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[Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Robb Ferris, VP of Finance. Please go ahead.

Thank you, Operator. Welcome to the NerdWallet Q3 2026 Earnings Call. Joining us today are our Co-Founder and CEO, Tim Chen, and Chief Financial Officer, John Lee. Our press release and shareholder letter are available on our Investor Relations website, and a replay of this update will also be available following the conclusion of today's call. We intend to use our Investor Relations website as a means of disclosing certain material information and complying with disclosure obligations under SEC Regulation FD from time to time. As a reminder, today's call is being webcast live and recorded. Before we begin today's remarks and question-and-answer session, I would like to remind you that certain statements made during this call may relate to future events and expectations and, as such, constitute forward-looking statements. The actual results and performance may differ from those expressed or implied by these forward-looking statements as a result of various risks and uncertainties, including the risk factors discussed in reports filed or to be filed with the SEC. We urge you to consider these risk factors and remind you that we undertake no obligation to update the information provided on this call to reflect subsequent events or circumstances. You should be aware that these statements should not be considered a guarantee of future performance.

Furthermore, during this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, except where we are unable, without unreasonable efforts, to calculate certain reconciling items with confidence. With that, I'll now turn it over to Tim Chen, our Co-Founder and CEO. Tim?

Thanks, Robb. We delivered revenue of $240 million in the third quarter with non-GAAP operating income, or NGOI, of $30 million. Revenue grew 11% year-over-year, but was below our guidance range due to a $17 million year-over-year decrease in auto insurance revenue. As a result, NGOI came in at the low end of our guidance range. We're our own harshest critics, and we are disappointed by our underperformance in auto insurance, especially with the tailwinds the overall industry is experiencing. We're relatively early in the development of our auto insurance carrier network, which has limited our ability to monetize traffic relative to our peers. We are committed to expanding our network of insurance carrier and third-party agent relationships. Unfortunately, this takes time to build, and in hindsight, we were overly optimistic on partnership timelines.

Although we expect these auto insurance dynamics to continue to impact our results for the remainder of the year, we are confident that we will secure these partnerships over time. From an owned audience standpoint, we are excited by and continue to invest in vertical integration plays across our brokering and advisory businesses with payback periods beyond the current year. Our full-year NGOI guidance range includes $15 to $20 million of negative impact associated with these investments, consistent with our outlook from last quarter. AI also gives us new ways to build and deliver services to consumers and SMBs. In our vertically integrated businesses, we are using AI-assisted development to improve the software our in-house agents use to manage customer relationships. Looking ahead, we are exploring ways for our licensed agents to support consumers shopping through AI assistance. And now I will pass it over to John to cover our financial results in more detail.

Thanks, Tim. As Tim mentioned, total revenue in Q3 was $240 million, up 11% year-over-year, and below our guidance range of $244 to $260 million. Consumer revenue was $215 million, up 12% year-over-year, driven by growth in student loans, personal loans, and deposit accounts. Personal loan revenue increased as we expanded our marketplace to serve more borrowers, and deposit account revenue growth was driven by expanded partner budgets. These increases were partially offset by a $17 million year-over-year decline in auto insurance. SMB revenue was $25 million, up 6% year-over-year. Strong loan originations and renewals supported growth, while organic search traffic continued to pressure other SMB products. Moving to profitability, Q3 GAAP operating income was $19 million and NGOI was $30 million at a 13% margin.

Beginning this quarter, our NGOI definition excludes certain accelerated stock-based compensation. This quarter, this definition change resulted in a $3.9 million add-back to NGOI related to a previous acquisition. Adjusted EBITDA was $40 million at a 17% margin. Turning to cash flow and capital allocation, we generated $129 million of adjusted free cash flow over the trailing 12 months, a 51% year-over-year increase. During this quarter, we repurchased approximately $11 million of Class A common stock, bringing our repurchases over the trailing 12 months to approximately $151 million. Our weighted average diluted share count was 64.7 million, down 16% year-over-year. As of September 30, we had $74 million of cash and cash equivalents, with approximately $57 million remaining under our share repurchase authorization.

Turning to guidance, we expect fourth quarter revenue in the range of $191 to $203 million and NGOI in the range of $9 to $15 million. For the full year, this implies that we expect NGOI in the range of $85 to $91 million. Looking forward, although we're still in the 2027 planning process, we expect to increase revenue year-over-year in 2027, but growing in Q1 will be a challenge as it will be our toughest year-over-year comp. On expenses, we plan to increase our investments in longer payback, vertical integration, and AI-related projects next year. Although these investments will have a negative impact on NGOI in the near term, we believe they will help us build a stronger business and set us up for sustainable long-term revenue growth. Our cash generation gives us flexibility to invest in the business, pursue acquisitions, and return capital to shareholders. We'll continue to weigh these opportunities against one another with a focus on long-term shareholder value. With that, we'll open up for Q&A.

