Good afternoon and welcome to Nerdy Inc. Q4 Earnings Call Annually. All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, we will conduct a question-and-answer session. [Operator Instructions] Thank you. I will now turn the call over to TJ to begin today's call. TJ, you may begin.

Good afternoon and thank you for joining us for Nerdy's Fourth Quarter 2022 Earnings Call. With me are Chuck Cohn, Founder, Chairman, and Chief Executive Officer of Nerdy; and Jason Pello, Chief Financial Officer. Before I turn the call over to Chuck, I'll remind everyone that this discussion will contain forward-looking statements, including but not limited to expectations with respect to Nerdy's future financial and operating results, strategy, opportunities, plans and outlook. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Any forward-looking statements are made as of today's date and Nerdy does not undertake or accept any obligation to publicly release any updates or revisions to any forward-looking statements to reflect any change in expectations or any changes in events, conditions or circumstances on which any such statement is based. Please refer to the disclaimers in today's shareholder letter announcing Nerdy's fourth quarter results and the company's filings with the SEC for a discussion of the risks. Not all of the financial measures that we will discuss today are prepared in accordance with GAAP. Please refer to today's shareholder letter for reconciliations of these non-GAAP measures. With that, let me turn the call over to Chuck. Chuck?

Thanks, TJ, and thank you to everyone who has joined us today. Over the last 10 months, we've been working to transition our products and revenue model toward long-term, recurring, always-on relationships with our customers. We believe this change will benefit our consumer and institutional customers and our business model by shifting to longer-term relationships that support evolving learner needs states. We created new subscription and recurring revenue products, including learning memberships for consumers and on-demand products for institutional customers. These products were built specifically to address the ongoing support we believe both types of customers desired. We shared that this new focus would require a short-term hit to revenue recognition because our packaged model has more front-loaded recognition associated with it than the learning membership model where subscription revenue is recognized linearly over time. We estimated that by month six for a given learning membership customer, the cumulative revenue would catch up and surpass that of a given package customer, a phenomenon we call the J-curve. We expected that by the start of the second quarter in 2023, the cumulative build of recurring revenue from learning membership customers would cause us to return to growth in our consumer business as well as for the total company. But now, with the product suite and revenue model, we believe we will be positioned for higher levels of growth, profitability, and predictability in the years to come. I am pleased to share that we have made substantial progress in the fourth quarter, and our shift to an always-on business model is ahead of plan. Learning membership adoption continues to exceed our expectations, demonstrating higher conversion, engagement, and customer retention than our former package model, which in turn has led to significantly higher customer lifetime value and operating leverage. We delivered revenue of $41.8 million in the fourth quarter, above our guidance range of $39 million to $41 million. These results reflect stronger-than-anticipated active learning membership counts, which totaled over 20,000 as of year-end. Also, we saw continued strength in lifetime value performance from learning membership customers. This progress, combined with operating efficiencies gained from the business model evolution, provides us with increased confidence in achieving adjusted EBITDA profitability by the end of 2023, as previously communicated. In the fourth quarter, we delivered on our commitment to enhance learning memberships by providing unlimited access to three new products: Adverse, Tutor Chat, and Essay Review. With the addition of these formats, we were able to grow the percentage of customers engaging in a non-tutoring format in their first month to over 30% in December. Multi-format engagement has historically been highly correlated with higher retention, higher lifetime value, and higher customer satisfaction. Learning membership revenue continues to grow at a rapid pace. Revenue recognized in the fourth quarter from learning memberships grew to $20.8 million, a $15 million increase from the third quarter, representing 50% of total company recognized revenue in the quarter, up from just 2% of total recognized revenue in the second quarter and 18% in the third quarter. In fact, learning membership revenue has reached an annualized run rate of more than $87 million as of year-end, an increase from $50 million as of the end of the third quarter, providing us with increased forecasting visibility in future revenues. The rapid transition of learning membership is also allowing us to deliver gross margin expansion and a more scalable and efficient operating model. During the fourth quarter, gross margin of 70.5% was approximately 230 basis points higher than gross margin of 68.2% during the comparable period of 2021. As we shift towards a higher proportion of learning membership customers and revenue, we expect continued gross margin expansion in 2023. Learning memberships also enabled further marketing yield optimization during the fourth quarter, with marketing expenses as a percentage of revenue improving by approximately 370 basis points year-over-year, driving further efficiencies in our consumer business. Higher engagement and retention among learning membership customers, along with an average revenue per learning membership of approximately $350 per month during the fourth quarter, combined to drive continued lifetime value expansion and an accelerated marketing payback period. In fact, recent monthly cohorts' cumulative learning membership average revenue per customer continues to expand and separate from the historical average consumer customer spend over time under our historical package model by the third or fourth month after starting. These results clearly demonstrate the superior lifetime value of our learning membership model and the higher average value of the consumer customers we're adding to the platform. During the fourth quarter, Varsity Tutors for Schools delivered on a major milestone in our product evolution with the go-live of both on-demand and Teacher Assigned products. These two new products are oriented toward providing district-wide solutions that can be deployed across entire