What changed in this filing

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Item 1A. Risk Factors

2025-02-19 compared with 2024-02-20 · 55 added, 46 removed, 647 unchanged (14% of the section changed)

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• We compete in a highly competitive and rapidly evolving market with a number of other companies and we face the possibility of new entrants disrupting our market over time.

• Our recent international expansion subjects us to additional costs and risks which could harm our business, revenue and financial results, and our continued international expansion may be unsuccessful.

• Our international expansion subjects us to additional costs and risks which could harm our business, revenue and financial results, and our continued international expansion may be unsuccessful.

• We are actively investing in new product offerings, technologies, and minority investments, with plans to further increase these investments in the future.

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Risks Related to Our Business

We depend on relationships with our financial services partners, and any adverse changes in their financial strength, tightening of their underwriting standards or adverse changes to their online marketing strategy would adversely affect our business, financial condition and results of operations.

Our success depends on the financial strength and underwriting standards of credit card issuers, lenders, insurers and other participants on our platform.

We depend on relationships with our financial services partners for our historical businesses, and any adverse changes in their financial strength, tightening of their underwriting standards or adverse changes to their online marketing strategy would adversely affect our business, financial condition and results of operations.

A significant portion of our success depends on the financial strength and underwriting standards of credit card issuers, lenders, insurers and other participants on our platform.

If our financial services partners experience financial difficulties, they may cease participating on our platform or tighten underwriting standards, which would result in fewer opportunities for us to earn fees from matching consumers with them.

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Failure to maintain our reputation and brand recognition and attract and engage users in a cost-effective manner would harm our business, financial condition and results of operations.

In order to attract consumers to our platform, convert these consumers into matches with financial services partners and generate repeat visits, we must market our platform and maintain consumer trust.

In order to attract consumers to the products we provide and our platform, convert these consumers into matches with financial services partners and generate repeat visits, we must market our platform and maintain consumer trust.

Promoting and maintaining our brand requires the expenditure of considerable money and resources for online and offline marketing and advertising, the continued provision of high-quality products and services that meet user needs, the ability to maintain consumers’ trust, and the ability to successfully differentiate our brand, products and services from those of our competitors.

Brand recognition is a key differentiating factor between us and our competitors.

We believe that continuing to build and maintain the recognition of our brand is important to achieving increased demand for the products we provide.

We believe that continuing to build and maintain the recognition of our brand is important to achieving increased traffic for our platform and demand for the products we provide.

Accordingly, we have spent, and expect to continue to spend, significant amounts on, and devote significant resources to, branding, advertising and other marketing initiatives, which may not be successful or cost-effective.

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Instead, we view this product as a means to build consumer trust by offering a compelling product designed for those who want to build or improve their credit.

We expect that as these consumers qualify for non-secured credit cards, they will transact on our site, allowing us to earn fees from matching them with financial services partners.

In 2024, the launch of NerdWallet+, a membership experience focused on providing additional services and rewards to consumers who join for an annual fee, is a program to build consumer trust designed to reward consumers for making healthy financial decisions, but it is not anticipated to generate significant profits.

However, the focus on building long-term trust and consumer engagement over short-term revenue opportunities may not always yield the expected long-term benefits, potentially resulting in harm to user traffic, engagement, business, financial condition, and operational results.

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In addition, it would negatively impact search engine ranking, user experience and our reputation with our financial partners.

Furthermore, in the event that any of our agreements with our third-party service providers are terminated, we may experience significant costs or downtime in connection with the transfer to, or

the addition of, new hosting providers.

Furthermore, in the event that any of our agreements with our third-party service providers are terminated, we may experience significant costs or downtime in connection with the transfer to, or the addition of, new hosting providers.

Although alternative providers could host our platform on a substantially similar basis, such transition could potentially be disruptive and we could incur significant costs in connection therewith.

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If any of our competitors are more successful than we are at attracting and engaging users or financial services partners, our business, financial condition and results of operations could be materially and adversely affected.

Our recent international expansion subjects us to additional costs and risks which could harm our business, revenue and financial results, and our continued international expansion may be unsuccessful.

Our expansion into mortgage brokering presents additional risks.

Our recent acquisition of NDL in October 2024 and our expansion into mortgage brokerage services introduce additional risks.

We must comply with complex federal and state regulations governing mortgage brokerage operations, including licensing requirements for both the entity and individuals in the states where NDL operates.

Maintaining and expanding relationships with wholesale lenders and credit facility providers is critical to NDL’s ability to offer competitive loan products.

Successfully integrating NDL’s operations, technology, and personnel into NerdWallet’s broader platform while ensuring compliance with laws such as the GLBA and RESPA presents execution challenges.