[Operator Instructions] Our first question comes from the line of Ralph Schackart with William Blair. Please go ahead.

First, just on the SEO headwinds that you called out, can you maybe speak to the relative headwinds you're seeing in Q3 versus what you've experienced through the year? I'm just kind of curious if those headwinds are getting tougher, you're finding workarounds, et cetera. And then second, just on the insurance situation and insurance vertical, what kind of time horizon do you think it would take to build these integrations and get that business sort of back where you expect it to be? Thank you.

Thanks for the question. So in terms of SEO, organic search has become a fraction of what it was for us after 3.5 years of rapid declines. That being said, the pace of declines has stabilized a bit in recent months. So just as a reminder, educational content has been severely impacted as Google puts AI summaries in search engine results. However, product marketplaces like insurance have been more insulated. I mean, there is an impact, but you can't, for example, summarize a marketplace. There's inventory, dynamic pricing, underwriting eligibility, and a host of other factors that do require that marketplace. So I'd say SEO is much smaller than it was before and it's stabilizing a bit.

In terms of insurance, to give a little more color there, we mentioned in our prepared remarks that our partner network is broad. So we have direct relationships with a few of the top 10 carriers, including one that was running laps around everyone during the last few years coming out of the hard market. So that allowed us to be very competitive in acquiring customers in 2024 and 2025. So what happened this year is the rest of the top 10 carriers are starting to get way more competitive in acquiring customers, which is awesome for the industry. But yes, you have to be able to monetize.

So ultimately we need to get more competitive and yes, carrier relationships take time to build. They don't really want to work with you until you're at a certain volume or have established your reputation in the market. And even after that happens, it can take quarters to establish that direct relationship. So it's a little hard to predict, frustrating for us, but the good news is we have the volume, we're talking, but it's hard to say exactly when we secure those relationships. At some point we'll get it done and it'll be pretty obvious when that happens, but we don't expect to resolve the problem in Q4.

Our next question comes from the line of Yusuf Squali with Truist Securities. Please go ahead.

This is Robert on for Yusuf. On organic search, I'm just curious what the strategy is here now to overcome the organic search headwinds because, historically, it's been an organic SEO business. So just curious now in this new era and with search seeing a lot of volatility, what the new strategy is. And then on that front, I'm curious how much traffic comes from AI agents today and where you think this is going to be in the next 5 years, the next 10 years. Thanks.

Yes, Robert, thank you for that question. We really have a multi-channel marketplace generating a ton of NGOI focused on in-month earnings, but we also have multiple long-term bets that we've been discussing over the last few quarters. So I would break out our business in the following categories, which is, as you mentioned, we have our SEO-led content business. That has been declining, but it's a lot smaller today than it was a couple of years ago. We have our paid marketing marketplace that has been growing meaningfully year-over-year, and you could track the increase in our marketing spend that we disclose. And we've been pretty clear that we are focused on in-month positive profit in that business. And we also have our vertical integration bets, which is negative in NGOI, which is this $15 to $20 million that we've highlighted for 2026 that we're excited about. And it is really a big part of our owned audience strategy.

And then we have our long-term bets. They're more AI-related as you could imagine now, and they're not contributing to the top line today, but do hit our OpEx so far. So I would really think about it in those 4 terms. And going back to your original question, yes, SEO content business, although big, has been declining and it's much smaller today than 2 years ago.

And on the agentic traffic question, I mean, I think it's a little bit hard to predict where that goes. I think it's going to vary a lot by vertical. As an example, I would speculate that in auto insurance it's going to really come down to whether carriers play ball. And then you have to think about some of the things they're worried about, right? So first is churn. If you have customers who are shopping via an agent, are they going to reshop in 6 months? And that's going to really impact LTV pretty linearly and make it a less attractive channel.

And then the second piece you've got to think about is just like the cost of quoting. I mean, it costs us a few bucks to run a quote, and then it costs the carriers a multiple of that to give a quote from an underwriting perspective. So that ratio of empty calorie quoting versus people who actually become customers is going to matter a lot. And I think without the major carriers playing ball, it's just not really going to function as a market. So that being said, we're investing in it. I think everyone's going to experiment with it and see where it goes. But it's kind of hard to say exactly how big it'll be.

Okay, great. Thanks.

Our next question comes from the line of Michael Infante with Morgan Stanley. Please go ahead.

Tim, I'd be curious to just get your perspective, perhaps your conversations with investors, just in terms of how you describe the value prop of the NerdWallet platform today, particularly as some of the LLMs now are obviously coming out with personal finance functionality, probably beginning to recommend products or at least provide sponsored ads at some point in the future. So how do you just think about continuing to make NerdWallet top of mind for consumers over time?