student and teacher populations, significantly widening the impact we can have with our school district partners. Additionally, these new offerings aligned to a school district’s in-class curriculum are embedded into schools' workflow and are directed by teachers, who we believe are ideally suited to assess their students' learning needs. We executed over 70 contracts, including 15 on-demand contracts with our first Teacher Assigned partnership, an important milestone as we transition to a more expansive partnership model with larger school districts. Collectively, these contracts resulted in a record $11.3 million of bookings during the fourth quarter. We believe these results clearly demonstrate that our new always-on product offerings are resonating with school district partners, especially when bundled together with our existing high-dosage tutoring products. These strong results, along with continued momentum at the start of the year, provide us with increased confidence that Varsity Tutors for Schools is well-positioned to provide solutions to administrators, teachers, and students who are seeking to support their evolving needs. Looking ahead to 2023, I wanted to share our plans for how we'll continue to focus on delivering exceptional value to customers and results for our investors. First, we'll continue to scale our always-on recurring revenue products. Given the success of learning memberships across our academic audiences, we plan to transition our test prep and professional audience to learning memberships by the end of 2023. With the completion of this transition, we’ll have shifted 100% of our consumer business to always-on recurring revenue subscription products. With the strong foundation in place, we believe we can continue to drive higher levels of learning membership growth across all of our consumer audiences through further product enhancements and testing. Specifically, we plan to iterate on the pricing and structure of learning memberships to broaden their appeal at the top of the funnel and drive further growth and conversion in customer acquisition. We also plan to create more flexibility for customers to manage their membership and tutoring frequency, including new self-service capabilities, which we believe will increase retention and lifetime value by better aligning learning memberships to evolving customer needs. Additionally, we plan to make it easier for members to discover multiple new learning paths, including new learning formats and programming coverage to drive further engagement among members with the aim of providing more value and enhancing customer satisfaction. Within our institutional business, we expect our new Teacher Assigned and on-demand products to represent a growing proportion of institutional bookings during the year as we remain focused on district-wide solutions and partnerships with larger school districts. Our second major area of focus is achieving adjusted EBITDA profitability. As the learning membership mix continues to increase as a percentage of total revenue, we believe we can drive continued gross margin expansion and further simplify our operating model in the year ahead. We also plan to make further investments in automation, self-service capabilities, and additional AI capabilities through our platform to enhance both the learner and expert experience. Recently, we have seen improved adjusted EBITDA performance each month as we progress further through the J-curve. Given our recent momentum, we have increased visibility into and confidence in achieving adjusted EBITDA profitability by the end of 2023 as previously communicated. Our third area of focus is that we will continue to lead the way forward with new technologies, further leveraging artificial intelligence capabilities to transform how people learn and create a more personalized learning experience. We firmly believe that AI for HI, or artificial intelligence for human interaction, has the ability to transform how people learn. AI has been central to our ability to improve quality, enhance personalization, and reduce the cost of our offerings. Today, AI powers our ability to identify the highest quality experts, assess learners' foundational knowledge, and help ensure the right expert-learner match occurs, among many other use cases on the platform. The latest AI advancements are allowing us to rapidly develop transformative experiences involving the real-time generation of content at near-zero costs, improving our ability to deliver live human interaction and personalized learning at scale, and providing new superpowers to experts and learners on the platform. We recently announced the launch of two new AI-driven products and plan to leverage the latest advancements in machine learning and AI, including ChatGPT and similar technologies to drive further product enhancements, personalization, and cost efficiency in the year ahead. The first two products include an AI-generated lesson plan creator embedded in the company's live learning platform that is available for use during live tutoring sessions and, separately, an AI-generated chat tutoring product that pairs a conversational AI-driven chat with the ability to access a live expert on demand. These two products represent the company's ongoing orientation towards a software and AI-driven approach to solve customer and business problems and build a highly scalable platform. We plan to roll out additional products and features for consumer customers that expand on these new capabilities as part of learning memberships. We believe that these additional products and tools will allow us to further personalize the experience for each learner and expert, yielding higher levels of engagement, retention, and customer lifetime value, driving both revenue predictability and operating leverage in the year ahead. In closing, I am proud of our team's execution. Just 10 months ago, we laid out a vision for our stated goal to transition our business towards always-on recurring revenue streams with the introduction of learning memberships and the new institutional products, including Teacher Assigned and on-demand. These efforts have allowed us to build a strong foundation for growth. They have also helped us establish a business model that can produce longer duration and higher value relationships with our customers, serve as a more scalable platform for future innovation, and has helped position us to achieve adjusted EBITDA profitability by the end of 2023. In the coming year, we look forward to continuing to push the pace of innovation and enhancing our ability to meet the needs of both consumer and institutional learners in any subject, anywhere, and at any time. We appreciate your continued interest in our company. With that, I'll turn it over to Jason to discuss the financials in more detail. Jason?

