What happened

Shares of Nerdy (NRDY -1.60%) soared 44% last week, according to data from S&P Global Market Intelligence. Investors cheered the online education company's successful transition to a membership business model. 

So what

Nerdy's revenue declined less than 1% year over year to $41.8 million in the fourth quarter. That was above management's guidance of $39 million to $41 million and Wall Street's expectations of $40 million. For the full year, Nerdy's revenue's revenue grew 16% to $162.7 million in 2022.

Notably, learning memberships accounted for 50% of Nerdy's total revenue in the fourth quarter, up from 18% in the third quarter.

"Last May we unveiled our plan to evolve our products and revenue model toward long-term recurring 'always-on' relationships with our customers," CEO Chuck Cohn said in a press release. "I am pleased to share that we made substantial progress in the fourth quarter and our shift to an 'always on' business model is ahead of plan."

Still, Nerdy is not yet profitable. But the company's adjusted net loss improved to $6.8 million from $7.1 million in the fourth quarter of 2021. Meanwhile, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss checked in at $5.5 million. That was significantly better than management's guidance for a loss of $6 million to $8 million. 

Now what

The midpoint of Nerdy's financial forecast calls for revenue to grow by 20% in 2023 to roughly $195 million. The company also expects its profit margin to improve as it shifts 100% of its consumer business to memberships by the end of the year. In turn, Cohn believes Nerdy will achieve adjusted EBITDA profitability by the end of 2023.

"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 meaningfully higher customer lifetime value," Cohn said.