Yes, I think for us a big piece of this is the marketplace dynamic. Consumers have to often make complex decisions, especially in areas like insurance, personal loans, mortgages, where there's really a lot of risk-based pricing. And in order to do that in a compliant manner, you need a trusted marketplace that has the inventory, the pricing that's going to send you to the partner. And so that's where we're in conversations with both the model companies as well as constantly with consumers. And I think there's an opportunity to do that in an agentic world. Now, exactly what shape that takes, I think it's still being sorted out in terms of how the economics work. I think it's going to be much more liquid in some verticals and not going to change that much in others. We want to be ready for all eventualities there, so we're definitely making the investment today.

Appreciate that. And John, just for a quick follow-up, I mean, performance marketing in the quarter, I think it rose $35 million year-on-year against, call it, $25 million of incremental revenue. Obviously, I understood that you had the insurance challenges, but still a lot of performance marketing intensity. As we've spoken about how you guys were still trying to optimize the performance marketing playbook, can you just sort of speak to some of the initiatives that you have in place to optimize that channel and how you think about the ability to sort of incrementally spend on performance marketing over time relative to the revenue generation? Thanks again, guys.

Yes, I mean, it's related to — I mean, the one big area that we just talked about is all the initiatives we're doing on insurance, right? Building a broader carrier network and having a healthy distribution network is an area that we're very focused on. On ROAS, we're highly focused on making sure that we are in-quarter positive in our marketplace. Performance marketing isn't just SEO. There are multiple different channels that we are developing, including social and other channels that we're highly focused on.

And then the other part of this is that in the math that you're doing, Michael, a lot of our NGOI investments are actually flowing through there as well. So some of the lift you're not seeing there is because of the NGOI investments — sorry, the IR investments that we're making. A lot of that $15 to $20 million is also flowing there, which does show like it's not being efficient, just to factor that in as you're thinking about our efficiency going forward.

Appreciate it.

Thank you. There are no further questions. I will now pass back to management for closing remarks.

Thanks, everyone, for your questions. Our mission of providing clarity for all of life's financial decisions continues to guide us. I want to thank our Nerds for their dedication to that mission and our shareholders for your continued support. We're encouraged by the progress we're making and excited about the opportunity ahead, earning the trust of the consumers and small businesses we serve and keeping them coming back to NerdWallet.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

Thank you. Good day and thank you for standing by. Welcome to the NerdWallet Inc Q2 2026 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. be advised that today's conference is being recorded.

I would now like to hand the conference over to the very first speaker today, Zach Ogle. Zach, please go ahead.

Thank you, Operator. Welcome to the NerdWallet Q2 2026 earnings call. Joining us today are co-founder and CEO Tim Chen and Chief Financial Officer John Lee. Our press release and shareholder letter are available on our Investor Relations website, and a replay of this update will also be available following the conclusion of today's call. We intend to be able to to use our investor relations website as a means of disclosing certain material information and complying with disclosure obligations under SEC Regulation FD from time to time. A reminder, today's call is being webcast live and recorded. Before we begin today's remarks and question and answer session, I would like to remind you that certain statements made during this call may relate to future events and expectations, and as such, constitute forward-looking statements. Actual results and performance may differ from those expressed or implied by these forward-looking statements as a result of various risks and uncertainties, including the risk factors discussed in reports filed or to be filed with the SEC.

We urge you to consider these risk factors and remind you that we undertake no obligation to update the information provided on this call to reflect subsequent events or circumstances. You should be aware that these statements should not be considered a guarantee of future performance. Furthermore, during this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, except where we are unable, without unreasonable efforts, to calculate certain reconciling items with confidence. With that, I will now turn it over to Tim Chen, our co-founder and CEO.

Thanks, Zach. We reported revenue of $197 million for the second quarter, up 6% year-over-year. Non-GAAP operating income, or NGOI, of $12 million was above the midpoint of our guidance range. We're in the middle of an AI transition that is changing how people get their answers to their money questions, making now an important time to check in on our long-term objectives. We're investing in building owned audiences by vertically integrating in some areas and by improving how we register and re-engage with users and others. While the story is still being written, we are confident because of the assets we have in place. a trusted brand, a large audience, healthy financials, and a strong team on an important mission. The success we are seeing in vertical integration plays across our brokering and advisory business lines is giving us conviction to start investing incremental marketing dollars based on internal rate of return or IRR targets rather than solely on in-quarter profitability. For the full year 2026, we expect to grow this incremental investment five-fold versus 2025.

Despite the longer payback periods associated with these investments, the recurring nature of the relationships produce highly attractive IRRs. We continue to optimize for positive in-quarter profitability for most of our business lines, but in the future we envision extending these IRR-based investments more broadly across our business. In our more traditional marketplace business, we continue to deliver more relevant and personalized offers to consumers while helping financial institutions meet their growth objectives. making it easier for consumers to find the financial products that best meet their needs. Product improvements unlocked significant volume growth in recent quarters, helping to drive the $12 million year-over-year increase in personal loans revenue delivered in the second quarter. Our relentless focus on efficiency is allowing us to stay nimble in this environment and to continue delivering solid profitability. We also continue to generate strong free cash flow, enabling us to fund investments in our owned audience strategy while maintaining a strong bond sheet. And now I will pass it over to John to cover our financial results in more detail.

