NerdWallet (NRDS) Q3 2026 Earnings Call: Auto Insurance Weighs on Revenue

Key Takeaways

• NerdWallet reported Q3 2026 revenue of $240 million, up 11% year over year but below its $244 million to $260 million guidance range.
• Auto insurance revenue fell $17 million year over year. Management attributed the decline to gaps in NerdWallet’s carrier network and said the issue is unlikely to be resolved in Q4.
• Consumer revenue increased 12% to $215 million, supported by student loans, personal loans and deposit accounts. SMB revenue rose 6% to $25 million.
• Non-GAAP operating income, or NGOI, was $30 million with a 13% margin. GAAP operating income was $19 million, while adjusted EBITDA reached $40 million with a 17% margin.
• Adjusted free cash flow for the trailing 12 months increased 51% year over year to $129 million. The company repurchased approximately $151 million of shares over the same period.
• Management guided for Q4 revenue of $191 million to $203 million and NGOI of $9 million to $15 million. Full-year NGOI is expected to be $85 million to $91 million.

Key Financial Data

Beginning in Q3, NerdWallet changed its NGOI definition to exclude certain accelerated stock-based compensation. The change added back $3.9 million related to a previous acquisition.

Business and Operating Performance

Consumer revenue growth was driven by student loans, personal loans and deposit accounts. Personal loan revenue benefited from an expanded marketplace serving more borrowers, while deposit account revenue increased due to larger partner budgets.

These gains were partly offset by auto insurance. Management said NerdWallet remains early in developing its network of insurance carriers and third-party agents, limiting its ability to monetize traffic relative to peers. Direct carrier relationships can take several quarters to establish, even after sufficient scale and market credibility have been reached.

SMB revenue growth was supported by strong loan originations and renewals. Organic search traffic continued to pressure other SMB products.

Management said organic search is now substantially smaller following 3.5 years of rapid declines, although the pace of deterioration has recently stabilized. Educational content has been particularly affected by AI summaries in search results, while product marketplaces have been more insulated because they depend on inventory, dynamic pricing and underwriting eligibility.

NerdWallet described its current model as a combination of a declining SEO-led content business, a growing paid-marketing marketplace, vertical integration initiatives and longer-term AI investments. The company remains focused on generating positive in-month profit from its paid marketplace.

Management Guidance

Management expects auto insurance constraints to continue affecting results for the remainder of 2026. The full-year NGOI outlook includes a $15 million to $20 million negative impact from investments in vertical integration, brokering and advisory businesses.

For 2027, management expects year-over-year revenue growth but said growth in Q1 will be challenging because of a difficult comparison. The company also plans to increase spending on longer-payback vertical integration and AI-related projects, which management expects to pressure NGOI in the near term.

Risks and Watch Items

• NerdWallet’s incomplete auto insurance carrier network is limiting monetization as more large carriers compete for customers.
• Management cannot predict the timing of additional carrier partnerships and does not expect the problem to be resolved in Q4.
• Organic search remains under pressure, particularly for educational content affected by AI-generated search summaries.
• Vertical integration and AI projects are increasing near-term expenses without currently contributing meaningful revenue.
• The future scale of traffic from AI agents remains uncertain and could vary materially by product category.
• In auto insurance, agent-driven shopping may create concerns around customer churn, lifetime value and the cost of generating quotes.

Analyst Q&A Highlights

Management said NerdWallet has sufficient insurance traffic and is in discussions with carriers, but direct relationships may still take quarters to complete. Expanding the carrier and third-party agent network remains a priority.

On the shift away from SEO dependence, the company highlighted paid marketing, owned-audience strategies, vertically integrated services and AI projects. Social and other acquisition channels are also under development, with return on advertising spend managed around positive in-quarter marketplace profitability.

Regarding AI agents and personal finance tools, management argued that complex categories such as insurance, personal loans and mortgages still require compliant marketplaces with real-time inventory, pricing and eligibility data. NerdWallet is investing in AI-assisted software for its in-house agents and exploring how licensed agents could support consumers shopping through AI tools.

Management cautioned that the economics of agentic traffic remain unsettled. In auto insurance, adoption may depend on carrier participation and whether AI-driven shopping produces excessive repeat quoting or customer churn.

