Slide 1: Investor Presentation March 2021
Investor Presentation March 2021 © Nerdy2020. Confidentialand proprietary.Investor Presentation March 2021 © Nerdy2020. Confidentialand proprietary.
Slide 2: Disclaimer
2 Disclaimer This Presentation has been prepared by Nerdy (the “Company”) based in part upon market information and statistics provided This presentation includes non-GAAP financial measures, including net sales, adjusted EBITDA (loss), and free cash flow by various third-party sources, upon which t
Slide 3: Transforming How People Learn
3 3 Transforming How People Learn Seamlessly Connecting Experts to Learners in Any Subject, Anywhere, Anytime © Nerdy 3 3 Transforming How People Learn Seamlessly Connecting Experts to Learners in Any Subject, Anywhere, Anytime © Nerdy
Slide 4: Flagship Business: Leading platform for live, online tutoring
4 4 Flagship Business: Leading platform for live, 1 online tutoring Personalized learning in any subject, anywhere, at any time 2020 Live Instruction Hours 4.7M+ hours broadly distributed across diverse audiences 3,000+ subjects Legacy Businesses: 1. Leading online tutoring platform in the United St
Slide 5: Learning's Digital Transition is Happening Now at a Faster Rate
5 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 70% Are more likely to use 30% online learning compared to CAGR 2 a year ago 83% Plan to use online learning 2 services going
Slide 6: Large Fragmented Market, Ripe for Disruption
6 Large Fragmented Market, Ripe for Disruption Other Academic Professional 2 Test Prep 3 1 Education Tutoring Certifications, 2 Training & Skills $ 62 bn $27 bn $7 bn $14 bn $14 bn U.S. direct-to-consumer learning total addressable market expected in 2024 1. Technavio, US Private Tutoring Market (20
Slide 7: Nerdy vs Offline Model Comparison
7 Nerdy vs Offline Model Comparison © Nerdy / TPG Pace Tech Opportunities Corp. 20217 Nerdy vs Offline Model Comparison © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 8: Nerdy by the Numbers
8 Nerdy by the Numbers $132M +87% 68% 2 1 Annualized Revenue Online Revenue Growth Gross Margin Q4-20E Q4-20E YoY Growth Q4-20E +59% +167% 3 4 Active Learner Growth Online Session Growth Q4-20E YoY Growth Q4-20E YoY Growth >3x 68 >500K 5 6 LTV/CAC 2020 Paid Learner Avg. NPS Score Learners Accessed F
Slide 9: A Comprehensive Learning Destination
9 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 10: Our Two-Sided Network: Learners and Experts
10 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 & 1 % of Net Sales by audience People Learn Income Convenience Key Segme
Slide 11: An Operating System Engineered For Learning
11 An Operating System Engineered For Learning Interaction Layer Adaptive Learning Layer for AI Matching Layer HI Curation Layer Artificial Intelligence for Human Interaction Data Lake © Nerdy / TPG Pace Tech Opportunities Corp. 202111 An Operating System Engineered For Learning Interaction Layer Ad
Slide 12: Curation Layer: Identifying the best experts
12 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. 3,000+ 900K 100,000 1 Hours of recorded Subjects of Expertise Applicants 1 video interviews 1
Slide 13: AI-Powered Learner/Expert Matching
13 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 o
Slide 14: Adaptive Learning Layer
14 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 Model-derived insights at the heart of a knowledge evolves inference engine capturing ev
Slide 15: Interaction Layer: Optimizing human interaction
15 Two-way Built-in graphing & video scientific Referenc calculators e tools Collaborative Share & upload Live help workspace options Interaction Layer Optimizing human interaction An autonomation system interleaving human judgment with machine intelligence. ✔Collaborative work space purpose built f
Slide 16: ©
16 © Nerdy / TPG Pace Tech Opportunities Corp. 202116 © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 17: Expert Engagement is Strong and Growing
17 Expert Engagement is Strong and Growing I love Varsity! I always tell my teacher friends 1 “ Sessions Taught per Active Expert 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 hav
Slide 18: Strong and Accelerating Marketplace Dynamics
18 Strong and Accelerating Marketplace Dynamics 1 2 Active Learners Online Sessions (‘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 pa