Thanks, Tim. As Tim mentioned, total revenue in Q2 was $197 million, up $6 percent year-over-year. Consumer revenue was $175 million, up 8 percent year-over-year, driven by personal loans and deposit accounts as consumer demand remained strong and financial institutions expanded budgets. This was partially offset by a decline in consumer credit cards, primarily due to continued organic search headwinds. Our largest auto insurance carrier relationship has stabilized, but not yet returned to the level seen earlier in the year. As we continue to explore ways to grow with that carrier, we remain focused on scaling with other leading auto insurance carriers and expanding our in-house insurance agency, an example of our growth and owned audiences. SMB revenue was 22 million, down 11% year-over-year, driven primarily by organic search revenue declines in SMB products, partially offset by revenue growth and business loan originations. Moving to profitability. Q2 GAAP operating income was $7 million, and NGOI was $12 million at a 6% margin, above the midpoint of our guidance range of 6 to 14 million.

Q2 adjusted EBITDA was 23 million, in line with our guidance range of 19 to 27 million. Turning to cash flow and capital allocation. Our trailing 12-month adjusted free cash flow grew 100% year-over-year to $141 million, a new record. As a reminder, we were not a cash payer of federal corporate taxes during this period and received $9 million of tax refunds. We do not expect to be a federal corporate taxpayer in 2026, but expect to return to normalize corporate taxes in Q2 or Q3 of 2027. During the quarter, we repurchased $23 million of Class A common stock, bringing our repurchases over the last over the past 12 months to 160 million. Our Our Q2 weighted average diluted share count was down 14% year-over-year due to our share repurchase activity.

As of June 30th, we had $62 million of cash and cash equivalents up from $56 million at the end of Q1 with $67 million remaining under our share repurchase authorization. Turning to guidance, we expect to deliver third quarter revenue in the range of $244 to $260 million, up 17% year-over-year at the midpoint. In terms of profitability, we expect non-GAAP operating income in the range of $29 to $37 million. Our Q3 guidance reflects typical seasonality in our business, as well as expected tailwinds from regulatory changes in student loans and the impact of our college finance acquisition in February. As a result, we expect our annual profitability to be more concentrated in the third quarter this year than in prior years. For the full year, we're narrowing our NGO expectation to a range of 90 to 105 million, maintaining the midpoint of our previous guidance. This guidance includes $15 to $20 million NGY impact from customer acquisition spend with payback periods beyond the current year.

At the midpoint, this spend implies an approximately five times increase year-over-year. We expect to continue generating meaningful, adjusted-free cash flow moving forward. From a capital allocation perspective, we'll continue to weigh organic investments, inorganic growth opportunities, and share repurchases against one another to maximize long-term shareholder value. With that, we'll open up for Q&A.

Thank you. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw a question, please press star 1-1. Again, please stand by while we compile the Q&A roster. Our first question comes from the line of Ralph Charcarte from William and Blair. Ralph, your line is now open.

Great. Thanks for taking the question. In the script you talked about stepping up the investment, I think fivefold versus last year with longer payback duration. I guess what's given you the confidence this investments are the right time at this particular scale? Then maybe if you could provide some color on the new, payback duration. I wasn't sure if he said more than one year. Also in the prepared remarks, but any color, you know, how you're thinking about the payback as well. Thank you.

Yes, I'm happy to take that. So with the investments we made in vertical integration, we're beginning to see cohorts of our consumers with high retention and recurring revenue. So tailoring our marketing spend to the stickier audiences on the basis of IRR is a natural extension of our progression here, but we're still keeping a very high bar and tracking cohort performances in detail. And to us, it's really ultimately an LTV to CAC optimization over a longer period of time while using IR and payback period as guardrails. And from an IR target perspective, it's really a capital allocation question for us. We know what our free cash flow yields are today. We have a pretty good sense of what our M&A opportunities are.

And these internal IR investments need to stack well against those opportunities to have capital allocated against it.

Okay, and then just another question, just switching gears maybe to the LLM traffic and some of the FCO headwinds that you called out, maybe just some perspective on, you know, just another quarter with the LL models. How is that traffic converting? You know, are you guys finding new workarounds? Just, you know, any call you can add there as well. Great. Thank you.

Yes, this is Tim. The traffic is converting well. I mean, I think intent is extremely high when someone is coming through an LLM in terms of wanting to transact in a marketplace. It continues to be a pretty small part of our business today, but it's definitely an area of investment and growth for us.

As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Our next question comes from the line of Michael Infante of Morgan Stanley. Michael, your line is now open.

