What changed in this filing

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Item 1. Business

2023-02-23 compared with 2022-03-24 · 65 added, 89 removed, 286 unchanged (35% of the section changed)

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At NerdWallet, we are leveraging this transformation to democratize access to trustworthy financial guidance—ultimately helping to improve the financial well-being of consumers and the financial services industry as a whole.

As the financial services industry becomes more fragmented and complex, we believe our value proposition as a trusted, independent platform for consumers increases.

As the financial services industry becomes more fragmented and complex, we believe the need for trustworthy and knowledgeable financial guidance increases.

Our objective remains the same:

serve as a trusted financial ecosystem that consumers and SMBs can rely on to learn about various financial topics, shop for products, connect their data and receive data-driven nudges..

We deliver guidance to consumers through educational content, tools and calculators, product marketplaces and the NerdWallet app.

Our platform delivers unique value across many financial products, including credit cards, mortgages, insurance, SMB products, personal loans, banking, investing and student loans, and has grown to include the United Kingdom (UK) and Canadian markets, with plans for further international expansion.

Our platform delivers unique value across many financial products, including credit cards, mortgages, insurance, SMB products, personal loans, banking, investing and student loans, and has grown to include the United Kingdom (UK), Canadian and, more recently, Australian markets, with further international expansion as an opportunity for future growth.

Across every touchpoint, the cornerstone of our platform is our consumers’ trust in the independent, objective and relevant guidance we provide, free of charge.

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To meet the standards of more informed consumers, financial services providers in turn must engage in healthy competition for consumer mindshare and develop better financial products, further improving the outcomes for consumers.

NerdWallet’s ability to serve consumers and financial services providers hinges on our position as an independent, unbiased resource.

The core strength of our platform is the trust that we build with consumers and the tailored and personalized recommendations we deliver via our data science models.

Our consumer-first values and consumer-centric mission permeate everything we do and have been key to building and maintaining trust — it’s the “consumer, company, team, self” value that guides our decision making and product development.

Across the company, Nerds engage every day with our values and mission to democratize trusted, accessible guidance and tools, leveling the playing field for everyone.

We believe these values will benefit us over the long-term as we build on our leadership as the place consumers turn to first for financial guidance.

We have already achieved massive, top-of-funnel reach.

By adhering to our consumer-first value, we will not only empower consumers to make better financial decisions, but also help our financial services partners more effectively find new customers well-suited to their products.

For 13 years, NerdWallet has strived to provide consumers with clarity for all of their financial decisions:

cutting through jargon, parsing terms and conditions, and simplifying complex ideas so consumers can make informed decisions about their money and pursue lives well-spent.

As a mission-driven, consumer-first company, we have long had a company culture oriented towards being responsible and socially conscious.

In 2022, we published our first-ever Environmental, Social and Governance (ESG) report to formalize our commitments and highlight how we achieve our goals with integrity.

Our commitments are a natural extension of our mission and while ESG considerations have been part of the NerdWallet story since our inception, our 2022 ESG report has allowed us to articulate our vision and priorities clearly, and it will ensure we hold ourselves accountable for progress on critical ESG initiatives.

Our revenue was $538.9 million and $379.6 million for 2022 and 2021, respectively, representing year-over-year growth of 42%.

We generated a net loss of $42.5 million for 2021, as compared to net income of $5.3 million for 2020.

We generated a net loss of $10.2 million for 2022, which decreased 76% from a net loss of $42.5 million for 2021.

Industry Trends in Our Favor

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The work of our editorial team as a whole is not only a key reason consumers trust our brand and turn to us for many of their financial questions, it is also the foundation of our personalized guidance and our “nudges.” The guidance developed by our editorial team is codified by our product team to create the insights surfaced across our platform.

It’s through this unique combination of human-powered guidance and machine learning capabilities, that we can provide consumers with high-quality and personalized insights.

It’s through this unique combination of human-powered guidance and machine learning capabilities, that we can provide consumers with high-quality and personalized insights, which help us advance toward being a trusted financial ecosystem, a single platform consumers and SMBs rely on to learn about various financial topics, shop for products, connect their data and receive data-driven nudges.

This trusted guidance has enabled us to build a large, well-informed audience, many of whom are ready to transact.

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We make it easy for our Registered Users to stay on top of their money by centralizing many of their product decisions in one place.

A Registered User is defined as an individual who has created an account on the NerdWallet platform, and is a standalone metric calculated independently from whether an individual accesses our platform in a given period.

Consumers can get a holistic view of their finances, and hone in on specific details about their spending and saving patterns across accounts.