Slide 19: Net Promoter Scores: Consumers Love their Experience
19 1 Net Promoter Scores 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
Slide 20: Building a Lasting Brand, Founded in Trust
20 Building a Lasting Brand, Founded in Trust 1 Brand Awareness 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 gen pop, 1,000 Parents of K-12 learners. Conducted by Halsted S
Slide 21: Multiple Vectors to Drive Sustainable Growth
21 Multiple Vectors to Targeted M&A Drive Sustainable Growth 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 22: Small Group Classes Vector is Taking Off
22 Small Group Classes Growth Small Group Classes Vector is Taking Off 1 Annualized Revenue 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. 202122 Small Group Classes Growt
Slide 23: Format Expansion Improving Already Strong Unit Economics
23 Format Expansion Improving Already Strong Unit Economics 1 1st Year Net Sales / User by # of Formats Used Profitable on first purchase, immediately paying back CAC One-on-One Large Group +89% Classes LTV expansion driven by multi- $/Learner 4 formats vs. one-on-one format engagement Adaptive Self
Slide 24: Competitive Landscape
24 Competitive Landscape Online, personalized one-on-one instruction, Homework help, textbook rentals, other Legacy In-Person small and large group classes, Asynchronous, recorded lessons supplements Learning Centers and self study K-12, Undergraduate, Post-Grad, Primarily Undergraduate and Post-Gra
Slide 25: COVID Impact and Recovery
25 COVID Impact and Recovery 2020 2021 and Beyond Headwinds Turn to Tailwinds Created Short Term Challenges Consumer need for supplemental help grows as Some schools went to optional grading, many students look to catch up academically. standardized tests and professional exams were Standardized and
Slide 26: Founder Led, Seasoned Management Team
26 Founder Led, Seasoned Management Team with deep technology and direct-to-consumer experience Jason Pello Chuck Cohn Ian Clarkson Heidi Robinson Adam Weber Founder, Chairman & CEO President & Chief Operating Officer Chief Financial Officer Chief Product Officer Chief Marketing Officer Dan Lee Chri
Slide 27: Financial Performance
Financial Performance © Nerdy / TPG Pace Tech Opportunities Corp. 2021Financial Performance © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 28: Our Monetization Model
28 Our Monetization Model Large Group Classes 3M+ 7M+ Free # of Free Class Learning Sessions Interactions >500K 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 learner
Slide 29: YoY Revenue Growth Rates
29 YoY Revenue Growth Rates Schools Shut Down / We’ve Built An Agile And Test Center Closures 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 innovatio
Slide 30: Our Business is Growing Rapidly and Accelerating
30 Our Business is Growing Rapidly and Accelerating 1 1 Historical and Projected Online Revenue Historical and Projected Online Revenue 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 m
Slide 31: Gross Margin Improvements
31 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 32: Summary Historical Financials and 2021F-2023F Forecast
32 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 33: Scalable Operating Model
33 Scalable Operating Model Long-Term 1 1 1 1 2021F 2022F 2023F Targets Revenue 25-30% 33% 43% 35% Growth Gross Margin 75-80% 70% 71% 72% Tech, Product & G&A 15-20% 29% 26% 21% % Revenue Adjusted EBITDA 25-30% (5%) (2%) 5% 2 Margin 3 FCF Margin 25-30% (11%) (7%) 2% Long-term opportunity for growth e
Slide 34: Q1 2021 Update: Continued strong business momentum
34 Continued strong business momentum and demand for our products Continued strong Active Learner growth Continued strong user retention and adoption of multi-format learning Q1 2021 Update Continued strong growth in small group classes Through Continued mix shift to higher gross margin products Feb
Slide 35: Anticipated Transaction Timeline
35 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 36: Financial Appendix
Financial Appendix © Nerdy / TPG Pace Tech Opportunities Corp. 2021Financial Appendix © Nerdy / TPG Pace Tech Opportunities Corp. 2021
Slide 37: Non-GAAP Reconciliations
37 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 3737 Non-GAAP Reconciliations 1 1. Non recurring item
Slide 38: Illustrative Fully Diluted Share Count
38 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