A Note to Our Shareholders

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 2023-2024 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 were just beginning to expand the product introduction to a higher percentage of new Consumer customers. Learning Memberships had driven just 2% of Consumer revenue in the second quarter of 2022. Fast forward to today and Learning Memberships accounted for 88% of recognized 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 by the end of the year, nearly 100% of recognized Consumer revenue will be from Learning Membership subscriptions as revenue recognized from legacy packages trails off. We ended this most recent quarter with 31K Active Members paying approximately $350 per month on average, representing a $130 million annualized run-rate at quarter 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. In addition to actually having to build these new products, we also needed to shift our Institutional go-to-market sales strategy to larger and more comprehensive relationships with school district partners. Fast forward to today, and 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 second 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 toward net new innovation, including the application of AI for HI^®. We expected the benefits would become apparent in upcoming 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.

Those anticipated business model benefits are now being realized and driving substantial improvements in our operating results. In the second quarter, we recognized $48.8 million of revenue, an increase of 16% year-over-year, exceeding our guidance range of $45-47 million, and a 1,100 bps acceleration in growth over the previous quarter.

The new and simpler operating model made possible by our ‘always on’ recurring revenue offerings, combined with the benefits we are realizing from our application of AI, has allowed for us to significantly reduce the labor needed to operate our 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. Our GAAP net loss was $5.6 million in the second quarter, while we delivered adjusted EBITDA of positive $1.3 million, a $10.9 million and 2,555 bps improvement year-over-year, beating our guidance range of an adjusted EBITDA loss of $3.0 million to breakeven.

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 labor productivity improvements stemming from automation efforts and our business model changes that streamline operations.

I am pleased to share that in the second quarter:

Rapidly Shifting to ‘Always On’ Recurring Revenue Products Q1-2022    Q2-2022 Q3-2022 Q4-2022 Q1-2023 Q2-2023 Institutional    Memberships Packages Q2 2023 Adjusted EBITDA Bridge Adj. EBITDA Q2 2022 Gross Profit S&M    G&A Adj. EBITDA Q2 2023

Consumer Business

Our Learning Membership model leads to more attractive unit-level economics, longer duration and higher lifetime value customer relationships, higher gross margin, and a more scalable and efficient operating model. It also serves 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, driving conversion of new members and the retention of existing ones.

As visualized in the chart below, recent cohorts’ cumulative Learning Membership average revenue per customer continues to expand and separate from the historical amount an average Consumer customer would spend over time under our legacy package model. We believe these results clearly demonstrate the superior lifetime value of our Learning Membership model across all cohorts that have matured for at least 90 days from the time of each Learning Members’ first purchase.

Enhanced Learning Membership Experience

We are introducing a significantly upgraded and enhanced Learning Membership digital experience this August in time for back-to-school. The 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. These upgrades of the digital experience for Learning Members are in service of that ultimate outcome and are aimed at increasing engagement across each of those vectors.

During the second quarter, we launched an all new membership experience making it easier for Learners to more fully engage with their Learning Membership by improving product discovery and personalization.

The new Learning Membership Experience includes several new features:

My Learning Hub: The new My Learning Hub transforms the way members engage with our platform, making engaging and discovery with our platform more intuitive and user-friendly. The My Learning Hub serves as the new home page and central destination for Learning Members, allowing members to effortlessly access their upcoming live tutoring schedule, easily track their past learning interactions in a subject, and track progress and achievement toward learning goals. The My Learning Hub 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. My Learning Hub also brings together all of the key account management information and resources into a simple user experience that provides easy self-service management tools to better meet the changing needs of Learning Members and, separately, drive operating efficiency.

Subject Portals: Our new Subject Portals enable Learners to easily find all the different ways they can learn a given subject. We know our typical Learner prefers to learn a given subject in multiple different ways and this new experience honors that with improved discoverability. With the new Subject Portal experience updates, we aim to increase the number of learning formats Learners leverage on our platform in each subject, thereby driving increases in engagement and frequency of use and improving the value received by Learning Members.

We launched Varsity Tutors for Schools two years ago to help students at a larger scale than ever before. Students needed significant intervention to remediate learning loss and help learn core foundational skills. Simultaneously, school districts were now open to leveraging third party online platforms to help solve problems they were experiencing. Given our Consumer experience, we believed we were uniquely qualified and positioned to help deliver live learning at district-wide scale in a way that hadn’t been done before.