Thanks, Chuck, and good afternoon, everyone. I'm pleased to be speaking with you today about Nerdy's strong fourth quarter performance and our outlook for the first quarter and full year of 2023. Our team continued to make substantial progress against our business model evolution. As Chuck mentioned, the accelerated transition to recurring revenue streams, including learning memberships, continued in the fourth quarter, reflecting the strong adoption we've seen from consumers during the back-to-school season and fall semester. Notably, we haven't observed any discernible macroeconomic pressure on demand for our products. And as we've shared in the past three earnings calls, this evolution toward learning memberships has resulted in lower near-term revenue and adjusted EBITDA. However, we expect that it will ultimately allow us to generate superior long-term customer unit economics and drive higher levels of growth and profitability, given the positive customer economics we're experiencing. This shift in revenue recognition is reflected in our revenue growth rate for the three and 12 months ended December 31. Expenses as a percentage of revenue also reflect the impacts of lower near-term recognized revenue in the denominator for rate-based expense calculations as we continue to progress through the J-curve during the fourth quarter. It's important to keep this in mind as we discuss our financial results for the period. In the fourth quarter, we delivered $41.8 million, results that were above our guidance range of $39 million to $41 million, reflecting stronger than anticipated active learning memberships, which totaled over 20,000 as of December 31, and continued strength in lifetime value performance from learning memberships. It also reflected the growth we're experiencing in our institutional business, which delivered revenue of $4.4 million, representing 10% of total revenue during the fourth quarter and record bookings of $11.3 million. On our last earnings call, we stated that we expected our monthly subscription revenue from learning memberships by the end of the calendar year would exceed the revenue recognized from packaged customers. We delivered on this promise, with learning memberships representing 66% of consumer revenues in December, and as Chuck mentioned, 50% of consolidated revenues for the fourth quarter, demonstrating the rapid transition to recurring revenue products. Moving down the P&L, gross profit of $29.5 million for the fourth quarter represented an increase of 3% compared to the same period last year. Gross margin of 70.5% for the three months ended December 31 expanded approximately 230 basis points from 68.2% in the same period last year. Gross profit and gross margin increases were primarily driven by gross margin expansion across our consumer audience as we evolve towards a greater mix of learning memberships, a trend we expect to continue into 2023, driving continued gross margin accretion. Sales and marketing expenses on a GAAP basis were $17 million in the fourth quarter, a decrease of $900,000 compared to the same period in 2021. Non-GAAP sales and marketing expenses excluding non-cash stock-based compensation were $15.7 million or 38% of revenue in the fourth quarter of 2022. This compared to 41% of revenue in the same period last year, representing a 330 basis point improvement year-over-year. Throughout the fourth quarter, we continued to focus on optimizing the level of marketing spend, yielding efficiencies in our consumer business. Consumer efficiencies were partially offset by the investments we made in our institutional sales and the go-to-market organization in support of Varsity Tutors for Schools, which we expect to grow into as revenue continues to scale while we slow the rate of hiring, which we've already done, thereby creating operating leverage. As we discussed in our last call, our investments in product development and subscription offerings, when combined with our ongoing efforts in automation and self-service capabilities, have allowed us to simplify operations and remove significant costs from the business. In the fourth quarter of 2022, we announced the completion of workforce reductions of approximately 17% of our total workforce. As of December 31, we had approximately 700 employees, representing a 30% decrease year-over-year, clearly demonstrating the sales and operating efficiencies enabled