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We quickly adapt to the evolving financial interests of consumers and can easily add coverage in new areas.

At the beginning of the COVID-19 pandemic, we added a COVID hub that covered topics such as the Paycheck Protection Program (PPP) loans and their forgiveness, unemployment benefits, coverage of debt relief packages (e.g.

student loan forbearance), life insurance and personal loans.

Throughout 2021, we augmented our coverage to address the evolving circumstances around student loan forbearance and forgiveness, the re-emergence of travel, and expanding digital investment categories such as non-fungible tokens.

Throughout 2022, our Content Nerds reinforced trust during another period of macroeconomic volatility, providing guidance across a variety of pressing topics, including the impact of interest rate hikes on credit cards, mortgages, bank accounts and personal loans;

how to save at the gas pump;

the return to travel and student loan forbearance and repaying student debt.

Benefits of Our Platform for Our Partners

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As a result, we believe that our financial services partners greatly benefit from placement on our Best-of Awards lists, in our reviews and within other NerdWallet content.

In fact, over 60% of the financial services providers who won a 2021 Best-of Award promoted their designation in their own marketing efforts.

In fact, nearly 60% of the financial services providers who won a 2022 Best-of Award promoted their designation in their own marketing efforts.

• Exposure to Consumers Seeking a Broader Range of Financial Products.

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As a result, consumers are exposed to our financial services partners’ products at various points in their financial journey, increasing the value of our platform both to consumers and financial services partners.

Our Strengths

We have five core strengths that provide us with a competitive advantage:

• Trusted Platform for Consumer and SMB Financial Guidance.

We believe our strategy of optimizing guidance for the consumer, as opposed to transactions per consumer, will benefit us over the long-term as we build on our leadership as the go-to destination platform for financial guidance.

We have maintained an unwavering commitment to providing consumers with free and trusted financial guidance for over a decade, including unbiased recommendations and decision-making tools.

Additionally, over 70% of all traffic to NerdWallet in 2021 came from direct or unpaid traffic sources, further demonstrating the value of our brand, organic marketing efforts and strategy.

• Massive Top-of-the-Funnel Reach.

The foundation of our platform is a direct, consumer-first approach, combined with deep domain expertise.

This drives superior brand awareness and traffic to our platform.

During 2021, we hosted an audience comprised of an average of 19 million MUUs, up 23% from 2020.

Our platform delivers financial product reviews and decision-making tools across a broad range of topics to consumers, free of charge.

This approach powers large-scale traffic acquisition capabilities at the top of the funnel in both unpaid and paid channels.

• Unique Breadth of Financial Offerings Under One Brand.

We are a one-stop destination for consumer and SMB financial guidance, covering credit cards, mortgages, insurance, SMB products, personal loans, banking, investing and student loans.

This makes it easy for consumers to compare solutions from a wide array of providers across multiple products to meet their diverse needs.

As a result, we experience a high level of engagement and repeat activity on our platform.

We do not offer our own financial products, but instead surface offers from hundreds of top-quality financial services providers.

Therefore, we remain a trusted source of information and insight for consumers and are complementary, not competitive, with our financial services partners.

• Founder-Led Management Team Focused on Continual Innovation.

Our co-founder, Chief Executive Officer and Chairman of our Board of Directors, Tim Chen, started NerdWallet in 2009 to bring clarity to all of life’s financial decisions.

We grew to approximately $44 million of revenue in 2014 with no outside equity capital.

Subsequently, we have increased revenue at a compound annual growth rate (CAGR) of 36% per year from 2014 to 2021.

Today, we continue to maintain a mindset of capital and financial discipline balanced with growth-oriented investing.

• Platform That Drives and Benefits from Strong Network Effects.

Our Growth Pillars

We believe our ability to execute against our strategy and invest in our three pillars of growth- “Land and Expand,” “Vertical Integration,” and “Registrations and Data-Driven Engagement''- helps us advance toward becoming a trusted financial ecosystem.

With our trusted financial ecosystem, we will provide a single platform that consumers and SMBs can rely on to learn about various financial topics, shop for products, connect their data and receive data-driven nudges.

This will provide our users with more clarity and confidence around their finances and help grow and diversify our business through reoccurring engagement and revenue.

• Land and Expand.

Our trusted brand and organic reach keep us well-positioned to land and expand in new financial areas and geographies.

As we look to add capabilities within our existing verticals and enter new verticals like Medicare and cryptocurrency, our brand paves the way for us to meet consumer demand.

By improving the quality of our guidance within existing verticals, we believe we can enhance the experience for our users and continue to build recurring revenue streams.

