Slide 1: Nerdy Investor Presentation
Nerdy Investor Presentation March 2021 © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 2: Disclaimer
2 Disclaimer General Historical Financial Information This presentation is for informational purposes only to assist interested parties in making their own evaluation with respect to The historical financial information of Nerdy for 2018 and 2019 in this presentation has either been audited or revie
Slide 3: Disclaimer (continued)
3 Disclaimer (continued) Forward-Looking Statements (continued) Industry and Market Data; Trademarks and Trade Names Accordingly, forward-looking statements, including any projections or analysis, should not be viewed as factual and should not Information and opinions in this presentation rely on an
Slide 4: Disclaimer (continued)
4 Disclaimer (continued) Participants in the Solicitation TPG Pace, Nerdy and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies of TPG Pace's shareholders in connection with the proposed business combination. Investors and security hold
Slide 5: Transaction Summary
5 Transaction Summary Sponsored public listing NYSE: PACE NYSE: NRDY • TPG Pace Group raised $450 million through the IPO of a special purpose acquisition company (“SPAC”), TPG Pace Tech Opportunities Corp. (“Pace” or “PACE”), in October 2020. Concurrent with the IPO, PACE secured an additional $150
Slide 6: TPG Pace Introduction
6 TPG Pace Introduction Select TPG Tech & Marketplace Investments Select Track Recent Record of TPG IPOsPrivate Companies Helping SelectEdTech TPG EdTech Investments and Impact Investing ● TPG has a long-history of supporting and investing in Transition to the Public Markets ● TPG has taken 56 compa
Slide 7: TPG Pace Joins High Quality Existing Investors and Board
7 TPG Pace Joins High Quality Existing Investors and Board EXISTING NERDY INVESTORS EXISTING BOARD OF DIRECTORS ● TCV has invested over $14 billion in leading technology companies and has helped guide CEOs through more than Chuck Cohn 125 IPOs and strategic acquisitions1 Founder, Chairman & CEO Cath
Slide 8: Investment Thesis for Nerdy
8 Large TAM Ripe for ▪ $1.3 trillion offline direct-to-consumer education market1 is moving online quickly Disruption ▪ COVID forced a step-function shift to online adoption that we expect to persist ▪ Nerdy is disrupting the market for live direct-to-consumer learning and is a leading One-on-One pla
Slide 9: Transforming How People Learn
Transforming How People Learn Seamlessly Connecting Experts to Learners in Any Subject, Anywhere, Anytime © Nerdy
Slide 10: Nerdy by the Numbers
10 Nerdy by the Numbers $132M +87% 68% Annualized Revenue1 Online Revenue Growth2 Gross Margin Q4-20E Q4-20E YoY Growth Q4-20E +59% +167% Active Learner Growth3 Online Session Growth4 Q4-20E YoY Growth Q4-20E YoY Growth >3x 68 >500K LTV/CAC5 2020 Paid Learner Avg. NPS Score6 Learners Accessed Free C
Slide 11: Nerdy’s Business is Growing Rapidly and Accelerating
11 Nerdy’s Business is Growing Rapidly and Accelerating Historical and Projected Online Revenue1 Historical and Projected Online Revenue1 87% YOY 67% YOY 45% CAGR Note: Nerdy financial information shown does not conform to Regulation S-X or PCAOB standards and includes estimates of certain financial
Slide 12: Learning’s Digital Transition is Happening Now at a Faster Rate than Previous Online Adoptions
12 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 70% Are more likely to use 30% CAGR online learning compared to a year ago2 83% Plan to use online learning services going fo
Slide 13: Large Fragmented Market, Ripe for Disruption
13 Large Fragmented Market, Ripe for Disruption Academic 2 Professional Other Test Prep Education3 Tutoring1 Certifications, Training & Skills2 $14 bn $27 bn $14 bn $7 bn $ 62 bn U.S. direct-to-consumer learning total addressable market expected in 2024 1. Technavio, US Private Tutoring Market (2020-
Slide 14: Nerdy vs Offline Model Comparison
14 Nerdy vs Offline Model Comparison © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 15: Leading platform for live, online tutoring
15 Flagship Business: Leading platform for live, online tutoring 1 Personalized learning in any subject, anywhere, at any time 4.7M+ hours 2020 Live Instruction Hours 3,000+ subjects broadly distributed across diverse audiences Legacy Businesses: 1. Leading online tutoring platform in the United Sta
Slide 16: A Comprehensive Learning Destination
16 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 Instru
Slide 17: Our Two-Sided Network: Learners and Experts
17 Our Two-Sided Network: Learners and Experts Learners Experts Audience Breakout Key Motivations Diverse population servicing learners across lifecycle K-8 High School College/Grad Professional Helping Supplemental Flexibility & % of Net Sales by audience 1 People Learn Income Convenience Key Segme
Slide 18: Superior Value Proposition for Both Sides of the Network
18 Superior Value Proposition 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 Sched