We continue to make progress building the foundation for a durable Institutional business capable of supporting millions of students. 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 Tutoring, Teacher Assigned, and On-Demand products into a single district partnership, is yielding results:

Varsity Tutors for Schools is delivering results for our school district partners and our ability to showcase the impact we are able to have through third party data continues to grow. As one example, last year Varsity Tutors for Schools partnered with the University of California Irvine and a large and well-known school district in southern California to conduct a randomized- controlled trial (RCT) research study to evaluate students’ score point increases in 4th grade mathematics as a result of High Dosage Tutoring. The study found that students who received the High Dosage Tutoring product offering from Varsity Tutors for Schools showed 217% growth in math proficiency compared to students not in the program.

Our sustained growth trajectory in the second quarter, an expanding portfolio of reference accounts, compelling efficacy data that demonstrates the effectiveness of our solutions, and enhancements to our unique product suite of High-Dosage Tutoring, Teacher Assigned, and On-Demand, provide us confidence that we are well positioned as we enter the key back-to-school selling season.

AI for HI^®

Our Artificial Intelligence for Human Interaction strategy is driving customer and business value at a rapid pace.

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 human interaction, deliver on the promise of hyper-personalized online learning and instruction, drive operating efficiency, and generally enhance the effectiveness and efficiency of our platform. I also shared that as a result of the investments we had made in instrumentation and data capture over the past 10 million hours of live face-to-face tutoring, as well as our practical experience driving both enhanced personalized learning interactions and business outcomes like revenue growth and operating efficiency through the application of AI, we believed we stood to benefit tremendously from the latest advancements in generative AI and were positioned to move quickly.

Ninety 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.

Our dedicated generative AI infrastructure team, Nerd AI, has built out and deployed shared capabilities and APIs that enable multiple different engineering teams to leverage common generative AI capabilities via APIs with established best practices, which in turn allows teams working on a given initiative or product to leverage that capability faster to accomplish their objective and enhance their initiative or product.

To illustrate the speed and significance of innovation occurring, along with where AI-related investments are being made beyond some of the more visible consumer- facing applications, I’ll share with you a few examples:

Customer Facing AI Enabled Innovation:

AI Content Generation: By employing the latest AI cloud frameworks, we’ve designed a robust system that generates practice content across a broad spectrum of subjects and skills. This system is unique as it integrates a human-in-the- loop feedback process, ensuring both accuracy and difficulty are aligned with educational standards while curating datasets we can use for improving our AI models. In order to scale learning content to the 3,000+ subjects we currently support, and the corresponding tens of thousands of skills, we needed to construct an AI-based approach for evaluating learning content. Every subject is different and needs a unique dataset in order to tune and optimize our AI models for both accuracy, difficulty and academic learning standards 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 to date, available for Learning Membership customers to use this back-to-school season in learning formats involving quizzes, computer adaptive diagnostics, and more. By year end, we expect to be able to 10X the quantity of learning content generated by the new AI system.

AI Tutor Chat Improvements: 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 Tutor’s strengths and areas for improvement. These updates reflect our commitment to pedagogical adherence and the individualized needs of each Learner.

Moderation and Redaction Services: Leveraging state of the art AI, we implemented monitoring and safeguarding of customer information and harmful content through the use of PII identification, redaction, and AI classification techniques for moderation in order to have complete auditability and control over conversations with our AI products and services.

Speech Transcription Service: Utilizing state of the art speech recognition AI, we built this service to automate the speech-to-text transcription of Nerdy’s rich audio data between customers, sales, support, and Experts. This enables us to more comprehensively predict insights, understand customer satisfaction and engagement, as well as tap into our rich Expert-Learner data to improve our AI- enabled products and solutions.

Summarization Service: We implemented an AI-based summarization system capable of distilling precise and accurate summaries from diverse interactions across all organizational levels. From Expert-Learner engagements to customer service interactions and internal communications, this tool is boosting efficiency, enhancing accuracy, and fostering insight-driven decisions.

AI Enabled Efficiency Improvements:

Nerdy Navigator Chatbot Creation: In order to meet the demand of internal teams requesting AI-powered chatbots to solve problems specific to users in their functional area, we created a templated approach for developing, training and deploying chatbots to support customers and internal teams.

Nerdy Navigator allows our employees to access Company specific information backed by the power of AI. With remote and distributed teams, growing volumes of information, and an ever-evolving landscape, the need for an efficient and accessible question-and-answer communication tool for our employees is essential. The Nerdy Navigator serves as a versatile solution that not only streamlines internal processes, it also empowers employees to be more productive, informed, and engaged. We’ve also supercharged our tech support chatbot using Nerdy’s AI embedded framework. Now integrated into our platform for Learners, the chatbot proficiently handles general account inquiries and technical support questions such as A/V camera issues and scheduling. These innovations are dramatically streamlining employee and customer support by reducing the number of interactions that require human based customer support.