Our approach for new vertical expansion is well-defined—provide trusted content and tools to attract organic traffic, then leverage our brand and marketing expertise to accelerate growth.

Expansion to new verticals allows us to address more of our consumers’ needs and increases our potential for cross-selling, thereby making existing verticals and marketing channels more efficient.

We also believe there is significant potential for us to grow the global reach of our platform.

Our success in the United States and our strong brand give us a solid foundation to expand our international footprint in markets like the United Kingdom in 2020, Canada in 2021 and most recently, Australia.

• Vertical Integration.

Our distinct ability to combine our trusted brand and massive top-of-funnel reach with best-in-class user experiences helps us vertically integrate in areas and topics that capture re-occurring revenue.

For example, in 2020, we acquired Fundera to improve our offering for SMBs.

Upon integration, we combined NerdWallet’s top-of-funnel strength with Fundera’s monetization strategy, which added a recurring revenue tail.

In 2022, our SMB vertical achieved triple digit year-over-year growth as they successfully directed organic traffic through an efficient funnel.

Given this success, we furthered our vertical integration efforts in 2022 through our acquisition of On the Barrelhead, a loan matching platform that provides consumers and SMBs with product recommendations.

Similar to the vertical integration approach utilized with Fundera, we expect that by pairing On the Barrelhead’s loan matching platform with NerdWallet’s trusted brand and massive reach, we can offer our users more personalized and compelling recommendations, leading to better customer experiences and improved monetization.

• Registration and Data-Driven Engagement.

Critical to our aspiration of delivering consumers and SMBs with a trusted financial ecosystem is our ability to register and engage users - in turn allowing us to drive repeat visits, collect data and provide users with unique insights via nudges.

We are focused on growing the traffic and engagement on our platform, as well as increasing our number of Registered Users, who have a lifetime revenue value five times greater than our non-registered users and more than twice the transactions and sessions, on average.

We have made significant progress in our efforts, and since 2016, we have started converting unique users into Registered Users that utilize our consumer decisioning tools and increased machine learning functionality.

We had Registered Users of 8 million as of December 31, 2020, over 10 million as of December 31, 2021 and 14 million as of December 31, 2022.

Full-year Registered User revenue increased over 80% from 2021 to 2022.

We will continue to invest in building efficient and scalable technical capabilities to deliver personalized guidance and nudge consumers, at the right time, to take action based on our advice.

With better machine learning, we believe our recommendations and contextual nudges will encourage repeat engagement and user registration on our platform.

As more consumers use our platform and engage with our extensive financial guidance and tools, our consumer and transaction database grows and our product recommendations yield higher success rates.

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This creates a unique value proposition for all constituents in our ecosystem, making our platform more valuable.

Our Growth Strategies

We intend to continue investing in and leveraging our key strengths to expand our business:

• Grow Our Traffic and Increase Engagement.

In 2021, we had an average of 19 million MUUs, an increase of 23% compared to 2020.

Since 2016 , we have started converting unique users into Registered Users that utilize our consumer decisioning tools and increased machine learning functionality.

We had over 5.5 million Registered Users as of December 31, 2019, 8 million Registered Users as of December 31, 2020 and over 10 million Registered Users as of December 31, 2021.

We will continue to invest in building efficient and scalable technical capabilities to deliver personalized guidance and nudge consumers, at the right time, to take action based on our advice.

With better machine learning, we believe our recommendations and contextual nudges will encourage repeat engagement and user registration on our platform.

• Grow Within Existing and New Verticals .

Our brand is a natural extension as we land and expand by adding capabilities within our existing verticals and by entering new verticals to provide a broad range of tools for consumers.

By improving the quality of our guidance within existing verticals, we believe we can enhance the experience for our users and continue to build recurring revenue streams.

For example, in the fourth quarter of 2020, we acquired Fundera, which allows us to both improve our offering for SMBs by providing a human touch during one of their biggest financial decisions and build a deeper relationship to anticipate future needs.

Upon integration, we combined NerdWallet's top-of-funnel strength to increase organic SMB traffic with Fundera’s monetization strategy, which added a recurring revenue tail.

We can apply this playbook to other existing verticals that have relationship-driven or renewal revenue models.

Our approach for new vertical expansion is well-defined — provide trusted content and tools to attract organic traffic, then leverage our brand and marketing expertise to accelerate growth.

Expansion to new verticals allows us to address more of our consumers’ needs and increases our potential for cross-selling, thereby making existing verticals and marketing channels more efficient.

• Expand Geographically.

We believe there is significant potential for us to grow the global reach of our platform.

Our success in the United States and our strong brand give us a solid foundation to expand into other geographies.