by our new always-on strategy and product offerings. Going forward, the application of artificial intelligence and machine learning in our business processes will allow us to simplify our business model even further, reducing the need to hire incremental staff as revenue scales and we exit the J-curve, returning to growth without a proportional increase in both variable and fixed costs. We reported a non-GAAP adjusted EBITDA loss of $5.5 million in the fourth quarter, beating the guidance range we provided with an adjusted EBITDA loss of $6 million to $8 million. Adjusted EBITDA outperformance against guidance was driven by higher revenue, higher gross margin, marketing efficiency gains, workforce reduction actions stemming from our business model changes, and diligent cost oversight. Turning to the business outlook, today we're providing first quarter and full-year 2023 guidance. We continue to see more evidence that validates our belief that the learning membership model leads to longer duration and higher value customer relationships, enhanced gross margin, and improved marketing efficiency. We're getting better forecasting visibility as we expand into new markets. Therefore, we expect to exit the aggregate J-curve business model transition, driving year-over-year growth with more attractive unit-level economics as we start the second quarter in 2023. We believe the combination of our unique platform, comprehensive product offerings, including learning memberships, the interest in early contracting successes we are seeing in Varsity Tutors for Schools new offerings, and our ability to deliver high-quality live learning at scale, personalized to each learner, positions us for continued growth as the education landscape evolves. As is typical for our business, we expect sequential quarterly revenue growth from the fourth quarter to the first quarter in 2023. For the first quarter of 2023, we expect revenue in a range of $45 million to $47 million. For the full year 2023, we expect revenue of $190 million to $200 million, representing 20% growth at the midpoint versus our 2022 revenue of $162.7 million. Full-year revenue guidance reflects our decision to shift 100% of the consumer business to Learning Memberships by the end of 2023, including the remaining Test Prep and Professional audiences. To provide a little more color on revenue modeling, given the rapid shift to recurring revenue products, from a quarterly perspective, we expect the percentage of full-year revenue to approximate 24%, 23%, 22%, and 31% during the first, second, third, and fourth quarters, respectively, during 2023. This quarterly cadence results in our expectation that year-over-year growth rates will increase each quarter over the course of 2023, with growth of 40% year-over-year as we exit the year. Revenue guidance also reflects normal summer seasonality, including the anticipated lower levels of new customer acquisition, consumption, and retention during the summer months when K-12 schools and universities are out of session. Our adjusted EBITDA guidance for both the first quarter and full-year reflects the continued benefits from our recurring revenue products, which focus on longer-term relationships with higher value customers, improved gross margin profile, and operating efficiencies stemming from our continued shift to recurring revenue business models. For the first quarter of 2023, we expect a non-GAAP adjusted EBITDA loss in the range of $3 million to breakeven. For the full year 2023, we expect non-GAAP adjusted EBITDA loss in the range of $10 million to breakeven. Full-year adjusted EBITDA guidance reflects a more than $30 million improvement year-over-year, resulting in a 1,900 basis point improvement in adjusted EBITDA margin at the guidance midpoint. Clearly demonstrating the sales, marketing, and operating efficiencies I mentioned earlier and their ability to positively impact the P&L in addition to higher revenue and gross margin. We're confident in our ability to achieve adjusted EBITDA profitability by the end of 2023, and we have increased visibility and confidence in how this goal will be reached. Additionally, our balance sheet remains strong with no debt and $90.7 million of cash, providing us with ample liquidity to operate against our plan and pursue growth initiatives. Thank you again for your time. And with that, I'll turn the call back over to Chuck.