Slide 19: Powerful and Reinforcing Growth Flywheels
19 Powerful and Reinforcing Growth Flywheels More Learners Expert Platform More opportunities delivers more +59% active learner growth 1 earnings & quality interactions for +35% LTV growth 2 top experts. Our end to end seamless experience makes the whole process more convenient. 3 >80 Million 68 NPS
Slide 20: AIHI: An Operating System Engineered For Learning
20 An Operating System Engineered For Learning Interaction Layer AIHI for Adaptive Learning Layer Matching Layer Curation Layer Artificial Intelligence for Human Interaction Data Lake © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 21: Curation Layer
21 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. 100,000 3,000+ 900K Hours of recorded Subjects of Expertise Applicants1 video interviews1 1. 2
Slide 22: Matching Layer
22 AI-Powered Learner/Expert Matching Both learners, struggling with the same subject, are intelligently matched to the instructor who best fits their specific needs. Introvert Low motivation (100+ total attributes) Matching Layer Selecting the best expert We optimize across a high dimensional set of
Slide 23: Adaptive Learning Layer
23 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 Model-derived insights at the heart of a knowledge evolves inference engine capturing ev
Slide 24: Interaction Layer
24 Two-way video Built-in graphing & Reference scientific calculators tools Collaborative Share & upload options Live help workspace Interaction Layer Optimizing human interaction An autonomation system interleaving human judgment with machine intelligence. ✔ Collaborative work space purpose built fo
Slide 25: Consumers Love their Experience
25 Net Promoter Scores1 Consumers Love their Experience 74 68 68 62 “ It was exactly what my son needed... In just a few weeks he had a better grasp on Spanish 4 and raised his grade significantly! I highly recommend them to anyone that needs additional help! 2 1. NPS score source: Retently, “What Do
Slide 26: Building a Lasting Brand, Founded in Trust
26 Building a Lasting Brand, Founded in Trust Brand Awareness1 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 gen pop, 1,000 Parents of K-12 learners. Conducted by Halsted Stra
Slide 27: Expert Engagement is Strong and Growing
27 Expert Engagement is Strong and Growing Sessions Taught per Active Expert1 “ I love Varsity! I always tell my teacher friends to become a Varsity Tutor. I also tell students they can use this platform. Overall, love working for this company! “ I love that I don't have to seek out clients and I ha
Slide 28: Strong and Accelerating Marketplace Dynamics
28 Strong and Accelerating Marketplace Dynamics Active Learners1 Online Sessions2 (‘000s) (‘000s) Learner to Expert flywheel is spinning Personalization, subject expansion, and new formats driving acceleration in engagement 1. Active learners defined as the unique number of Learners attending a paid
Slide 29: Multiple Vectors to Drive Sustainable Growth
29 i on an s E xp u ct d Multiple Vectors to P ro Drive Sustainable Growth Targeted M&A International Expansion nsion a t Exp m a Product Innovation New product and pricing r Fo solutions Self Study Self-guided materials diagnostic tests, practice problems, and study Free live classes with celebrity
Slide 30: Small Group Classes Growth Vector is Taking Off
30 Small Group Classes Growth Vector is Taking Off Small Group Classes Annualized Revenue1 H2 2020E Revenue +185% YOY 1. Annualized Revenue represents half year revenue multiplied by two. Amounts exclude Legacy Businesses. © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 31: Format Expansion Improving Already Strong Unit Economics
31 Format Expansion Improving Already Strong Unit Economics 1st Year Net Sales1 / User by # of Formats Used Profitable on first purchase, immediately paying back CAC One-on-One Large Group Classes +89% LTV expansion driven by $/Learner 4 formats vs. one-on-one multi-format engagement Adaptive Self Stu
Slide 32: Competitive Landscape
32 Competitive Landscape Online, personalized one-on-one instruction, Homework help, textbook rentals, other Legacy In-Person Asynchronous, recorded lessons small and large group classes, supplements Learning Centers and self study K-12, Undergraduate, Post-Grad, Primarily Undergraduate and Post-Gra
Slide 33: COVID Impact and Recovery
33 COVID Impact and Recovery 2020 2021 and Beyond Created Short Term Challenges Headwinds Turn to Tailwinds Some schools went to optional grading, many Consumer need for supplemental help grows as standardized tests and professional exams were students look to catch up academically. suspended, which
Slide 34: Improving Access to High Quality Learning Resources
34 Improving Access to High Quality Learning Resources Free Live Online Classes Free Assessments & Practice Tools Nerdy leverages its Large Group Class learning platform to Nerdy’s library of over 200,000+ practice problems, quizzes, provide access to high quality live instruction in academics, flash
