Good afternoon. Thank you for attending today's Nerdy, Inc. Second Quarter 2023 Earnings Call. My name is Bethany and I'll be the moderator for today's call. I would now like to pass the conference over to our host, TJ Lynn, Associate General Counsel with Nerdy, Inc. Please go ahead.

Good afternoon, and thank you for joining us for Nerdy's second quarter 2023 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 change 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 second quarter results and the company's filings with the SEC for a discussion of the risk. 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.

Thanks, TJ, and thank you to everyone for joining us today. In the second quarter, our strong start to the year continued, and we delivered revenue and profitability ahead of our expectations. We also made substantial progress in advancing our always-on recurring revenue product offerings and the application of AI for HI, or artificial intelligence for human interaction, to our business. As we head into the upcoming school year, it is worth noting what has changed over the past year and how we believe those changes position us for growth in the periods ahead. One year ago, we were entering our first back-to-school with Learning Memberships, a new all-access subscription offering that aimed to support learners across academic calendar years, subjects, and learning formats. We had just introduced the concept the quarter before, and Learning Memberships had just driven 2% of consumer revenue in the second quarter of 2022. Fast forward to today, and Learning Memberships accounted for 73% of total company revenue and 88% of consumer revenue in the second quarter of 2023. As of this June, 100% of new consumer customers joining the platform are doing so through a learning membership subscription, marking the completion of our evolution to the new recurring revenue business model six months earlier than expected. We now expect that nearly 100% of recognized consumer revenue will be from learning membership subscriptions by year-end. We underwent a similar evolution over the past year in our institutional offering, Varsity Tutors for schools. We shared one year ago that we were building new always-on products that were built for district-wide scale that would enable us to help more learners than ever before. We also shared that we were seeking to bring together our different offerings to address a multitude of needs for school district partners and students. This would require building the product offering and shifting our sales strategy to focus on deeper and more comprehensive partnerships with these larger school districts. We are pleased to share that our strategy continues to work, and that the strong momentum from the first quarter continued into the second quarter. Our Institutional business delivered revenue of $8.4 million, an increase of 43% year-over-year, representing 17% of total revenue in the quarter. Bookings in the quarter totaled $10.5 Million, an increase of 175% year-over-year. We shared over the past year and at the start of this year that we expected our new always-on recurring revenue offerings to be far superior to our legacy package model. In addition to allowing us to provide a better and more personalized experience to learners, our new operating model would be far more efficient, allowing us to drive operating leverage, simplify our sales model, and shift additional resources towards net new innovation, including the application of AI for HI. Those anticipated business model benefits are now being realized and driving substantial improvements in our operating results. The new and simpler operating model made possible by our always-on recurring revenue offerings combined with the benefits we are realizing from the application of AI has allowed us to significantly reduce the labor needed to operate the platform. These changes have meaningfully enhanced our contribution margin profile and simultaneously allowed us to fund increased investments in product and engineering, including AI, to more aggressively pursue our product roadmap and drive both growth and profitability in future periods. I am pleased to share that in the second quarter, we delivered $48.8 million of revenue, an increase of 16% year-over-year, exceeding our guidance range of $45 million to $47 million and representing an 1,100 basis point acceleration in growth over the previous quarter. We saw positive new customer acquisition and engagement trends in the second quarter, with new consumer membership and package customers acquired in the quarter growing 19% year-over-year. As we progressed farther into the summer, June and July represented the highest levels of year-over-year growth for new consumer membership and package customers this year. We completed our evolution to 100% Learning Memberships for new consumer customers in June, with the transition of the professional audience occurring six months earlier than originally targeted. Our customer lifetime values continued to show significant improvements relative to the old package model, driven by our evolution of Learning Memberships and the application of AI for HI. These drivers were key contributors to our strong operating results and improved profitability. We delivered positive adjusted EBITDA of $1.3 million, a $10.9 million