Thanks, Jason, and thanks again to all of you for joining us today. As always, we appreciate your interest in Nerdy and look forward to continuing the dialogue during this exciting time for the company. With that, I'll turn it over to the operator for Q&A. Operator?

Thank you. [Operator Instructions] The first question we have from the phone line comes from Doug Anmuth with JPMorgan. Your line is open.

Great. Thanks so much for taking the question. So it's good to see the learning membership transition tracking ahead of schedule, just as you complete the J-curve transition. I guess thinking bigger picture, can you just walk us through more around your long-term strategic vision for the subscription model? How you could potentially iterate around pricing and structure of memberships? And then what are the key investments to get there? Thanks.

Thanks, Doug. This is Chuck. Great question. So the way that we're thinking about this is that learning membership is an all-encompassing, comprehensive solution that supports students across multiple academic calendar years and multiple subjects, allowing for them to engage across different learning modalities. You can access any of 3,000 different subjects worth of tutoring, more than 250 live classes per week. We have asynchronous diagnostic tests, code verse, and other coding-related content. We have star courses and other on-demand lessons. Our goal is to continue to add more value each and every quarter and allow people to learn however they want, whenever they want, and support them in a way that really fosters academic success and learning. We'll continue to lean into additional product capabilities and bring them together in a holistic way that makes it easy to access. Some of those could include AI-generated lesson plans and our AI tutor solution that we're working on right now. We'll continue to build out content coverage in areas like class selection. We're going to be testing price, contractual terms, and adding different content to see what really resonates. We're really excited about that as a vector of growth and how we can kind of play with different elements to find the right fit for a given audience segment to drive conversion improvements and ultimately build a high net promoter score product that people are excited about.

Yes. And Doug, maybe -- this is Jason. I would add to that. One of the things we're seeing about the learning membership model, we've mentioned this in the past. We're seeing longer duration and higher lifetime value customer relationships, enhanced gross margin, improved marketing efficiency, and we're getting better forecasting visibility as we expand into new markets. During the first quarter, we transitioned all of our existing customers to learning memberships as well as our test prep audience to learning memberships, which we're really excited about as we evolve towards 100% of our consumer customers being on learning memberships by the end of 2023.

Great. Thank you both.

Thank you. Your next question comes from Ryan MacDonald of Needham. Please go ahead when you're ready, Ryan.

Hey, guys. This is Matt Shea on for Ryan. Thanks for taking the question and congrats on the quarter. I wanted to start with the institutional business, Varsity Tutors for Schools. Nice to see some contract wins and some on-demand and teacher assigned contributions, which I would assume help unlock some of the COVID-related learning loss relief budgets. When you're seeing clients adding these new offerings, what have purchasing habits looked like? And have you had success seeing clients utilize those learning loss budgets? Are you seeing more one-year deals, or are schools trying to lock in functionality for a multi-year period?