Nerdy AI Playground: An exploratory environment that embodies our innovative spirit, the “AI Playground” serves as an internal platform enabling our teams to experiment, learn, and prototype AI applications. By offering capabilities like rapid A/B testing and seamless integration of generative AI, this playground fast-tracks the development and adoption of AI within Nerdy, fostering a culture of continuous innovation.

Increased Productivity and Operating Efficiency

As noted at the beginning of this letter, our simplified operating model, coupled with recent AI-driven automation and operational improvements enabling more efficient and responsive customer support interactions, have allowed for us to increase the productivity of our existing teams and reduce the variable labor needed to operate our platform. Whether it is 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 driving significant operating leverage.

These improvements support our ambitious goal to improve adjusted EBITDA margins by more than 2,000 bps in 2023 and become adjusted EBITDA profitable on a permanent basis. 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

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.

We appreciate your continued interest in our Company.

CHUCK COHN

Founder, Chairman & CEO

General and Administrative

General and administrative expenses for the three months ended June 30, 2023 on a GAAP basis were $29.7 million, a decrease of $3.0 million from $32.7 million in the same period in 2022. Excluding non-cash stock compensation expenses, general and administrative expenses for the three months ended June 30, 2023 were $20.3 million, or 42% of revenue, compared to $22.9 million, or 54% of revenue in the same period in 2022, an improvement of 1,270 bps year-over-year. General and administrative expenses for the six months ended June 30, 2023 on a GAAP basis were $59.4 million, a decrease of $3.9 million from $63.3 million in the same period in 2022. Excluding non-cash stock compensation expenses, general and administrative expenses for the six months ended June 30, 2023 were $39.8 million, or 41% of revenue, compared to $42.0 million, or 47% of revenue in the same period in 2022, an improvement of 652 bps year-over-year.

Our investments in product development and our platform-oriented approach to growth have allowed us to launch a suite of ‘always on’ subscription products including Learning Memberships for consumers, and our Teacher Assigned and On Demand offerings for Institutional customers. Subscription offerings simplify the operating model needed to support customers and grow the business. Combined with our ongoing automation efforts involving self-service capabilities, the application of artificial intelligence, and other efficiency efforts, we have been able to generate operating efficiencies and remove significant costs from the business. We believe we will be able to further simplify our operating model and remove additional costs from the business while growing revenue and Active Members.

Net (Loss) Earnings, Non-GAAP Adjusted Net Earnings (Loss), and Non-GAAP Adjusted EBITDA

Net loss on a GAAP basis was $5.6 million for the three months ended June 30, 2023, compared to net earnings of $15.3 million in the same period in 2022. Excluding non-cash stock compensation expenses and mark-to-market derivative adjustments, non-GAAP adjusted net earnings was $0.4 million for the three months ended June 30, 2023 compared to a non-GAAP adjusted net loss of $11.2 million in the same period in 2022, an improvement of $11.6 million year-over-year. Net loss on a GAAP basis was $37.8 million for the six months ended June 30, 2023, compared to a net loss of $16.5 million in the same period in 2022. Excluding non-cash stock compensation expenses and mark-to-market derivative

adjustments, adjusted non-GAAP net earnings for the six months ended June 30, 2023 was $0.9 million versus a non-GAAP adjusted net loss of $19.4 million in the same period in 2022, an improvement of $20.3 million year-over-year.

Non-GAAP adjusted EBITDA was $1.3 million for the three months ended June 30, 2023, beating our guidance range of an adjusted EBITDA loss of $3.0 million to breakeven, and compared to a non-GAAP adjusted EBITDA loss of $9.6 million in the same period in 2022, an improvement of $10.9 million and 2,555 bps year-over-year. Non-GAAP adjusted EBITDA was $2.7 million for the six months ended June 30, 2023, compared to a non-GAAP adjusted EBITDA loss of $16.3 million in the same period in 2022, an improvement of $19.0 million and 1,826 bps year-over-year. Adjusted EBITDA outperformance was driven by higher revenues, gross margin expansion, sales and marketing efficiency gains, and continued variable labor productivity improvements stemming from automation efforts and our business model changes that streamline operations.

See page 17 for reconciliations of non-GAAP measures to the most directly comparable GAAP financial measure.

Liquidity and Capital Resources

As of June 30, 2023, the Company’s principal sources of liquidity were cash and cash equivalents of $90.9 million. Our strong balance sheet provides us with ample liquidity to operate against our plan and pursue growth initiatives.