improvement year-over-year in the second quarter, beating our guidance range of an adjusted EBITDA loss of $3 million to break even. That represents a more than 2,500 basis point improvement in adjusted EBITDA margin year-over-year. We have continued to make substantial progress on accelerating the use of AI throughout our business, including launching membership experience improvements that leverage generative AI as well as accelerating its use to drive substantial operating efficiencies and internal productivity improvements. Moving to our Consumer business, the learning membership model has demonstrated superior unit-level economics, longer duration, and higher lifetime value customer relationships, higher gross margin, and is a more scalable and efficient operating model. Learning Memberships also serve as an easier platform from which to drive innovation and incremental growth, given our ability to add new product capabilities into the existing All Access subscription offering, thereby making the offering more appealing and engaging, ultimately driving conversion of new members and the retention of existing ones. Learning membership revenue continued to grow at a rapid pace in the second quarter. Revenue during the second quarter from Learning Memberships grew to $35.6 million, a $5.9 million or 20% increase from the first quarter of 2023. We ended the second quarter with 31,000 active members paying approximately $350 per month, representing a $130 million annualized run rate at quarter end. This August, in time for back-to-school, we are introducing a significantly upgraded and enhanced learning membership digital experience that makes it easier for learners to more fully engage with their learning membership. These updates are aimed at enriching the experience, encouraging achievement, reinforcing personal accountability to learning, and improving the discoverability of learning formats and subjects. From many years of experience, we know that when customers engage more deeply with our products, including across multiple learning formats, multiple subjects, or multiple students per household, it is highly predictive of stronger long-term retention and higher lifetime value of those customers. The new digital learning membership experience transforms the way members engage with our platform, making engaging in discovery with the platform more intuitive and user-friendly by serving as the new homepage and central destination for learning members. It allows members to effortlessly access their upcoming live tutoring schedule, easily track their past learning interactions in a subject, and track progress and achievement towards learning goals. The new digital membership experience enables easier discovery of new subjects and will encourage users to explore additional areas of interest through personalized AI-generated learning recommendations that predict and suggest the next product interaction across learning formats and subjects that are most likely to drive engagement and customer value. The new experience also brings together all of the key account management information and resources into a simple user experience that provides easy self-service membership management tools to better meet the changing needs of learning members. We also expect these new self-service tools will help drive operating efficiency. Now let's turn our attention to Varsity Tutors for schools and our Institutional business. Consistent with our strategy heading into 2023, our focus on larger and more expansive partnerships with larger school districts, including the inclusion of our high dosage, teacher assigned, and on-demand products into a single district partnership is yielding results. Institutional revenue in the quarter was $8.4 million, an increase of 43% year-over-year, representing 17% of total revenue in the second quarter. We completed 48 contracts in the quarter, totaling $10.5 million of bookings, an increase of 175% year-over-year. Year-to-date, our average contract value is above $100,000, more than double compared to the same period last year. Our continued growth in the second quarter and expanding portfolio of reference accounts, compelling efficacy data that demonstrates the effectiveness of our solutions, and enhancements to our unique product suite provide us confidence that we are well-positioned as we enter the key back-to-school selling season. Over the last six years, AI has been foundational to our ability to improve quality, enhance personalization, and decrease the cost of our offerings. We've been using AI for years to power our ability to identify the highest quality experts, assess learners' foundational knowledge, help ensure the right expert learner match, and drive operational efficiency. Last quarter, I shared that the speed of innovation occurring at Nerdy was both stunning and invigorating, and that we were actively infusing generative AI into our products to supercharge and personalize human interaction, drive operating efficiency, and generally enhance the effectiveness and efficiency of our platform. I also shared that we had made significant investments in instrumentation and data capture and that through those investments we had built up a large proprietary data set over the past 10 million hours of live instruction delivered through our live learning platform. We