Personalized Experience
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 ● matching Low motivation
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 Convenient Flexible Schedule Learners
Slide 24: How We Do It
24 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 AIHI for Matching Layer Curation Layer Artificial Intelligence Data Lake for Human Interaction © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 26: Data Lake
26 Data Lake Our proprietary data Student preferences An expansive and integrated data set to drive the Expert interviews algorithms powering our personalized Expert pipeline Site interactions interventions Session outcomes Web inquiries Expert assessments >80M Phone Student assessments conversation
Slide 27: Curation Layer
27 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 Expert Rating1 NPS Score2 Better Experts = Better Outcomes = Better Learner Experience
Slide 28: Matching Layer
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 Matching Layer (Learne
Slide 29: Adaptive Learning Layer
29 Continuous Personalized evolution across ASSESSMENT Learning Plan learning journey Adaptive Learning Layer Adaptive ASSESSMENT Learning Plan ASSESSMENT Personalizing the learning path to mastery Learning Plan evolves 40% more likely to renew after completing an assessment1 The system adapts after
Slide 30: Growth
30 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 Active Learners1 Online Sessions2 Sessions Taught per Active Expert 3 (‘000s) (‘000s) +67% +186% +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 ses
Slide 32: Multiple Vectors to Drive Sustainable Growth
c u nt 32 d Pro nsio pa Multiple Vectors to Ex Drive Sustainable Growth Targeted M&A a t International Expansion o r m n F ns i o p a Ex Product Innovation New product and pricing solutions Self Study Self-guided materials diagnostic tests, practice problems, and study Free live classes with celebri
Slide 33: Growth via New Subjects
33 GROWTH VIA NEW SUBJECTS 1,000’s Tackling a sizeable opportunity in of Potential Professional Subjects the Professional segment Professional Hours Consumed1 CURRENT TOP SUBJECTS NCLEX SERIES 65 Hour Consumed Nursing Uniform Investment licensure exam Advisor Law Exam CPA PRAXIS Certified Public Teac
Slide 34: Format Growth
34 FORMAT GROWTH $62 bn Projected U.S. direct-to-consumer learning market size in 20241 Classes revenue increased 185% in 2H 2 2020 , with significant upside remaining ONE-ON-ONE $24 bn1 We’re well positioned vs. legacy offline options: Wider subject selection Higher quality instructors CLASSES Person
Slide 35: Multi-format usage is driving $/Learner growth
35 Multi-format usage 1st Year Net Sales1 / User by # of Formats Used is driving $/Learner One-on-One growth Large Group Classes +89% $/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 +13% +24%2 2020 2020 2019 LTV expansion driven by multi-format 2019 Net LTV Net LTV engagement and higher consumption Recent cohorts’ initial LTV significantly higher than historical periods Elapsed Quarters Elapsed Quarters 2H 2020 Cohorts surpassed in one qua
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: 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, Brand Awareness1 Founded in Trust >2x 64% 31% This Year 2019 2020 Aided Awareness 90% 87% Believe Varsity Tutors offers Believe Varsity Tutors is a high quality instruction2 brand they can trust2 1. Survey of general population, 1,000 Parents of K-12 learners. Conduc
Slide 40: Building Scale
40 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. 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. 2021
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 multi-product format strategy >3x Average new initiative 1 Leveraging Generalizable Capabilities consump
Slide 44: Scaling Smarter: Machine Learning for Consultation
44 Scaling Smarter: Machine Learning for More Personalized & Efficient Consultation Opportunity Nearly 2/3rd of customers prefer at least some level of personal consultation when looking for learning help1 41% Reduction in sales cost Application of Machine Learning as a % of revenue2 (2H 2020 vs. 2H
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% Application of Process Automation Expert acquisition cost1 (as a % of Revenue 2H 202
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 +67% Active Learner growth 1` top experts. Our end-to-end seamless experience makes the whole process more convenient 2 >80 Million 68 NPS Score Usable data
Slide 47: Financials & Outlook
47 Financials & Outlook © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 48: Our Monetization Model
48 Our Monetization Model Free Large Group Classes 3M+ 7M+ # of Free Class Learning >500K Sessions2 Interactions3 Active Learners1 Adaptive Self Study Typical Order (Hours) Typical $/Hour Paid 87K Small Group Classes 5-20 $10-$45+ One-on-One 9-50 $45-$75+ 1. Paid Active Learners defined as the uniqu
Slide 49: We've Built An Agile And Resilient Business
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 1 2 New product innovation and increased adoption of online
Slide 50: Nerdy Seamlessly Transitioned to 100% Online
50 Nerdy Seamlessly Transitioned to 100% Online Quarterly Online Revenue1 2H and Annual Online Revenue1 100% YOY 87% YOY 51% 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. Tr
Slide 51: Gross Margin Improvements Driven By Product Expansion
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. 2021
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. 2021
Slide 53: Cash Flow Improvement Through Technology & Operational Efficiency
53 Cash Flow Improvement Through Technology & Operational Efficiency Free Cash Flow1 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-GAA
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% 30% YOY YOY 50% 31% 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% onlin
Slide 57: Q1 2021 - Continued Momentum and Strong Growth
57 Q1 2021 - Continued Momentum and Strong Growth Active Learners1 Online Sessions2 Sessions Taught per Active Expert 3 (‘000s) (‘000s) +67% +186% +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 se
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 2021F1 2022F1 2023F1 Targets1 Revenue 33% 43% 35% 25-30% Growth Gross Margin 70% 71% 72% 75-80% Tech, Product & G&A 30% 26% 21% 15-20% % Revenue Adjusted EBITDA Margin2 (5%) (2%) 5% 25-30% Long-term opportunity for growth expecte
Slide 60: Transaction Overview
60 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 Investment Network Effects and Data Create Deep Competitive Moat 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 51%1 SPAC IPO 26% 2 Post-Transaction Valuation (Illustrative) 1. Includes unvested employee options and equity a
Slide 63: Defining Nerdy's Public Comparables
63 Defining Nerdy’s Public Comparables Direct-to-Consumer Asynchronous Consumer Facing Learning Learning Platform Digital Gig Economy Platform for Adult Learners Platform ▪ Leading learning internet ▪ Leading asynchronous, ▪ Leading freelance digital platform in North America recorded lessons learnin
Slide 64: Operational Benchmarking: Revenue Growth and Gross Margin
64 Operational Benchmarking 2022F Avg. Revenue Growth: 27% Revenue Growth 2022F Avg. Gross Margin 70% Gross Margin Sources for third-party information: SEC filings, S&P Capital IQ as of 5/4/2021. © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 65: Valuation Benchmarking: 2022F EV / Revenue
65 Valuation Benchmarking 2022F EV / Revenue Avg.: 13.3X 47% Discount to Peers 2022F EV / Gross Profit 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 Opportuniti
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 Q2 2021 ▪ Set Reco
Slide 67: Financial Appendix
67 Financial Appendix © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 68: 2019 - 2020 Quarterly (unaudited) & 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 (unaudited)
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