Our limited experience operating a mortgage brokerage business increases the importance of attracting and retaining licensed mortgage professionals while ensuring adherence to SAFE Act licensing requirements and evolving industry regulations.

The CFPB and federal agencies such as the FHA and the VA continue to expand enforcement actions in mortgage origination, requiring robust compliance and risk management practices.

Additionally, operating a direct mortgage brokerage alongside our existing mortgage marketplace comparison platform creates potential conflicts of interest that must be carefully managed to maintain transparency and trust with consumers and lending partners.

Mortgage brokerage operations are highly sensitive to interest rate fluctuations, housing market conditions, and changes in wholesale lender policies, all of which could impact loan approvals, funding availability, and revenue generation.

Given the competitive and highly regulated nature of the industry, our success will depend on effective execution, compliance, and maintaining consumer trust while navigating evolving market conditions.

If we fail to effectively manage these risks, integrate NDL’s operations, or comply with applicable regulatory requirements, our business, financial condition, and results of operations could be materially and adversely affected.

Our international expansion subjects us to additional costs and risks which could harm our business, revenue and financial results, and our continued international expansion may be unsuccessful.

Historically, all of our business has been generated in the U.S.

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If we are unable to successfully manage any of these risks, our existing international operations and any future international expansion could be compromised, which could harm our business, financial condition and results of operations.

We are actively engaged in significant investments in new product offerings, technologies, and minority investments, with plans to further increase these investments in the future.

However, these endeavors inherently carry risks, and the realization of expected benefits is not guaranteed.

Our substantial investments encompass the development of various products, technologies, and minority investments, including our mobile application, personal finance management tools, data infrastructure, and recommendation engine.

We are committed to continuing substantial resource allocation for the creation of new technologies, tools, features, services, and product offerings.

Anticipating an increase in investments in the near term, we acknowledge that this may impact our margins.

Following the acquisition of On the Barrelhead (OTB) in the third quarter of 2022, we plan to continue investing in developing and expanding new offerings using the acquired technology.

Moreover, we plan to allocate substantial resources to grow the verticals on our platform, increase our scale, and expand into additional geographic markets.

However, the efficient and effective allocation of our development budget on commercially successful and innovative technologies is crucial for realizing the expected benefits of our strategy.

The high degree of risk associated with our new initiatives includes limited or no prior development or operating experience in the strategies, technologies, and regulatory requirements involved.

There is no assurance of sustained consumer demand or sufficient market acceptance to generate revenue that offsets new expenses or liabilities associated with these investments.

Competitive dynamics pose a risk, as product offerings developed by others may render our offerings noncompetitive or obsolete.

Furthermore, the development efforts for new product offerings and technologies could distract management attention from current operations and redirect capital and resources from our established products.

Even if successful, regulatory authorities may impose new rules or restrictions in response to our innovations, potentially increasing expenses or hindering successful commercialization.

The failure to realize the expected benefits of these investments may adversely impact our business, financial condition, and operating results.

We are, and intend to continue, developing new products and services, and our failure to accurately predict their demand or growth could have an adverse effect on our business.

We are, and intend in the future to continue, investing significant resources in developing new tools, features, services, products and other offerings, including offerings of mortgage, other lending and financial products.

Risks from our innovative initiatives include those associated with potential defects in the design and development of the technologies used to automate processes, misapplication of technologies, the reliance on data that may prove inadequate, and failure to meet client expectations, among others.

As a result of these risks, we could experience increased claims, reputational damage, or other adverse effects, which could be material.

Additionally, we can provide no assurance that we will be able to develop, commercially market and achieve acceptance of our new products and services.

In addition, our investment of resources to develop new products and services may either be insufficient or result in expenses that are excessive in light of revenue actually originated from these new products and services.

The profile of potential clients using our new products and services may not be as attractive as the profile of the clients that we currently serve, which may lead to higher levels of delinquencies or defaults than we have historically experienced.

Failure to accurately predict demand or growth with respect to our new products and services could have an adverse impact on our business, and there is always risk that these new products and services will be unprofitable, will increase our costs or will decrease our operating margins or take longer than anticipated to achieve target margins.

Further, our development efforts with respect to these initiatives could distract management from current operations and could divert capital and other resources from our existing business.

If we do not realize the expected benefits of our investments and development of new products and services, our business may be harmed.

Our financial performance is dependent on our ability to successfully refer users to financial services partners, and these partners are not precluded from offering products and services outside of our platform.

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We track certain operational metrics, which are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and adversely affect our stock price, business, results of operations, and financial condition.