also shared that over the past six plus years, we had developed practical experience driving enhanced personalized learning interactions as well as efficiency gains through the application of AI. As a result, we believed we stood to benefit tremendously from the latest advancements in generative AI. 90 days later, that speed of innovation that was initially stunning is now quickly becoming just how we work. Our teams are both encouraged and pushed to leverage AI in their daily work and all employees have access to in-line generative AI tools in addition to system and workflow driven approaches to support high-volume activities at scale, allowing our teams to focus their time and energy on new innovation and growth opportunities. To illustrate the speed of innovation occurring along with where AI-related investments are being made beyond some of the more visible consumer-facing applications, we shared several examples in our shareholder letter, a few of which I'll share with you today. The first is related to leveraging generative AI to produce high-quality learning content at scale. In order to scale learning content to the 3,000 plus subjects we currently support and the corresponding tens of thousands of skills, we needed to construct an AI-based approach for evaluating learning content. We designed a robust system that generates practice content across a spectrum of subjects and skills leveraging generative AI. The system is unique as it integrates a human-in-the-loop feedback process, ensuring both accuracy and difficulty aligned with educational standards, while curating data sets we can use for improving our own AI models. Every subject is different and needs a unique data set in order to tune and optimize our AI models for both accuracy, difficulty, and academic learning standard alignment. We are rapidly deploying learning content across approximately 200 of our most in-demand subjects with more than 66,000 AI-generated practice problems, answers, and explanations having been created and vetted in the last month or so. They will be available for learning membership customers to use this back-to-school season in a variety of learning formats such as quizzes, computer adaptive tests, and more. By year-end, we expect to be able to 10x the quantity of high-quality learning content generated by the new AI system. In addition to new capabilities being deployed, we're also continuing to enhance the existing generative AI capabilities we've spoken about in the past. During the quarter, we made enhancements to our AI tutor chat system, focusing on both user experience and educational effectiveness. By employing an upgraded AI model and refining metrics to evaluate each conversation, we've sharpened our understanding of the AI tutors' strengths and areas for improvement. These updates reflect our commitment to pedagogical adherence and the individualized needs of each student. We also continue to see strong engagement with our AI lesson plan generator. Over the last 90 days, we've had experts on the platform leverage it more than 45,000 times for lesson plans in their sessions with learners. We've continued to increase the quality and relevance of this AI-generated content, and 92% of these lessons were rated 5 stars. Another example relates to using AI to power chatbots. We saw significant interest from our internal product and operating teams in different functional areas to begin using sophisticated AI-powered chatbots to allow users to get answers faster. We created a templated approach for developing, training, and deploying chatbots to support customers and internal teams. We have seen strong results thus far, and AI-powered chatbots have been deployed for a variety of different uses on both sides of the platform and for internal teams. Our IT customer support bot, for example, addresses technical issues learners and experts experience, like issues with audio and video. It is currently resolving more than 50% of all interactions, arming live agents with better diagnostic information, enabling them to solve the root issue faster, and we'd expect for these numbers to keep going up over time. These sorts of AI-enabled solutions to completing work are helping to drive substantial operating efficiency gains across the business. Whether it's the mass production of hyper-personalized learning content or the use of AI-powered chatbots for customer service interactions, the application of AI throughout our business is yielding a better experience for learners and experts and driving significant operating leverage. Looking ahead, we expect to see further wins on driving both conversion and retention, as well as improvements in operational efficiency as a result of continued investments in AI. In closing, I want to extend my thanks to our team at Nerdy for their high-quality work and focus on driving strong execution in service of our learners, experts, institutional partners, and shareholders. We have an opportunity to redefine how people learn and build a business of significant value and impact in the years to come. Our strategic evolution towards always-on recurring revenue products and the continued implementation of AI for HI have helped put us in a strong position entering the 2023/2024 school year. With that, I'll turn the call over to Jason to discuss the financials in more detail.