Yes, hi guys. Thanks for taking my question. Tim, I just get your thoughts on just the importance of distribution in the future with everything going on from an AI perspective. How much of that value do you think ultimately accrues to distribution? to NerdWallet versus the platforms and anything you can share in terms of, you know, some of the underlying CAC trends that sort of gives you the confidence that you can continue to capture that over time.

I think brand and reach are just an incredible asset. I mean, I think distribution is so important in this future state of the world. A lot is left to be determined. Obviously, the story is being written, but we've already entered a phase where you've got billions of weekly active users across major LLMs. Mass adoption is already taking place, right? And so I think a lot of the impact that we've already seen in terms of our educational content being effective the last three years has played out. I think we're starting to see what the future looks like. The The importance of that trusted brand when you're talking about offering marketplaces and high stakes financial guidance is really front and center.

I just think we're really well positioned there. That does translate into CAC. Brands with higher trust are going to have advantages there. That's where our vertical integration strategy is really banking on. We think our distribution and our trust are going to give us a leg up there.

That's helpful. And then maybe just on, you know, just the SMB business and the quarter are sort of down 11. structural search headwinds sort of continuing, like, how should we be thinking about the path to recovery there? And or like, if this is a business you ultimately, you know, want to continue to own and lean into incrementally relative to just investing more into, you know, the consumer vertical integration. Thanks, guys.

I think about SMB as having two distinct parts. Part of it is the loan business, so that's more of a loan brokering operation with a highly, highly considered purchase on behalf of this small business owner. And then the other piece of the SMB business is more of our traditional business I mean, we're recommending things like everything from credit cards to bank accounts to software. So where we're really seeing headwinds year over year is on the non-loans part of the business and loans is growing year over year. The loans business does have this dynamic of, you know, an owned audience that does come back to us over and over again, over a number of years. So that's the part of the business that we continue to invest on from, you know, a brokering efficiency standpoint. And then in terms of the rest of that business, we really think about expanding our channels and improving our CRM.

So we're investing in both. I'm showing no further questions at this time. I would now like to turn it back to management for closing remarks.

Thanks everyone for your questions today. Looking ahead, we're going to remain focused on building owned audiences through vertical integration, registrations, and data-driven engagement. And with the assets and people we have in place, we're confident that NerdWallet will emerge from the AI transition as the most trusted consumer finance brand and the place people turn to for answers to the most important money questions. I look forward to updating you on our progress next quarter.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Good day, and thank you for standing by. Welcome to the NerdWallet, Inc. First Quarter 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Robb Ferris, VP of Finance. Please go ahead.

Thank you, operator. Welcome to the NerdWallet Q1 2026 Earnings Call.

Joining us today are Co-Founder and Chief Executive Officer, Tim Chen; and Chief Financial Officer, John Lee.

Our press release and shareholder letter are available on our Investor Relations website, and a replay of this update will also be available following the conclusion of today's call. We intend to use our Investor Relations website as a means of disclosing certain material information and complying with disclosure obligations under SEC Regulation FD from time to time. As a reminder, today's call is being webcast live and recorded.

Before we begin today's remarks and question-and-answer session, I would like to remind you that certain statements made during this call may relate to future events and expectations and as such, constitute forward-looking statements. Actual results and performance may differ from those expressed or implied by these forward-looking statements as a result of various risks and uncertainties, including the risk factors discussed in reports filed or to be filed with the SEC.

We urge you to consider these risk factors and remind you that we undertake no obligation to update the information provided on this call to reflect subsequent events or circumstances. You should be aware that these statements should not be considered a guarantee of future performance. Furthermore, during this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, except where we are unable without reasonable efforts to calculate certain reconciling items with confidence.

With that, I will now turn it over to Tim Chen, our Co-Founder and CEO. Tim?

Thanks, Robb. We reported revenue of $222 million for the first quarter, up 6% year-over-year. Within our Consumer vertical, we saw continued year-over-year growth in banking, driven by robust demand for savings accounts. Personal loans revenue was also significantly higher in Q1 year-over-year. These positives were partially offset by a year-over-year decline in credit cards. Within our SMB vertical, we saw year-over-year declines driven by organic search headwinds.

Non-GAAP operating income of $34 million and adjusted EBITDA of $45 million set new Q1 records, driven by strong operating leverage on our fixed cost base and lower other marketing spend. As we look ahead, we are affirming the high end of our full year NGOI guidance range, but taking a more conservative view on the lower end of the range to reflect 2 dynamics that are adding uncertainty to near-term results.

First, in auto insurance, monetization from one of our large partners started running below our expectations, which impacted our Q1 results and is expected to have a greater impact in Q2. While this business can be volatile on a quarter-to-quarter basis, we're encouraged by the strong macro outlook for auto insurance customer acquisition spend. Against this healthy backdrop, we are deepening our technology integrations with several auto insurance carriers and expanding our offering with agent-centric carrier partners through phone-based referrals.