We track certain operational metrics, including metrics such as Monthly Unique Users (MUUs), which may differ from estimates or similar metrics published by third parties due to differences in sources, methodologies, or the assumptions on which we rely.

We track certain operational metrics, which may differ from estimates or similar metrics published by third parties due to differences in sources, methodologies, or the assumptions on which we rely.

Our internal systems and tools are subject to a number of limitations, and our methodologies for tracking these metrics may change over time, which could result in unexpected changes to our metrics, including the metrics we publicly disclose.

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While these numbers are based on what we believe to be reasonable estimates of our metrics for the applicable period of measurement, there are inherent challenges in measuring how our platform is used.

For example, the number of MUUs on our platform is based on activity associated with a unique device identifier during a certain time period.

Certain individuals may have more than one device and therefore may be counted more than once in our count of MUUs.

Limitations or errors with respect to how we measure data or with respect to the data that we measure may affect our understanding of certain details of our business, which could affect our long-term strategies.

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Risks Related to Our Industry and the Consumer Finance Economy

Macroeconomic developments such as inflationary conditions and a rising interest rate environment in the U.S.

Macroeconomic developments such as inflationary conditions and the current interest rate environment in the U.S.

have caused macroeconomic uncertainty and may have an adverse impact on our business, results of operations and our vertical diversification strategy.

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After the regional bank failures that began in the spring of 2023, however, increasing issuer conservatism caused our credit card vertical revenue to begin to decline without any offsetting overperformance in another vertical.

Continued inflationary conditions, higher interest rates, and a tightening of credit markets would pose challenges to our business and may impact many of our verticals and may not be offset by performance in other verticals.

Continued inflationary conditions, high interest rates, and a tightening of credit markets would pose challenges to our business and may impact many of our verticals and may not be offset by performance in other verticals.

Further, an unexpected or prolonged economic downturn, or rapidly rising or sustained high unemployment, would adversely affect our financial condition and results of operations.

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Economic factors such as increased interest rates, slow economic growth or recessionary conditions, the pace of home price appreciation or the lack of it, changes in household debt levels, and increased unemployment or stagnant or declining wages can affect the loan markets by impacting the number of loan applications and loan approval rates which can adversely affect our business.

In 2022 and 2023 the U.S.

Federal Reserve increased the benchmark federal funds rate many times in an attempt to rein in inflation.

This policy change has led to a softening of the housing market and reduced consumer demand for mortgage refinancings and originations on our platform.

At the same time, increased conservatism by our financial services partners following the regional bank failures in the spring of 2023 led to a tightening of underwriting standards by our financial services partners.

Further interest rate increases and continued conservatism by our financial services partners would negatively impact our loans and SMB product verticals by both reducing demand for loan products and reducing the supply of credit available, making it more difficult for us to match consumers and small and mid-sized businesses with financial services products.

Although the U.S.

Federal Reserve decreased the benchmark federal funds rate in 2024, we expect that future interest rate increases and continued conservatism by our financial services partners would negatively impact our loans and SMB product verticals by both reducing demand for loan products and reducing the supply of credit available, making it more difficult for us to match consumers and small and mid-sized businesses with financial services products.

Risks Related to Regulation

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the marketing of mortgages, credit cards, personal loans, insurance, and other financial products and services;

privacy and data security;

the manner in which we conduct our loan origination and servicing businesses and the fees that we may charge;

the collection, use, retention, protection, disclosure, transfer and other processing of consumer personal information;

investment advisory services;

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We also anticipate that U.S.

federal regulators relevant to our business, such as the Federal Trade Commission and the Consumer Financial Protection Bureau, may pursue more enforcement actions.

federal regulators relevant to our business, such as the FTC and the CFPB, may pursue more enforcement actions.

In addition, the government and regulatory authorities in the UK, Canada, Australia and U.S.

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If we are unable to maintain and grow such data, we may be unable to provide consumers with a platform experience that is relevant, efficient and effective, which could adversely affect our business, financial condition and results of operations.

There are numerous federal, state and local laws and regulations regarding data privacy and the storing, sharing, use, processing, disclosure and protection of personal information and other user data, the scope of which are changing and subject to differing interpretations.

There are numerous federal, state and local laws and regulations regarding data privacy and the collection, storing, sharing, use, processing, disclosure and protection of personal information and other user data, the scope of which are changing and subject to differing interpretations.

In addition, as we continue to expand internationally, we are subject to foreign data privacy and security laws and regulations.

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Most of the jurisdictions in which we operate have established their own data privacy and security legal frameworks.