Thanks, Chuck, and good afternoon everyone. We shared at the beginning of the year that we expected our new always-on recurring revenue offerings to be far superior to our legacy package model and that the benefits would become apparent in the coming quarters, with accelerating growth and profitability that stemmed from more attractive unit level economics, longer duration and higher lifetime value customer relationships, higher gross margin, and a more scalable and efficient operating model. Today, I'm pleased to report that during the second quarter, those anticipated business model benefits are now being realized and driving substantial improvements in our operating results. In the second quarter, we delivered revenue of $48.8 million, results that were above our guidance range of $45 million to $47 million and represented 16% year-over-year growth. Our active member count of 31,000 as of June 30 exceeded our expectations and was driven by higher than anticipated levels of new client acquisition and strong retention among Learning Membership customers. Learning Memberships' revenue grew to $35.6 million during the quarter and represented 73% of total company recognized revenue and 88% of consumer recognized revenue in the second quarter. As Chuck mentioned, we expect nearly 100% of consumer recognized revenues will be from Learning Memberships by the end of the year. Our Institutional business delivered revenue of $8.4 million, representing 17% of total revenue during the second quarter, and delivered bookings of $10.5 million, an increase of 175% year-over-year. On a combined basis, Learning Memberships and institutional revenues delivered 90% of total revenue, which is a substantial change from last year when just 16% of revenues were from consumer subscription and institutional contracts. Moving down the P&L, gross profit of $34.1 million in the second quarter increased by $5.4 million and 19% year-over-year. Gross margin of 69.8% for the second quarter was approximately 160 basis points higher than 68.2% in the same period last year. Both gross profit and gross margin increases were driven by growth in our consumer business as a result of the strong adoption of Learning Memberships, which has led to lifetime value expansion and higher gross margin. As we evolve towards a greater mix of Learning Membership revenue, we expect consumer gross margin to continue to expand throughout 2023. Sales and marketing expenses on a GAAP basis were $14.9 million in the second quarter, a decrease of $3.1 million compared to the same period in 2022. Non-GAAP sales and marketing expenses, excluding non-cash stock-based compensation, were $14.2 million, or 29% of revenue in the second quarter. This compared to 40% of revenue in the same period of last year, an improvement of more than 1,100 basis points year-over-year. Sales and marketing spend and efficiency improvements were driven by the completion of our evolution to Learning Memberships, including the continued expansion of lifetime value, our focus on optimizing the level of marketing spend, and a more efficient operating model in our consumer business, leading to attractive LTV/CAC dynamics. We also delivered substantial Varsity Tutors for schools revenue growth, yielding efficiencies from prior investments in the institutional sale in go-to-market organization. As Learning Memberships become a greater percentage of total revenues and the Institutional business continues to scale, we expect to yield durable sales and marketing improvements as the business delivers accelerating sequential year-over-year revenue growth each quarter as we move throughout 2023. G&A on a GAAP basis was $29.7 million in the first quarter, a decrease of $3 million compared to the same period in 2022. Non-GAAP general and administrative expenses, excluding non-cash stock-based compensation were $20.3 million, or 42% of revenue in the second quarter, which compared to 54% of revenue in the same period last year, an improvement of nearly 1,300 basis points year-over-year. In July 2023, the company communicated workforce reductions to certain variable hourly employees in expert vetting and matching roles and IT customer support. The workforce reductions are the result of efficiencies gained through new recurring revenue relationships with higher lifetime value customers that simplify the company's operating model as well as automation efforts involving self-service capabilities, the application of AI, and other efficiency efforts. Cost savings realized from the workforce reductions across variable roles staffed in proportion to customer volumes are allowing us to increase the pace of investments in product and engineering, including AI, to more aggressively pursue our product roadmap and drive both growth and profitability in future periods. As Chuck mentioned, we delivered positive adjusted EBITDA of $1.3 million, a $10.9 million or more than 2,500 basis point improvement year-over-year, beating our guidance range of an adjusted EBITDA loss of $3 million to break even. Positive adjusted EBITDA was driven by improvements across every P&L line item on a year-over-year basis, including higher revenues, gross margin expansion, sales and marketing efficiency gains, and continued variable label productivity improvements stemming from our automation efforts in our business model changes that streamline operations. We believe we'll be able to continue to drive further efficiency and operating leverage as revenue and active member accounts continue to grow through our work on enhanced self-service and AI capabilities. During the second quarter, we had negative operating cash flow of $4.5 million, which primarily reflects the continued burn down of legacy package deferred revenue and compared to negative operating cash flow of $19.3 million last year, an improvement of $14.8 million, that reflects the substantial improvements from our evolution to Learning Memberships. We have $90.9 million of cash on our balance sheet and no debt, giving Nerdy ample liquidity to fund the business and pursue growth initiatives. Turning to our business outlook, today, we're providing third quarter and updated full year 2023 guidance. For the third quarter and full year, we expect year-over-year revenue growth will be driven by the completion of our evolution towards a recurring revenue stream in our consumer business, the corresponding increase in the number of Learning Membership subscribers and higher institutional revenues. Third quarter revenue guidance reflects the quarterly low point in revenue during the year, which is due to normal seasonality and the resulting lower revenues from Learning Membership, legacy package customers, and Varsity Tutors for schools that occur when K-to-12 schools and universities are on summer break. In fact, we experienced the summer trough or low point in active members two weeks ago, and total members started growing again this past week, a trend we expect to continue as new learning member acquisition grows, approaching the start of the school year and the end of summer break for all students. Full-year revenue guidance reflects normal back-to-school seasonality, with effectively all schools in session after Labor Day in September, including anticipated higher levels of new customer acquisition and retention, coupled with higher institutional revenues during the academic calendar when K-to-12 schools and universities are in session. For the third quarter of 2023, we expect revenue in a range of $38 million to $40 million, representing 23% growth at the midpoint versus our Q3 2022 revenue of $31.8 million. For the full year, we're raising our revenue targets from $193 million to $200 million to $196 million to $200 million, representing 22% growth at the midpoint versus our 2022 revenue of $162.7 million. Our positive momentum provides us with increased confidence in our expectation that we'll deliver accelerating sequential year-over-year revenue growth each quarter as we move throughout 2023. Our adjusted EBITDA guidance for both the third quarter and full year reflects the continuing benefit from our recurring revenue products, which focus on long-term relationships with higher value customers, an improving gross margin profile, and further operating efficiencies stemming from the completion of our evolution to recurring revenue business models. Third quarter adjusted EBITDA guidance reflects the impact of lower revenue due to normal summer seasonality and higher variable costs in the third quarter as we ramp into the back-to-school selling season. For the third quarter of 2023, we expect an adjusted EBITDA loss in the range of $8 million to $10 million. For the full-year, we're raising our adjusted EBITDA targets from a loss of $7 million to break even to an adjusted EBITDA loss of $4 million to breakeven. Consistent with prior guidance, we expect a return to positive adjusted EBITDA in the fourth quarter.