Full Earnings Call Transcript

Complete Earnings Call Transcript

Management Remarks

Operator

[Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Robb Ferris, VP of Finance. Please go ahead.

Robb Ferris

Thank you, Operator. Welcome to the NerdWallet Q3 2026 Earnings Call. Joining us today are our Co-Founder and CEO, Tim Chen, and Chief Financial Officer, John Lee. Our press release and shareholder letter are available on our Investor Relations website, and a replay of this update will also be available following the conclusion of today's call. We intend to use our Investor Relations website as a means of disclosing certain material information and complying with disclosure obligations under SEC Regulation FD from time to time. As a reminder, today's call is being webcast live and recorded. Before we begin today's remarks and question-and-answer session, I would like to remind you that certain statements made during this call may relate to future events and expectations and, as such, constitute forward-looking statements. The actual results and performance may differ from those expressed or implied by these forward-looking statements as a result of various risks and uncertainties, including the risk factors discussed in reports filed or to be filed with the SEC. We urge you to consider these risk factors and remind you that we undertake no obligation to update the information provided on this call to reflect subsequent events or circumstances. You should be aware that these statements should not be considered a guarantee of future performance.

Furthermore, during this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, except where we are unable, without unreasonable efforts, to calculate certain reconciling items with confidence. With that, I'll now turn it over to Tim Chen, our Co-Founder and CEO. Tim?

Tim Chen

Thanks, Robb. We delivered revenue of $240 million in the third quarter with non-GAAP operating income, or NGOI, of $30 million. Revenue grew 11% year-over-year, but was below our guidance range due to a $17 million year-over-year decrease in auto insurance revenue. As a result, NGOI came in at the low end of our guidance range. We're our own harshest critics, and we are disappointed by our underperformance in auto insurance, especially with the tailwinds the overall industry is experiencing. We're relatively early in the development of our auto insurance carrier network, which has limited our ability to monetize traffic relative to our peers. We are committed to expanding our network of insurance carrier and third-party agent relationships. Unfortunately, this takes time to build, and in hindsight, we were overly optimistic on partnership timelines.

Although we expect these auto insurance dynamics to continue to impact our results for the remainder of the year, we are confident that we will secure these partnerships over time. From an owned audience standpoint, we are excited by and continue to invest in vertical integration plays across our brokering and advisory businesses with payback periods beyond the current year. Our full-year NGOI guidance range includes $15 to $20 million of negative impact associated with these investments, consistent with our outlook from last quarter. AI also gives us new ways to build and deliver services to consumers and SMBs. In our vertically integrated businesses, we are using AI-assisted development to improve the software our in-house agents use to manage customer relationships. Looking ahead, we are exploring ways for our licensed agents to support consumers shopping through AI assistance. And now I will pass it over to John to cover our financial results in more detail.

Jun Lee

Thanks, Tim. As Tim mentioned, total revenue in Q3 was $240 million, up 11% year-over-year, and below our guidance range of $244 to $260 million. Consumer revenue was $215 million, up 12% year-over-year, driven by growth in student loans, personal loans, and deposit accounts. Personal loan revenue increased as we expanded our marketplace to serve more borrowers, and deposit account revenue growth was driven by expanded partner budgets. These increases were partially offset by a $17 million year-over-year decline in auto insurance. SMB revenue was $25 million, up 6% year-over-year. Strong loan originations and renewals supported growth, while organic search traffic continued to pressure other SMB products. Moving to profitability, Q3 GAAP operating income was $19 million and NGOI was $30 million at a 13% margin.

Beginning this quarter, our NGOI definition excludes certain accelerated stock-based compensation. This quarter, this definition change resulted in a $3.9 million add-back to NGOI related to a previous acquisition. Adjusted EBITDA was $40 million at a 17% margin. Turning to cash flow and capital allocation, we generated $129 million of adjusted free cash flow over the trailing 12 months, a 51% year-over-year increase. During this quarter, we repurchased approximately $11 million of Class A common stock, bringing our repurchases over the trailing 12 months to approximately $151 million. Our weighted average diluted share count was 64.7 million, down 16% year-over-year. As of September 30, we had $74 million of cash and cash equivalents, with approximately $57 million remaining under our share repurchase authorization.