We are also investing to build out our branded agency, NerdWallet Insurance Experts. We believe that these investments will create a more diversified and resilient base from which we'll grow in the future. Second, we've decided to be more aggressive in placing our long-term bets. We believe our brand and distribution moats represent a growing advantage as less powerful brands struggle to reach consumers efficiently while AI simultaneously reduces the cost of offering financial products. This is creating a unique investment window for NerdWallet.

While this environment is increasingly challenging for newer entrants and single product companies, our trusted brand leaves us in a strong position to capitalize on our massive consumer reach and distribution network. Whether we're evaluating corp dev opportunities or building offerings like NerdWallet Insurance Experts, we believe we are in a sweet spot to generate attractive long-term returns on these investments.

And now I will pass it over to John to cover our financial results in more detail.

Thanks, Tim. Before I walk through the results in detail, a quick reminder on the reporting change we discussed last quarter and which took effect today. Beginning this quarter, we're presenting revenue in 2 categories: Consumer and SMB. Consumer combines what we previously reported as insurance, credit cards, loans and emerging verticals. SMB remains unchanged. Prior period amounts have been restated under this new presentation.

Turning to the top line. Total revenue in Q1 was $222 million, up 6% year-over-year. Consumer revenue was $198 million, up 10% year-over-year, driven by banking and personal loans and partially offset by consumer credit cards, primarily due to organic search headwinds. SMB revenue was $25 million, down 15% year-over-year, driven primarily by organic search revenue declines in SMB products, partially offset by revenue growth in loan originations.

Moving to profitability. Q1 GAAP operating income was $27 million compared to $1 million in the prior year quarter. NGOI was $34 million at a 15% margin, up from $9 million at a 4% margin in Q1 2025 and above our guidance range of $28 million to $32 million. The year-over-year improvement was primarily driven by lower other marketing expenses on lower brand spend, partially offset by higher performance marketing spend. Recall that we did not repeat a Super Bowl ad this year, which was the primary cause of the decline in our other marketing spend year-over-year. As we have seen in the past quarters, brand spend tends to fluctuate quarter-over-quarter and is dependent on timing of brand campaigns and market conditions. Q1 adjusted EBITDA was $45 million.

Turning to cash flow and capital allocation. We ended the quarter with $56 million of cash and cash equivalents, down from $98 million at year-end in 2025. During the quarter, we generated $40 million of adjusted free cash flow, offset by $17 million of cash consideration for the College Finance acquisition that closed in February as well as $66 million of share repurchases in the quarter.

Please note that the contributions from the College Finance acquisition were not material to first quarter revenue or operating income. Our trailing 12-month adjusted free cash flow of $131 million was up 125% year-over-year, a testament to the strong cash flow characteristics of our business model. Our diluted weighted average share count was down 9% year-over-year due to our share repurchase activity, and we will continue to evaluate share repurchases alongside other uses of capital. As of March 31, we had $90 million remaining under our share repurchase authorization.

Turning to guidance. We expect to deliver second quarter revenue in the range of $186 million to $202 million, up 4% year-over-year at the midpoint. In terms of profitability, we expect non-GAAP operating income in the range of $6 million to $14 million.

As a reminder, Q2 is typically our seasonally softest quarter, and our guidance reflects this as well as our deliberate increase in vertical integration investments to drive long-term growth. For the full year, we're guiding to an NGOI expectation between $85 million and $110 million. We're reaffirming the upper end of our previously issued guidance range with the expectation that we will continue to grow revenue year-over-year in each of the remaining quarters of 2026, supported by continued performance marketing-led growth in banking, personal loans and other products, resulting in full year revenue growth in the mid- to high single digits year-over-year.

In addition to top line growth, we expect NGOI to be supported by ongoing corporate G&A expense discipline. However, we're reducing the low end of the range, which now reflects planned investments to accelerate our vertical integration strategy and to reflect uncertainty as it relates to monetization with one of our large auto insurance partners. As Tim mentioned, we're increasingly confident that these investments not only have the potential to accelerate our growth and generate attractive returns for our shareholders, but to create a more diversified and resilient NerdWallet over time.

With that, we'll open it up for Q&A.

[Operator Instructions] Your first question comes from the line of Justin Patterson with KeyBanc Capital Markets.

This is Miles Jakubiak on for Justin. I wanted to dive deeper in on the acceleration of investments in the vertical integration. Just curious if you could give more context around what you saw or what changed that led you to want to push the pedal on some more investment in these areas? And then any more context you can provide around just where these dollars are going within the vertical integration strategy would be helpful?