Hey, it's Bryan Smilek on for Doug. Thanks for taking my questions. Just to start, can you just elaborate on the early results and feedback you're seeing from the revamped user experience launch in 2Q? And then could you also just provide an update on the benefits of monthly memberships and how you think about pricing going forward? Thanks.

Absolutely. Thanks, Bryan. Yes, so we're really excited with the new digital Learning Membership experience. We've completely overhauled it with a specific focus on discovery and self-service tools. So there are a variety of different ways that you can get value out of your Learning Membership, ranging from, of course, live tutoring to group classes, to recorded on-demand videos, to asynchronous content. And then as part of this back-to-school launch, we're going to be launching a large, large swath of AI-generated content in practice test format, diagnostic test format, and others. And so there's so much different content that we wanted to organize it in a way that was consistent with how students study. And so on their main dashboard page, students are able to discover a variety of different tools they can use and then dig into a particular subject and find all the different learning formats associated with that subject, because we know that most students prefer to learn across multiple different learning formats. So when this launched, we saw a pretty dramatic step function change in engagement among non-tutoring formats. And that's really exciting because we know that historically, when learners engage in multiple subjects or multiple learning formats, that we see significantly higher retention and customer lifetime value ultimately. And so that's exactly the metric that we are trying to move. And as we add a couple of additional capabilities beyond just the existing membership features that they have to date, like the AI generated content, like a couple of additional iterations on a couple of our key product modalities, AI tutor is getting a huge overhaul soon, we're pretty excited about the potential to get yet another step function change, which we believe will ultimately lead to much higher levels of engagement and retention and ultimately customer lifetime value.

Yes, I think I would say during the summer both acquisition and retention exceeded our expectations. We think from a price point perspective, the value that we can provide through the Learning Membership with all of our modalities is appropriately placed. And then certainly, we feel like those level of new customer additions during the summer months continue to accelerate, with June and July being the highest, we're well positioned going into the key back-to-school period and we feel really good about the setup that we've got going.