Slide 35: Founder Led, Seasoned Management Team
35 Founder Led, Seasoned Management Team with deep technology and direct-to-consumer experience Chuck Cohn Ian Clarkson Jason Pello Heidi Robinson Adam Weber Founder, Chairman & CEO President & Chief Operating Officer Chief Financial Officer Chief Product Officer Chief Marketing Officer Dan Lee Chris Swenso
Slide 36: Financial Performance
Financial Performance © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 37: Our Monetization Model
37 Our Monetization Model Free Large Group Classes 3M+ 7M+ # of Free Class Learning >500K Sessions Interactions Adaptive Self Study active learners 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 unique n
Slide 38: We’ve Built An Agile And Resilient Business
38 YoY Revenue Growth Rates Schools Shut Down / Test Center Closures We’ve Built An Agile And Resilient Business School and testing center closures related to the pandemic significantly impacted the business in the first half of 2020 Completed transition to 100% online in April New product innovation
Slide 39: Strong Core Business with Multiple New Growth Vectors Drive Topline Expansion
39 Historical and Projected Revenue Strong Core Business with Multiple New Growth Vectors Drive Topline Expansion One-on-One strength provides strong foundation for growth Multiple learning formats enable increased consumption and retention Classes business continues to experience strong growth as w
Slide 40: Gross Margin Improvements Driven By Product Expansion
40 Gross Margin Improvements Historical and Projected Gross Margin Driven By Product Expansion Shift toward 100% online improved margins over last several years Growth in Classes expected to produce future gross margin expansion Note: Nerdy financial information shown does not conform to Regulation
Slide 41: Summary Historical Financials and 2021F-2023F Forecast
41 Summary Historical Financials and 2021F-2023F Forecast Revenue growth acceleration in 2022F driven by multi-format strategy Targeted marketing investments extend reach to drive Active Learner growth Tech and product investments ensure Nerdy remains at the forefront of innovation G&A increase driv
Slide 42: Scalable Operating Model
42 Scalable Operating Model Long-Term 2021F1 2022F1 2023F1 Targets1 Revenue 33% 43% 35% 25-30% Growth Gross Margin 70% 71% 72% 75-80% Tech, Product & G&A 29% 26% 21% 15-20% % Revenue Adjusted EBITDA (5%) (2%) 5% 25-30% Margin2 FCF Margin3 (11%) (7%) 2% 25-30% Long-term opportunity for growth expecte
Slide 43: Sources & Uses / Pro-Forma Valuation
43 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 44: Defining Nerdy’s Public Comparables
44 Defining Nerdy’s Public Comparables Direct-to-Consumer Consumer Facing Consumer Facing Learning Digital Gig Economy Platforms & Marketplaces Platform Platform ▪ Leading learning internet ▪ Leading freelance digital ▪ Leading vertical online platform in North America services gig economy marketplac
Slide 45: Revenue Growth
45 Operational Benchmarking 2022 Avg. Revenue Growth: 27% Revenue Growth 2022 Avg. Gross Margin 71% Gross Margin Sources for third-party information: SEC filings, S&P Capital IQ as of 2/10/2021. © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 46: 2022F EV / Revenue
46 Valuation Benchmarking 2022F EV / Revenue Avg.: 19.6X 64% Discount to Current Sources for third-party information: SEC filings, S&P Capital IQ as of 2/10/2021. © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 47: Q1 2021 Update Through February
47 Continued strong business momentum and demand for our products Continued strong Active Learner growth Q1 2021 Continued strong user retention and adoption of multi-format learning Update Continued strong growth in small group classes Through Continued mix shift to higher gross margin products Feb
Slide 48: Key Takeaways
48 Large TAM Ripe for Disruption Leading Gig Economy Platform for Learning Attractive Unit Economics Scalable Technology Platform Key Takeaways Network Effects and Data Create Deep Competitive Moat Business is at an inflection point Creating Positive Change Experienced, Entrepreneurial Team © Nerdy /
Slide 49: Anticipated Transaction Timeline
49 Anticipated Transaction Timeline Date Event ▪ Transaction Agreement Executed January 2021 ▪ Transaction Announced March 2021 ▪ Preliminary Proxy Materials Filed with the SEC ▪ Mail Final Proxy Materials to TPG Pace Shareholders Q2 2021 ▪ Set Record Date for TPG Pace Shareholders Vote ▪ Hold TPG P
Slide 50: Financial Appendix
Financial Appendix © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 51: Non-GAAP Reconciliations
51 Non-GAAP Reconciliations 1 1. Non recurring items in 2020 are related to a recorded loss for an office sublease. 2021 non-recurring items are primarily related to expected forgiveness of a loan. © Nerdy / TPG Pace Tech Opportunities Corp. 2021 51
Slide 52: Illustrative Fully Diluted Share Count
52 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