What happened
Shares of NerdWallet (NRDS 2.92%) were taking a dive today after the personal finance specialist posted solid results in its first-quarter earnings report, but warned of headwinds for the rest of the year.
As of 12:54 p.m. ET, the stock was down 18.3%.
So what
NerdWallet, which makes money from affiliate marketing programs from partners like credit cards, banks, and insurance companies, posted strong top-line growth. Revenue rose 31% to $169.6 million, topping estimates for $167 million.
Growth was driven by credit cards, which jumped 36% to $61.3 million, and other verticals, which rose 74% to $86.3 million. However, loans fell 36% to $22 million due to pressure from higher interest rates.
Nonetheless, the company continued to make progress on the bottom line, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) soaring 134% to $20.9 million. It flipped a $0.16-per-share loss in the year-ago quarter to a $0.02-per-share profit, ahead of the consensus of a loss of $0.05 per share.
CEO Tim Chen said, "We delivered solid financial results in Q1 during a volatile economic climate. We focused on executing against our growth pillars to deliver value to consumers, expanding our financial guidance across verticals and acquisition channels, and investing in consumer experiences to drive continued growth in Registrations and Engagement."
NASDAQ: NRDS
Key Data Points
Now what
Despite those strong results, second-quarter guidance indicated that the company expected a substantial deceleration in growth, calling for $134 million-$141 million in revenue, or just 10% top-line growth at the midpoint, well below the consensus of $162.3 million. It also forecast a sequential decline in adjusted EBITDA of $17 million-$19 million.
Management noted near-term macro headwinds in credit cards and insurance, but still called for a year-over-year increase in its annual adjusted EBITDA margin.
Still, the weak guidance explains shares slumping today because NerdWallet is priced like a growth stock. If those headwinds do prove to be fleeting, today's sell-off could be a buying opportunity.