Turning to guidance, we expect fourth quarter revenue in the range of $191 to $203 million and NGOI in the range of $9 to $15 million. For the full year, this implies that we expect NGOI in the range of $85 to $91 million. Looking forward, although we're still in the 2027 planning process, we expect to increase revenue year-over-year in 2027, but growing in Q1 will be a challenge as it will be our toughest year-over-year comp. On expenses, we plan to increase our investments in longer payback, vertical integration, and AI-related projects next year. Although these investments will have a negative impact on NGOI in the near term, we believe they will help us build a stronger business and set us up for sustainable long-term revenue growth. Our cash generation gives us flexibility to invest in the business, pursue acquisitions, and return capital to shareholders. We'll continue to weigh these opportunities against one another with a focus on long-term shareholder value. With that, we'll open up for Q&A.

Operator

[Operator Instructions] Our first question comes from the line of Ralph Schackart with William Blair. Please go ahead.

Question-and-Answer Session

Ralph Schackart

First, just on the SEO headwinds that you called out, can you maybe speak to the relative headwinds you're seeing in Q3 versus what you've experienced through the year? I'm just kind of curious if those headwinds are getting tougher, you're finding workarounds, et cetera. And then second, just on the insurance situation and insurance vertical, what kind of time horizon do you think it would take to build these integrations and get that business sort of back where you expect it to be? Thank you.

Tim Chen

Thanks for the question. So in terms of SEO, organic search has become a fraction of what it was for us after 3.5 years of rapid declines. That being said, the pace of declines has stabilized a bit in recent months. So just as a reminder, educational content has been severely impacted as Google puts AI summaries in search engine results. However, product marketplaces like insurance have been more insulated. I mean, there is an impact, but you can't, for example, summarize a marketplace. There's inventory, dynamic pricing, underwriting eligibility, and a host of other factors that do require that marketplace. So I'd say SEO is much smaller than it was before and it's stabilizing a bit.

In terms of insurance, to give a little more color there, we mentioned in our prepared remarks that our partner network is broad. So we have direct relationships with a few of the top 10 carriers, including one that was running laps around everyone during the last few years coming out of the hard market. So that allowed us to be very competitive in acquiring customers in 2024 and 2025. So what happened this year is the rest of the top 10 carriers are starting to get way more competitive in acquiring customers, which is awesome for the industry. But yes, you have to be able to monetize.

So ultimately we need to get more competitive and yes, carrier relationships take time to build. They don't really want to work with you until you're at a certain volume or have established your reputation in the market. And even after that happens, it can take quarters to establish that direct relationship. So it's a little hard to predict, frustrating for us, but the good news is we have the volume, we're talking, but it's hard to say exactly when we secure those relationships. At some point we'll get it done and it'll be pretty obvious when that happens, but we don't expect to resolve the problem in Q4.

Operator

Our next question comes from the line of Yusuf Squali with Truist Securities. Please go ahead.

Robert Zeller

This is Robert on for Yusuf. On organic search, I'm just curious what the strategy is here now to overcome the organic search headwinds because, historically, it's been an organic SEO business. So just curious now in this new era and with search seeing a lot of volatility, what the new strategy is. And then on that front, I'm curious how much traffic comes from AI agents today and where you think this is going to be in the next 5 years, the next 10 years. Thanks.

Jun Lee

Yes, Robert, thank you for that question. We really have a multi-channel marketplace generating a ton of NGOI focused on in-month earnings, but we also have multiple long-term bets that we've been discussing over the last few quarters. So I would break out our business in the following categories, which is, as you mentioned, we have our SEO-led content business. That has been declining, but it's a lot smaller today than it was a couple of years ago. We have our paid marketing marketplace that has been growing meaningfully year-over-year, and you could track the increase in our marketing spend that we disclose. And we've been pretty clear that we are focused on in-month positive profit in that business. And we also have our vertical integration bets, which is negative in NGOI, which is this $15 to $20 million that we've highlighted for 2026 that we're excited about. And it is really a big part of our owned audience strategy.