Thanks for the question, Miles. Yes. So high level, the cost of launching financial products is decreasing rapidly as everything from software to call centers, to capital markets is getting more efficient. Meanwhile, the cost of distribution is going up. That means now more than ever, distribution is king. And so as a result, a lot of bright entrepreneurs, whether internal to NerdWallet or external are seeing NerdWallet is a great place to build.

So we have a really unique investment window. I mean from the corp dev side, we're seeing a lot of people coming to us who value our distribution, who have built great products. So we're also considering building a lot of things ourselves as well.

[Operator Instructions] The next question comes from the line of Michael Infante with Morgan Stanley.

Yes. Two ones for me. I'll ask them both at the same time. Are you able to parse how much of the full year low-end NGOI reduction is driven by the monetization dynamics versus the incremental investment? And then, Tim, just on the incremental investment, you obviously gave some commentary there. I mean, we're in, obviously, the middle of a pretty significant sort of structural profitability change in the business with the mix shift towards performance marketing. Can you just sort of walk us through the work that you guys have done internally to get comfortable with the returns that you intend to deliver here?

Thank you for the question. So just -- on the NGOI full year guidance question, so we are reaffirming the upper end of our issued -- previously issued guidance range with the expectation that we'll continue to grow revenue year-over-year each in the remaining quarters. So in terms of the low end of the range, we assume that at the low end of the range that we're not able to offset the insurance weakness for the entire year, and we continue to invest further into our vertical investment strategy, whereas the high end of the range represents that we are able to offset the insurance weakness in the second half of the year while we identify fewer investment opportunities in our vertical investment strategy.

Yes. I'll take the second part of that. But maybe first, I'll give a little more color on the insurance as well. So I mean, one of our large carriers pulled back in March, and we have a lot of concentration towards a few carriers currently and a few channels, right? So taking a step back, even after growing our insurance business several fold over the past few years, we're still a relatively new player in this market and have a pretty high concentration. So we're really investing in growing additional carriers, but we're also starting to sell directly to agents, and that's a new business for us.

And that rounds out our core quick offerings with calls and leads and enables us to open up additional channels. In terms of the IRR analysis, we have -- we obviously want to exceed our cost of capital when we're doing things like vertical integration. And our cost of capital is pretty high, right? Like if you look at our free cash flow yield versus our market cap and our growth rate, that's a pretty high hurdle to get over. So I think what's kind of unique for us is we have that big top of funnel. When we're looking at things from a corp dev perspective, we can do commercial testing with partners and get a pretty good sense of how that's going to shake out. And when we're building internally, yes, with all the new tools and infrastructure that's available now, you can build pretty incredible stuff with pretty small teams. So both of those are affecting the cost side of the IRR calculation.

[Operator Instructions] Our next question comes from Ralph Schackart with William Blair.

Just maybe piggybacking off that last question on insurance. Can you maybe just give us a sense or a better understanding of the investment needed in terms of the dollars and/or the duration of this investment? Is this going to be a multi-quarter cycle or something that you think could be, I guess, sort of quickly built to add that additional carrier capacity?

And then maybe just an update on the LLM traffic, maybe what you've observed or learned since the last call. Any sense potentially how cannibalistic this is or kind of maybe how that traffic is shaking out?

On the insurance build-out, we're definitely talking multi-quarters, right? I mean we're talking about standing up a system where we're routing calls to agents at both independent agents as well as captive agents. So that just takes time. We got to build that out from both a operational side as well as a BD side and demonstrate our value and kind of follow the playbook over time.

So I'd expect more of a slower ramp there. We're going to try to do it efficiently, but that is an incremental investment. And then in terms of LLM traffic, pretty much the same story as last quarter. I mean we're pretty dominant when it comes to LLM share in financial services or money questions based on all the third-party data we've seen. So we do see people coming through. We see high conversion rates. It's just a very small piece of our overall pie right now from a revenue perspective.

I'm showing no further questions at this time. So I will now turn it back to management for closing remarks.

All right. Thanks, everyone, for your questions today. The quarter -- this quarter, we made meaningful progress against our strategic pillars. I'm proud of what the Nerds delivered and remain confident in where we're headed. And so our focus is clear, making NerdWallet the first place consumers turn to shop for financial products. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the NerdWallet Q4 2025 Earnings Call [Operator Instructions] Please be about that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Rob Farris, VP of Finance. Please go ahead. .

Thank you, operator. Welcome to the NerdWallet Q4 and Full Year 2025 Earnings Call. Joining us today are Co-Founder and Chief Executive Officer, Tim Chen; and Chief Financial Officer, John Lee. Our press release and shareholder letter are available on our Investor Relations website -- and a replay of this update will also be available following the conclusion of today's call. We intend to use our Investor Relations website as a means of disclosing certain material information and complying with disclosure obligations under SEC Regulation FD from time to time.