Yes, and we saw like one of the really exciting things is that as we continue to improve the customer experience and some of the product marketing associated with it, we've seen conversion at the top of the funnel continue to improve. And that's resulted in an acceleration in new customer additions on a year-over-year basis throughout the last several months. So over the last couple of months, so call it June, July, and even August month-to-date, we're in the mid-to-high 30s, a north 35% growth on the combination of tutoring, package and Learning Membership customers. So really excited about that. And then, as we mentioned in our prepared remarks, as of June, 100% of new consumer customers joining the platform are doing so through Learning Membership, which, of course, is subscription revenue and more predictable and ultimately allows for us to add more value to that customer experience by continuing to bundle in additional products and features that are additive to that learning experience. So the fact that there's this close connection between improving the value that we're providing to consumers, seeing conversion at the top of the funnel accelerate and grow and then that driving new member adds that were ahead of our expectations is something that we feel really, really good about. So right now, there's about 15% of students or so in the United States are in schools, started going back about a week ago. Over the next 5 weeks, the remainder will begin to start. But the fact that new customer acquisition is ramping up and the extent to which some of the new elements of our member experience and our offering overall are resonating, really exciting and encouraging. But we're not all the way through the back-to-school season yet. We have really strong summer on new customer adds, good start to August and we feel good.

Hey, thanks for taking the question. This is Matt Shea on for Ryan and nice to see the EBITDA strength in the quarter as well. Wanted to double-click on the guidance though, so I think we were a little surprised by the lower numbers in Q3 relative to consensus. And I think part of that is some questions around the new Learning Membership model and the consumer revenue. So curious with the seasonality that you described in the prepared remarks, can we think about that as really just compared to Varsity Tutors for schools and some of those package customers and really that you're not seeing that same seasonality with some of the Learning Memberships? And ultimately would just love to kind of get an update on what things were seasonal that you're starting to see abate and what things are maybe seasonal that will continue to be part of the Nerdy model now and in the future?

Yes, while we exceeded revenue expectations in Q2, our guidance for Q3 aligns with our prior forecasts. It's important to note that when we projected active members at the end of Q2, we were looking ahead at the summer. We observed that the lowest number of active members occurred about two weeks ago, but last week we began seeing net new additions to Learning Memberships. As Chuck mentioned, we are just entering the back-to-school season, and there are still at least six weeks before most students, both in K-12 and universities, return to school after Labor Day. This quarter is somewhat back-weighted. We wanted to consider this because it's our first back-to-school season with our consumer offering being entirely made up of Learning Members, along with the timing and cadence of the seasonal changes. As Chuck noted, our new additions in July and June were over 35%, and we are optimistic about our setup. However, since this is our first back-to-school period with a 100% Learning Membership model and considering we are only a week into the season, we felt that our guidance was reasonable and in line with our previous statements.

Yes, look, we're doing exactly what we said we would do. So we exceeded expectations on revenue and EBITDA in Q2, feel great about that. We finished with more active learners than we expected. That was a function of better new customer acquisition and retention than expected. And the low point kind of in the summer is that last week in July, which obviously falls between quarters and then from that point on ramps up. So last week started ramping back up with the school year. Big net positive that week. So we're really well positioned for the start of the school year. But as it relates to, I guess your implication around raising guidance relative to expectations around the next two quarters, we just want to see a little more data. We feel really well positioned to start the school year. And this guide is consistent with our expectations.

Yes, the only thing I'd add is the positive momentum we had and the guide that we put out there delivers accelerating sequential year-over-year revenue growth each quarter as we move throughout 2023. And we expect to be adjusted EBITDA positive in the fourth quarter and growing to north of 40%. So we feel really good about those metrics, and I think they demonstrate the strength of Learning Memberships.

Got it. Appreciate that color. I think that all makes sense. And switching gears to the institutional business, it looks like with the Esser funds, those should all be or they're all planned to be committed by the deadline at this point. So curious how additive that continues to be with some of your RFP volume and demand and then post that funding, do you have any concerns that the funding is driving some interest right now, and maybe that makes it tougher to drive deals once those Esser funds have been used? Or is it more just additive to conversations now? And you think that you can continue to have productive conversations whether Esser funding is on the table or not?