Following our 2020 acquisition of Know Your Money (KYM), an online provider of financial guidance and tools in the UK, KYM was rebranded as NerdWallet UK.

By deploying our playbook, organic traffic to the NerdWallet UK site increased from approximately 10,000 monthly sessions pre-acquisition to approximately 130,000 monthly sessions within one year of acquisition.

This early proof point has encouraged us to invest in further global expansion, and we expanded organically into Canada during 2021.

• Broaden and Deepen our Partnerships with Financial Services Providers.

We partner with banks, insurance agencies, financial advisors, loan brokers and other financial services providers.

As we deepen our relationships with our financial services partners, our pricing often increases as they see greater value in being matched with the well-informed consumers who use our platform.

We will continue to identify new financial services partners, as well as vertical expansion opportunities with existing financial services partners to optimize our platform for consumers.

Our Market Opportunity

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financial services digital advertising spend, which is expected to be more than $32 billion in 2022 and has been growing at double digit rates annually, according to eMarketer.

Additionally, IDC estimates global financial services advertising spend to be approximately $73 billion in 2021, and we believe that we will be able to increasingly address this global spend as we grow internationally.

As digital advertising spend continues to increase as a percentage of overall advertising spend, we expect our addressable market opportunity to grow along with it.

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As a result of this offline-to-online shift, offline sales commission dollars will be reallocated to better align with the growth and importance of digital channels.

To illustrate the growth potential of our addressable market, for example, the life insurance industry in 2019 spent $9 billion on advertising, of which $2 billion was digital advertising — yet, $13-$15 billion in commissions were still paid to agencies.

As financial services providers modernize their approach to sales commissions and related compensation, we expect that our addressable market opportunity will continue to grow.

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• For some loans products, we operate a prequalification system that assists consumers through the underwriting process.

Additionally, On the Barrelhead’s loan-matching platform unlocks more personalized and compelling recommendations, leading to better customer experiences and improved monetization.

Our technology is flexible enough to engage with financial services partners in ways that align with each industry’s unique requirements and business practices.

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Our mission, to provide clarity for all of life’s financial decisions, is rooted in our belief that both individual consumers and SMBs should be empowered to make financial decisions with confidence.

As we grow and scale following our entry into the public markets, we are committed to developing an Environmental, Social and Governance (ESG) strategy that reflects our unique position as a trusted brand for personal finance.

We look forward to enhancing our disclosures for ESG and engaging with our stakeholders as we continue to make progress on this crucial initiative.

As a mission-driven, consumer-first company, we have long had a company culture oriented towards being responsible and socially conscious.

In 2022, we published our first-ever Environmental, Social and Governance (ESG) report to formalize our commitments and highlight how we achieve our goals with integrity.

You can find the report at https://www.nerdwallet.com/environmental-social-governance .

Our ESG strategy is founded on three pillars:

• Achieving Our Vision, or the work we do to create a world in which everyone makes financial decisions with confidence.

We know that not everyone has access to the information they need to make confident decisions, that not everyone is adequately served by financial incumbents, and addressing these inequities is endemic to our DNA.

• Investing in Our Nerds, or the work we do to provide our talented Nerds with an equitable and inclusive workplace in which they can thrive professionally and personally.

Our Nerds are eager to make an impact, and we want to empower them in pursuit of our shared and individual goals.

• Building a Socially Responsible Business, or the work we do to ensure that our business practices protect and improve the lives of our consumers, our Nerds, and our wider world.

Employees and Human Capital

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We’re consistently recognized as a Fortune “Best Place to Work” due to our competitive employee benefits, commitment to employee growth and empowerment, and our flexible workplace environment.

Response to COVID-19 and Employee Safety

At the outset of the COVID-19 pandemic in the first quarter of 2020, we closed our San Francisco office and transitioned all of our employees to a remote work environment in order to mitigate the spread of COVID-19 and comply with local shelter-in-place policies.

Subsequently, in December 2020, we adopted a remote-first policy that allows for almost all roles to be remote on an ongoing basis.

Many of our employees transitioned or were hired into permanent remote status and as of December 31, 2021 are not required to report to an office for work.

While we maintain offices in San Francisco, California, Scottsdale, Arizona, New York, New York and Norwich, UK, we continue to monitor COVID-19 pandemic developments and local conditions to adjust our policies accordingly.

For example, in response to the recent surge of COVID-19 cases arising from the spread of the omicron variant, we closed our U.S.

offices on a temporary basis while leaving our UK office open, but with reduced capacity.