And then we have our long-term bets. They're more AI-related as you could imagine now, and they're not contributing to the top line today, but do hit our OpEx so far. So I would really think about it in those 4 terms. And going back to your original question, yes, SEO content business, although big, has been declining and it's much smaller today than 2 years ago.

Tim Chen

And on the agentic traffic question, I mean, I think it's a little bit hard to predict where that goes. I think it's going to vary a lot by vertical. As an example, I would speculate that in auto insurance it's going to really come down to whether carriers play ball. And then you have to think about some of the things they're worried about, right? So first is churn. If you have customers who are shopping via an agent, are they going to reshop in 6 months? And that's going to really impact LTV pretty linearly and make it a less attractive channel.

And then the second piece you've got to think about is just like the cost of quoting. I mean, it costs us a few bucks to run a quote, and then it costs the carriers a multiple of that to give a quote from an underwriting perspective. So that ratio of empty calorie quoting versus people who actually become customers is going to matter a lot. And I think without the major carriers playing ball, it's just not really going to function as a market. So that being said, we're investing in it. I think everyone's going to experiment with it and see where it goes. But it's kind of hard to say exactly how big it'll be.

Robert Zeller

Okay, great. Thanks.

Operator

Our next question comes from the line of Michael Infante with Morgan Stanley. Please go ahead.

Michael Infante

Tim, I'd be curious to just get your perspective, perhaps your conversations with investors, just in terms of how you describe the value prop of the NerdWallet platform today, particularly as some of the LLMs now are obviously coming out with personal finance functionality, probably beginning to recommend products or at least provide sponsored ads at some point in the future. So how do you just think about continuing to make NerdWallet top of mind for consumers over time?

Tim Chen

Yes, I think for us a big piece of this is the marketplace dynamic. Consumers have to often make complex decisions, especially in areas like insurance, personal loans, mortgages, where there's really a lot of risk-based pricing. And in order to do that in a compliant manner, you need a trusted marketplace that has the inventory, the pricing that's going to send you to the partner. And so that's where we're in conversations with both the model companies as well as constantly with consumers. And I think there's an opportunity to do that in an agentic world. Now, exactly what shape that takes, I think it's still being sorted out in terms of how the economics work. I think it's going to be much more liquid in some verticals and not going to change that much in others. We want to be ready for all eventualities there, so we're definitely making the investment today.

Michael Infante

Appreciate that. And John, just for a quick follow-up, I mean, performance marketing in the quarter, I think it rose $35 million year-on-year against, call it, $25 million of incremental revenue. Obviously, I understood that you had the insurance challenges, but still a lot of performance marketing intensity. As we've spoken about how you guys were still trying to optimize the performance marketing playbook, can you just sort of speak to some of the initiatives that you have in place to optimize that channel and how you think about the ability to sort of incrementally spend on performance marketing over time relative to the revenue generation? Thanks again, guys.

Jun Lee

Yes, I mean, it's related to — I mean, the one big area that we just talked about is all the initiatives we're doing on insurance, right? Building a broader carrier network and having a healthy distribution network is an area that we're very focused on. On ROAS, we're highly focused on making sure that we are in-quarter positive in our marketplace. Performance marketing isn't just SEO. There are multiple different channels that we are developing, including social and other channels that we're highly focused on.

And then the other part of this is that in the math that you're doing, Michael, a lot of our NGOI investments are actually flowing through there as well. So some of the lift you're not seeing there is because of the NGOI investments — sorry, the IR investments that we're making. A lot of that $15 to $20 million is also flowing there, which does show like it's not being efficient, just to factor that in as you're thinking about our efficiency going forward.

Michael Infante

Appreciate it.

Operator

Thank you. There are no further questions. I will now pass back to management for closing remarks.

Tim Chen

Thanks, everyone, for your questions. Our mission of providing clarity for all of life's financial decisions continues to guide us. I want to thank our Nerds for their dedication to that mission and our shareholders for your continued support. We're encouraged by the progress we're making and excited about the opportunity ahead, earning the trust of the consumers and small businesses we serve and keeping them coming back to NerdWallet.

Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

This live transcript is auto-generated without human intervention or review.