For example, in the U.S., we are subject to the Gramm–Leach–Bliley Act (GLBA) which governs non-public personal information of individuals who obtain financial products or services from financial institutions primarily for personal, family or household purposes, as well as the Fair Credit Reporting Act (FCRA) which generally governs the collection of credit information and access to credit reports.

For example, in the U.S., we are subject to the GLBA which governs non-public personal information of individuals who obtain financial products or services from financial institutions primarily for personal, family or household purposes, as well as the Fair Credit Reporting Act (FCRA) which generally governs the collection of credit information and access to credit reports.

These laws restrict the collection, use, storage and disposal of information about individuals that we may collect during the provision of our products and impose certain disclosure obligations on us.

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Certain of our products that are not otherwise subject to the GLBA or FCRA may be subject to additional laws and regulations.

For example, the California Consumer Privacy Act (CCPA) created new data privacy rights for California-resident users that were expanded when the California Privacy Rights Act (CPRA) went into effect

In addition, a growing number of states have passed or are expected to pass their own respective privacy laws.

For example, the CCPA created new data privacy rights for California-resident users that were expanded when the California Privacy Rights Act went into effect in 2023.

In addition, a growing number of states have passed

or are expected to pass their own respective privacy laws.

These laws, as well as any associated regulations, create a patchwork that poses challenges for our business and may increase our operating costs and potential liability (particularly in the event of a data breach), delay or impede the development of new products, and have a material adverse effect on our business, including how we use information about individuals, our financial condition and the results of our operations or prospects.

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In the aftermath of the UK’s withdrawal from the EU in January 2020 (an event commonly referred to as Brexit), there was uncertainty with regard to the regulation of data protection in the UK.

Since then, the UK has undergone efforts to introduce post-Brexit data protection reform in the form of the Data Protection and Digital Information (No.

2) Bill (the “Bill”) which is intended to supersede the UK’s version of the GDPR.

As of December 2023, the Bill was at the Committee Stage of the House of Lords and further progress is expected during the course of 2024.

While the Bill has largely remained consistent with the spirit of the EU’s GDPR, there are few instances where changes have been made, and more changes are possible during the course of the legislative process.

Since then, the UK underwent efforts to introduce post-Brexit data protection reform in the form of the Data Protection and Digital Information (No.

2) Bill which is intended to supersede the UK’s version of the GDPR.

The Data Protection and Digital Information (No.

2) Bill, however, did not complete before Parliament was dissolved on May 24, 2024 and is no longer being progressed.

In October 2024, the House of Lords conducted the first reading of a new legislation – the Data (Use and Access) Bill (the Bill).

Although less extensive than the previous government’s proposed legislation, the new Bill still envisages a significant number of changes to UK data protection law.

As a result, we may face challenges in addressing and implementing the requirements of the proposed new law in light of uncertainty over its interpretation and application to data transfer, privacy, data protection, and information security in the UK, and may incur significant costs and expenses in an effort to do so.

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We do not have employment agreements with executives or other key personnel that require them to continue to work for us for any specified period and, therefore, they could terminate their employment at any time.

We depend on our senior management, including Tim Chen, our Co-founder, Chief Executive Officer and Chairman of our Board of Directors, and Lauren StClair, our Chief Financial Officer, as well as other key personnel.

We depend on our senior management, including Tim Chen, our Co-founder, Chief Executive Officer and Chairman of our Board of Directors, as well as other key personnel.

We may not be able to retain the services of any of our senior management or other key personnel, as their employment is at-will and they could leave at any time.

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Based on our ongoing assessment of all available evidence, both positive and negative, including consideration of our historical profitability and the estimated impact of our operating model on future profitability, we concluded that it was more likely than not that our U.S.

deferred tax assets in excess of deferred tax liabilities would not be realized, and we recorded a valuation allowance against these net U.S.

deferred tax assets in excess of deferred tax liabilities would be realized, and we recorded a release of the valuation allowance against these net U.S.

deferred tax assets as of December 31, 2024.

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If such claims are successful, our business, results of operations, financial condition and prospects could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our brand and reputation, business, results of operations, financial condition and prospects.

We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

We will incur increased costs if we are no longer an emerging growth company, and our management will be required to devote substantial time to new compliance initiatives.

As a public company, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting, investor relations and other expenses that we did not incur as a private company.

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Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

In addition, if we are no longer an emerging growth company, we will incur additional legal, accounting, and other expenses.

Our management and other personnel will need to devote a substantial amount of time to comply with these requirements.

Moreover, these requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements.

Sales of a substantial number of shares of our Class A common stock by our existing stockholders in the public market could cause our stock price to decline.

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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 1A. Risk Factors