Understanding that our employees may need additional support during the COVID-19 pandemic, we introduced new benefits:

access to on-demand mental health support through a third-party service provider and adding mental health days to our company calendar.

In addition, we encouraged employees to take advantage of existing flexible time off policies and work with their teams to arrange for a flexible work schedule.

Diversity, Equity and Inclusion

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For our Nerds, this means fostering an inclusive culture that allows all Nerds to be their authentic selves, grow their skills, contribute, and thrive with the confidence of belonging.

Our three-year DEI goal involves continually increasing representation among women in leadership and women in tech, and in the U.S.

across underrepresented races and ethnicities.

Our key initiatives include:

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NerdOut!, NerdParents, NerdWomen, Nerds of Color and NerdWallet Women in Data & Engineering.

• Working to Obtain a Black Equity at Work Certification from Management Leadership for Tomorrow (MLT).

The certification is a three-year process and we have developed a data-driven and comprehensive plan to achieve certification.

• We received Plan Approved status by Black Equity at Work from Management Leadership for Tomorrow (MLT).

This rigorous three-year route to certification features a data-driven and comprehensive plan to drive and support racial equity at NerdWallet.

• We use a third-party platform to analyze our employee salaries for gaps based on race or gender twice a year.

• Offering Learning and Activism Days to inspire and encourage Nerds to grow and give back to their communities.

In 2022, we launched our First Annual Nerds Pay It Forward Day, a dedicated volunteer day to encourage all NerdWallet employees to give back to their communities.

Talent Attraction, Recruitment and Retention

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• Training, Learning and Development - In line with our Relentless Self-Improvement value, we encourage our employees to seek out professional development opportunities and we provide them with a yearly education stipend.

In addition, we provide in-house opportunities for career development, including in-depth training as part of our New Manager Lab.

In addition, we provide in-house opportunities for career development, including in-depth training as part of our New Manager Lab and our Career Accelerator Program (CAP) and Leadership Empowerment Accelerator Program (LEAP) aimed to increase representation of underrepresented races and ethnicities, women in leadership and women in tech and propel underrepresented women into leadership positions.

• Compensation - NerdWallet offers market-competitive compensation to attract employees and a pay-for-performance philosophy to engage and retain our employees.

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For additional information, see the section titled “Risk Factors—Risks Related to Our Technology, Security and Intellectual Property—Failure to protect or enforce our intellectual property rights could harm our business, financial condition and results of operations.”

We market and provide our products and services in heavily regulated industries through a number of different channels across the U.S.

As a result, aspects of our business are potentially subject to a variety of U.S.

and UK laws and regulations, including:

We market and provide our products and services in heavily regulated industries through a number of different channels across the U.S.,the UK and Canada.

As a result, aspects of our business are potentially subject to a variety of U.S., UK and Canadian laws and regulations, including:

• The Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act (FCRA), Fair and Accurate Credit Transactions Act of 2003, the Fair Housing Act, the Real Estate Settlement Procedures Act, and similar state laws, all of which place certain restrictions on the manner in which mortgages and other consumer loans are marketed and originated, and some of which impose restrictions on the amount and nature of fees that may be charged to lenders and real estate professionals for providing or obtaining consumer loan requests;

• The Dodd-Frank Wall Street Reform and Consumer Protection Act, which imposes, among other things, a broad prohibition on Unfair, Deceptive and Abusive Acts and Practices (UDAAPs) in connection with consumer financial products and services, limitations on fees charged by mortgage lenders, and requirements related to mortgage disclosures and is enforced by the Consumer Financial Protection Bureau and state regulatory authorities;

• The Federal Trade Commission Act (FTC Act), which, among other things, imposes a broad prohibition on Unfair and Deceptive Acts and Practices in or affecting commerce, and is enforced by the Federal Trade Commission;

• State laws that impose prohibitions on Unfair, Deceptive and Abusive Acts and Practices similar to the Dodd-Frank Act and FTC Act’s prohibitions;

• Federal and state licensing laws;

• Federal and state laws, which impose restrictions on activities conducted through telephone, mail, email, mobile device or the Internet, including the Telemarketing Sales Rule, the Telephone Consumer Protection Act, and the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003;

• Federal, state and provincial licensing laws;

• Federal and state laws, which impose restrictions on activities conducted through telephone, mail, email, mobile device or the Internet, including the Telemarketing Sales Rule, the Telephone Consumer Protection Act, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, and Canada’s Anti-Spam Legislation (CASL);

• Federal and state laws relating to offering of credit repair services to consumers, including such laws that impose restrictions on the usage and storage of consumer credit information such as the Credit Repair Organizations Act and the FCRA;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business