Thanks, Matt. Good question. So earlier -- so this past, call it, six months ago, we started shifting our focus from selling exclusively high-dosage tutoring to now also selling on-demand and Teacher Assigned products. These are district-wide solutions that are sold top-down to superintendents and available to all students within a school district. This was a multi-model shift, and we started focusing on bundling solutions. We’ve seen really good traction there, with more than 100,000 students having access to these products. You referenced specific funding types; one of the interesting aspects about these products is that they align with various funding sources, not just the SR3 funds. We're observing good adoption, helping teachers assess learning needs. Some contracts could be multiyear deals, and we’re seeing a variety of funding sources that employ our solutions.

Got it. That is helpful. And then jumping over to the consumer business. Learning memberships, we were surprised to see a $350 average revenue per learning membership, which was higher than the six to 12 monthly plans listed on your website. The math off of the $87 million run rate and 20,000 learning members even suggests a higher figure. Does this suggest more customers are adopting shorter duration plans, or are they choosing to purchase more hours than the base six to 12 month subscriptions currently offer? Thanks.

Yes, good question. When we first introduced learning memberships, we had a simplified version that only included one-on-one tutoring. Over time, we've added capabilities, so customers could now purchase higher consumption models that provide more academic support. Many learning membership customers in Q4 skewed towards those higher consumption models leading to higher average revenue per customer. We’re going to continue testing different membership variations to drive conversion and retention, but we're pleased with the uptake in these higher frequency products.

Thank you. Your next question comes from Eric Sheridan of Goldman Sachs. Your line is now open.

Thanks so much for taking the questions. I want to come back to the comments you made about the AI-driven products. You made that announcement in the period leading up to the earnings report and talked about it in the prepared remarks. Can you talk a little bit about past investment cycles around AI and machine learning? How should we think about AI and machine learning as cornerstones of your investment policy going forward? How should we think about it as an add-on to product enhancements, personalization, and cost efficiency, maybe beyond just the next six to 12 months when you think about more AI and more machine learning tools being deployed on the platform? Thanks so much.

Thanks, Eric. Great question. We started leveraging machine learning around six or seven years ago to identify patterns that a human might not detect. One of the first use cases was matching learners with experts; getting that connection right is crucial for long-term relationships. When we can make the correct match, we see higher lifetime value relationships and better unit economics. Over time, we've been able to improve many aspects of the customer experience by utilizing the data generated to enhance personalization and service. We've applied machine learning for customer propensity modeling, lead scoring, and adaptive diagnostic testing to pinpoint exactly what a student needs most efficiently. Our investments here have a quick payback period. For instance, we've seen improvements in student outcomes by around 20% when tutors utilize AI-generated lesson plans. We're achieving real cost savings and are excited about leveraging example use cases that drive growth and enhance user experiences.

That was super helpful. Thanks so much for all the color.

Thank you. We'll now have the next question from Brett Knoblauch from Cantor Fitzgerald.

Great. Hi, guys. Thanks for taking my question. I guess first on the institutional side, obviously, a very strong quarter. I was just curious how many of the 70 deals that you executed were with new customers versus re-signing existing customers?

Sure. About 40 of the contracts were new customers, 15 of them were on-demand contracts, and we had one Teacher Assigned deal, which was an important milestone.

But -- and then I guess if we look at -- sorry, go ahead.

No, I was just going to say look, we're really pleased with the pace that the team is putting into place. The products are resonating in the market now that Teacher Assigned is live, and people can experience it. We're having deeper and broader conversations with more small districts, especially as they think about where to implement this technology for the next school year.

Perfect. That's helpful. And then on the average monthly revenue of $350, I guess, where would you expect that to trend? I know you talked about some self-service options and pricing model iterations. How should we think about that?

