Nerdy Inc. · NYSE:NRDY
Nerdy — TPG Pace Tech Opportunities — SPAC Merger (August 2021)
43 slides from Nerdy's SPAC merger presentation, Aug 12, 2021
Slide 1: Investor Presentation
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 Investor Presentation Chuck Cohn, CEO Jason
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: Investment Thesis
3 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 Positiv
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: Live Learning
6 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 7: 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 7 A Comprehensive Small Group Classes Small Group Classes Learning Destinatio
Slide 8: Nerdy by the Numbers
8 Nerdy by the Numbers 8 $33M +52% 65% 2 1 Total Revenue Total Revenue Growth Gross Margin Q2-21 Q2-21 YoY Growth Q2-21 +80% +109% 3 4 Active Learner Growth Online Session Growth Q2-21 YoY Growth Q2-21 YoY Growth >3x 68 >500K 5 6 LTV/CAC 2020 Paid Learner Avg. NPS Score Learners Accessed Free Classe
Slide 9: Second Quarter Product Highlights
9 9 Second Quarter Product Highlights ● Invested in expanding subject breadth and the frequency of our small group class offering to drive growth and reach new audiences, which resulted in small group class revenue increasing over 300% year-over-year during the second quarter ● Hosted over 50 StarCo
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: Competitive Advantage: Quality Experts
WHAT SETS US APART Competitive Advantage 11 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 12: Competitive Advantage: Scaled Selection
WHAT SETS US APART 12 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 13: Competitive Advantage: Personalized Experience
WHAT SETS US APART 13 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 14: Our Two-Sided Network: Learners and Experts
14 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 15: Multiple Vectors to Drive Sustainable Growth
15 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 16: Brand Building: Large Format StarCourses
16 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 150+ StarCourses taught 75+ partnerships N
Slide 17: Establishing a Lasting Brand, Founded in Trust
17 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 18: Strong LTV Expansion
18 1 Strong LTV Expansion Q1 Q2 2 2 +22% +31% 2020 2020 LTV expansion driven by multi-format 2019 2019 2021 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 19: COVID Impact and Recovery
19 COVID Impact and Recovery 2020 2021 and Beyond Created Short Term Challenges Headwinds Turn to Tailwinds Some schools went to optional grading, many We continue to be encouraged the the anticipated standardized tests and professional exams were resumption of in-person schooling in the fall for mo
Slide 20: Founder Led, Seasoned Management Team
20 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 21: Financials & Outlook
21 Financials & Outlook © Nerdy / TPG Pace Tech Opportunities Corp. 202121 Financials & Outlook © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 22: Our Monetization Model
22 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 23: Revenue Growth Rates YoY
23 1 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 onlin
Slide 24: Gross Profit Margin
24 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: Semi-annual financial information is unaudited. © Nerdy / TPG Pace Tech Opportunities Corp. 202124 Gross Pro
Slide 25: Investments in Technology and Automation Drive Efficiency
25 Investments in Technology and Automation Drive Efficiency Sales Expense % of Revenue Operations & Fulfillment Expense % of Revenue Note: Semi-annual financial information is unaudited. © Nerdy / TPG Pace Tech Opportunities Corp. 202125 Investments in Technology and Automation Drive Efficiency Sales
Slide 26: Cash Flow Improvement Through Technology & Operational Efficiency
26 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 in H2 2020 Targeted investments in marketing, and new talent across executive management, engineering, pro
Slide 27: Q2 2021 - Continued Momentum and Strong Growth
27 Q2 2021 - Continued Momentum and Strong Growth 1 2 3 Active Learners Online Sessions Sessions Taught per Active Expert (‘000s) (‘000s) +109% +80% +31% Q2-21 YoY Growth Q2-21 YoY Growth Q2-21 YoY Growth 1. Active Learners defined as the unique number of Learners attending a paid online one-on-one
Slide 28: Q2 and YTD 2021 - Delivering Results Ahead of TPG Pace Forecast
28 Q2 and YTD 2021 - Delivering Results Ahead of TPG Pace Forecast 1 Total Revenue Gross Profit Revenue growth driven by Learner and engagement growth, as Learners increasingly adopted our multi-format approach to +52% +51% +51% +56% delivering personalized learning Gross Profit expansion driven by th
Slide 29: Historical Seasonality and TPG Pace 2021 Forecast by Quarter
29 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% 52% YOY YOY YOY YOY 30% YOY 1 2 1. Q1 2020 In Person Revenue accounted for $
Slide 30: TPG Pace 2021 Forecast by Quarter
30 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 31: TPG Pace Forecast
31 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 32: Attractive Long-Term Growth and Strong Operating Leverage
32 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 33: Transaction Overview
33 Transaction Overview © Nerdy / TPG Pace Tech Opportunities Corp. 202133 Transaction Overview © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 34: Sources & Uses / Pro-Forma Valuation
34 Sources & Uses / Pro-Forma Valuation Sources & Uses (Illustrative) Post-Transaction Ownership (Illustrative) Sponsor PIPE Investors 5% 9% FPA Investors 9% Existing Nerdy Shareholders 1 51% SPAC IPO 26% Post-Transaction Valuation (Illustrative) 1. Includes unvested employee options and equity awar
Slide 35: Defining Nerdy's Public Comparables
35 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 36: Operational Benchmarking
36 Operational Benchmarking 2022F Avg. Revenue Growth: 26% 2022F Avg. Gross Margin 70% Sources for third-party information: SEC filings, S&P Capital IQ as of 7/30/2021. © Nerdy / TPG Pace Tech Opportunities Corp. 2021 36 Gross Margin Revenue Growth36 Operational Benchmarking 2022F Avg. Revenue Growt
Slide 37: Valuation Benchmarking
37 Valuation Benchmarking 46% Discount to Peers Avg.: 13.3X 48% Discount to Peers Avg.: 19.1X Sources for third-party information: SEC filings, S&P Capital IQ as of 7/30/2021. Nerdy valuation multiples assume $10 per share. © Nerdy / TPG Pace Tech Opportunities Corp. 2021 37 2022F EV / Gross Profit 2
Slide 38: Anticipated Transaction Timeline
38 Anticipated Transaction Timeline Event ▪ Transaction Agreement Executed January 2021 ▪ Transaction Announced March 2021 ▪ Preliminary Proxy Materials Filed with the SEC April 2021 ▪ Analyst Day August 2021 ▪ Q2 Earnings Release ▪ Mail Final Proxy Materials to TPG Pace Shareholders ▪ Set Record Da
Slide 39: Financial Appendix
39 Financial Appendix © Nerdy / TPG Pace Tech Opportunities Corp. 202139 Financial Appendix © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 40: 2019 - 2020 Quarterly (unaudited) & Annual Financials
40 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 (loss) is def
Slide 41: Non-GAAP Reconciliations (unaudited)
41 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. 2021F includes one-time non-recurring items related to the forgiveness of a Promissory loan. Note: Quarterly financial information is unaudi
Slide 42: Illustrative Fully Diluted Share Count
42 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
Slide 43: Thank you
43 Thank you © Nerdy / TPG Pace Tech Opportunities Corp. 202143 Thank you © Nerdy / TPG Pace Tech Opportunities Corp. 2021
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