Great question. So, look, we're coming off a great quarter. We had 43% revenue growth in the quarter. Our bookings $10.5 million, we're up 175% year-over-year. We only launched for our seniors for schools two years ago. And one year ago, we launched this new always-on strategy focused on larger districts, bigger partnerships, more comprehensive solutions, a top-down sponsorship from superintendents. And we feel great about the momentum to date and the extent to which our product is resonating. And I'll answer your question about the specific funding types, but maybe to put it into perspective, right now we are serving less than 1% of public school students, and we've obviously built a tremendous amount of momentum over just this past year. And as we enter the back-to-school period, we feel like this strategy around putting teachers at the center of the relationship where, based on their own unique knowledge of what's occurring in the classroom and who needs the most intervention, they're able to prescribe tutoring to the students that need it and get leverage in their own life. So we're solving kind of the two most important and acute issues that school district administrators face, which is student achievement, including learning loss, and then separately, teacher retention. And this product lines up incredibly well against both of those. And so as we head into back-to-school, we have a whole host of different product enhancements that we'll be rolling out that are oriented around making the product even better and then also even more cost-effective as it relates to being able to help a larger number of students and making it more reasonable for an entire school district to be able to roll this out broadly. So right now, I believe about a third of those three funding dollars have been spent. That leaves $16 billion to be spent over the course of the next call it 15 months. And we feel really good about the position that we're in and frankly, the extent to which this product solves such acute needs that it's durable, long-lasting in nature. And we feel like we're just getting started. So we are hearing multiple year deals being brought up. That's exciting. That's something that we expected to have happened. We had one of those in the quarter that was material, and we feel good about the ability for this product to continue to scale.

Great, thank you so much.

Matt on for Andrew. Thanks for taking my question. Maybe two. Just on the Institutional business, can you just talk about your sales force and if there's any other investments that need to be made there, especially as the business continues to scale? And then just now it's obviously Learning Memberships at an inflection point, what further investments do you need to make? Obviously, the new portal is a key focus now, but are there any other additions that you need to make into that business as it continues to grow? Thank you.

Sure. I'm glad to address that. It's a good question. Regarding the Varsity Tutors for school segment, we are beginning to see operational efficiency from the investments made in our institutional go-to-market strategy and team over the past 18 months while maintaining constant costs. This is leading to increased revenue, thereby creating operating leverage. The overall team size and investment remain stable. As we receive renewals and grow our revenue base, we are seeing benefits reflected in our bottom line. I do not anticipate significant team growth, and I feel confident about our total investment in this area. On the Learning Memberships front, as we add new learning members throughout the school year, they bring a higher lifetime value compared to previous packages, which will contribute to sequential revenue growth in the upcoming quarters. Essentially, we are layering higher lifetime value customers, extending their duration, and increasing their monthly value, resulting in revenue acceleration. We expect that following Q3, which is typically our seasonal low point, we will experience considerable operational leverage. While we are making some additions in areas like software engineering and AI, these investments are currently self-funding. We feel optimistic about the potential for this business to achieve strong profitability as we move into 2024.

Yes, that's a great question. I think as you mentioned, we've been able to drive substantial leverage through the first half of this year from a marketing perspective, given a combination of both higher LTVs on the one hand and those will continue to layer tank, which is going to be a net benefit going forward coupled with just efficient and optimized marketing spend. One of the things though that we're going to do during the third quarter and this plays into the EBITDA guide is given the strength of the LTVs in the more efficient operating model, we are going to lean into some additional marketing spend to extend our reach during the key back-to-school period. We think it's a prudent thing to do when customers are in the greatest need state for tutoring. And, again, given the strength of the LTVs that we've seen, we think it's the right time to do it.

Yes. As it relates to your question on sustainability, I mean, the exciting thing about the growth in new customer adds that we're seeing is that it's been driven by conversion. So our product is resonating more with customers, and we are making it more rather than we're increasing the value that we're able to communicate and provide. And that, of course, has incredible benefits from a unit level economic perspective and allows for you to drive immense operating leverage over time. And so as we continue to add new SKUs to appeal to different audiences, feature different elements of the membership to communicate value propositions that are specific to that type of customer that they're likely to leverage, we've seen conversion improve and then unit level economics improve. So CAC going down and then new adds going up. And that is something that we think we'll be able to continue to optimize over the course of many years to come. Just continuing to make the product more resonant and appealing, adding more value to the Learning Membership and as a result you’re driving delta marketing and operating leverage.

Thank you. There are no additional questions waiting at this time and that concludes today's conference call. I hope you all enjoy the rest of your day. You may now disconnect your lines.