Yes, I would expect it to remain pretty consistent. There are going to be some higher-priced products. For instance, we just moved into the test prep audience, which generally entails higher pricing since students seek to study over shorter periods. That will be offset by some lower-priced products as we move through the year to drive retention. Overall, I believe the average revenue remains within the $350 range in 2023, but there will certainly be some fluctuations.

The one thing I would add is, it's early days, and based on some tests we're running, we think there is a significant opportunity to modify learning memberships for different audience segments. We believe this can drive substantial conversion improvements. It's early days, but we're prepared to take big swings in testing to see where we can optimize our offerings.

Okay. Understood. Thanks, guys, and congrats again.

Thanks, Brett.

Thank you. We now have Maria Ripps of Canaccord. Your line is open.

Great. Good afternoon, and thanks so much for taking the questions. First, given that the membership model is becoming a meaningful portion of your revenue base, what kind of assumptions are embedded in your full-year guidance from the renewal rate standpoint, considering that some of your early cohorts will be coming up for renewal this year?

Yeah, good question, Maria. I think just as Chuck mentioned, it’s still early days as it relates to renewal rates from learning memberships. We continue to see strong retention and are developing unique products to drive engagement. The one caution I'd give is that we haven't yet experienced the transition from one school year to another during the summer months. So while we are working to increase programming over the summer, that remains an unknown.

Got it. That's very helpful. And then could you maybe talk about your rationale for transitioning your test prep customers to the learning membership, understanding that unit economics and customer lifetime values of memberships are more attractive?

Sure. The rationale for transitioning all audiences so far was through methodically AB testing different segments to understand conversion and unit economics with both models. Once we had confidence that the new model was trending positively, we transitioned customers to a model we believe enables better customer experience and unit economics. In the case of test prep, we believe we can offer higher lifetime value, higher gross margin, and create a better overall experience. Operational efficiencies can emerge when more customers align under one operating model. We are confident in moving toward 100% subscriptions by the end of this year.

Got it. Thank you so much for the color.

Thanks, Maria.

Thank you, Maria. We now have Andrew Boone with JMP Securities.

Hi, guys. Matt on for Andrew. Thanks for taking my question. Just understood your target for EBITDA profitability in 2023. But with strong LTVs and now you're growing debt, just on retention of LTVs, is there an opportunity for you guys to lean more heavily into marketing spend? And how are you thinking about this in 2023? Thanks.

Yeah, absolutely. Great question, by the way. One of our top goals this year is to achieve profitability, so we’re focusing on that. If our LTVs continue to exceed expectations, we will certainly consider reinvesting some of that into marketing in the latter half of the year. But, for now, the priority is on reaching profitability as quickly as possible.

Thank you. We now have Mario Lu of Barclays. Your line is now open.

Great. Thanks for taking the questions. The first one is on the full-year revenue guide of 20% growth. I was just curious what kind of embedded percentage for institutional revenue is in that full-year number?

Yes, so embedded in the guide at the midpoint of 195 for the full year would be 15% of that total mix associated with institutional business, representing about 50% growth year-over-year. We're excited about the opportunity for that business to grow at a higher rate this year. Additionally, there are various funding sources within the institutional base that we are utilizing. We've seen that the solutions align with teachers’ workflow, making it easier for schools to use their operating budgets for our products.

Great. Thanks, Jason. And another point, the shareholder letter mentions, Nerdy is like the only company that currently combines live learning and AI technology. I know it's still early, but can you talk about how large of an advantage this is, having this unique combination in terms of the client for both experts and learners?

We're excited about the potential behind what we call AI for HI, or artificial intelligence for human interaction. The concept here is to digitally enhance and augment the interaction between instruction and students in ways we couldn't do offline. It provides more intuitive learning experiences for both experts and learners. With generative AI, we can create highly relevant content at near-zero costs, which makes our platform even more attractive. Many applications are in development, and we're excited about how we can leverage this unique combination to improve engagement and retention.

Thank you. That concludes our Q&A session and conference call. Please have a lovely day, and you may now disconnect your lines.