As a reminder, today's call is being webcast live and recorded. Before we begin today's remarks and question-and-answer session, I would like to remind you that certain statements made during this call may relate to future events and expectations and, as such, constitute forward-looking statements. Actual results and performance may differ from those expressed or implied by these forward-looking statements as a result of various risks and uncertainties, including the risk factors discussed in reports filed or to be filed with the SEC.

We urge you to consider these risk factors and remind you that we undertake no obligation to update the information provided on this call to reflect subsequent events or circumstances. You should be aware that these statements should not be considered a guarantee of future performance. Furthermore, during this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, except where we are unable, about reasonable efforts to calculate certain reconciling items with confidence. With that, I will now turn it over to Tim Chen, our Co-Founder and CEO. Tim?

Thanks, Rob. This quarter, we exceeded our guidance for revenue and non-GAAP operating income. In a moment, John will talk through our results in more detail, and you can also find more information in the earnings release and shareholder letter posted on our Investor Relations website. In 2025, we faced headwinds as consumers increasingly turn to AI Uber views and LOMs over traditional search, resulting in steep organic search declines. In spite of this, we delivered year-over-year revenue growth of 22% for the full year and 23% for the fourth quarter as growth in performance marketing, direct and nonsearch referral channels more than offset the decline in organic search.

Turning to our financial performance. We delivered fourth quarter revenue of $225 million, up 23% year-over-year and non-GAAP operating income of $25 million, up 47% year-over-year. Revenue growth was driven primarily by personal loans, banking and insurance, partially offset by credit cards and SMB products. For the full year, we reported revenue of $837 million, up 22% year-over-year and non-GAAP operating income of $96 million, up over 100% year-over-year.

Looking ahead, in the near term, we anticipate continued growth in performance marketing, while we expect organic search to remain under pressure. We are keeping the long term in focus by continuing to invest in building deeper relationships with consumers and SMBs across an increasing number of financial decisions. And now I will pass it over to John to cover our financial results in more detail.

Thanks, Tim. As Tim mentioned, our fourth quarter results exceeded our revenue and non-GAAP operating income guidance due to continued momentum in performance marketing. We remain focused on creating long-term shareholder value by delivering sustainable growth, strong free cash flow generation and disciplined capital allocation. With Q4 growth ahead of expectations, trailing 12 months adjusted free cash flow increasing to $118 million and Q4 share repurchases of $51 million, we made progress on each of these objectives during the quarter. Total revenue in Q4 was $225 million, up 23% year-over-year exceeding our guidance range. This was driven by a 28% revenue growth in our consumer verticals, partially offset by a 12% revenue decline in our SMB vertical.

Within Consumer, insurance revenues increased 13% year-over-year, driven by robust auto carrier demand. Lending revenue increased 141% year-over-year, driven by a 264% growth in personal loans and double-digit growth in mortgages and other loans. Emerging Verticals revenue grew 57% year-over-year, driven by banking as we leveraged conversion data provided by our partners to gain share in a healthy demand environment. Looking forward, we are cautious on the outlook for our banking business as lower interest rates could reduce demand for high-yield savings accounts as the year progresses.

Credit card and SMB revenues declined 24% and 12% year-over-year, respectively, driven by organic search headwinds. For the full year, total revenue was $837 million, up 22% versus 2024. Revenue from our consumer verticals grew 27% to $737 million while revenue from our SMB vertical decreased 9% to $100 million, primarily driven by organic search headwinds. Moving on to profitability. Q4 non-GAAP operating income or NGOI was $25 million, which was above our guidance range. The beat was primarily driven by revenue outperformance, partially offset by margin pressure from declining organic search revenue.

Q4 GAAP operating income was $19 million, and brand marketing expense was $11 million during the fourth quarter, consistent with prior year levels. Full year 2025 and July was $96 million at an 11% margin compared to 2024 NGOI of $48 million at a 7% margin. NGOI margin expansion for the full year was driven by expense discipline, partially offset by a 40% increase in Perforce marketing investments. Full year 2025 GAAP operating income was $65 million.

Over the last 4 quarters, we generated $118 million of adjusted free cash flow and ended the year with a cash balance of $98 million. Please refer to today's earnings press release for a full reconciliation of our GAAP to non-GAAP measures. In terms of capital allocation, during Q4, we completed $51 million of share repurchases and reflecting our confidence in NerdWallet's long-term prospects. Looking ahead, we will continue to focus on creating long-term shareholder value through disciplined capital allocation, including both opportunistic share repurchases and and bolt-on acquisitions to accelerate our strategic initiatives.

Before moving to guidance, I want to highlight the change we're making to our financial reporting beginning in Q1 2026. Moving forward, we will simplify our revenue reporting from 5 categories to 2: consumer and SMB. Consumer will combine what we currently report as insurance, credit cards, loans and emerging verticals. SMB will continue to be reported as it is today. Our consumers and SMBs often engage with us across multiple product categories, and we believe this presentation will better reflect that reality.

We have provided historical data restated under the new revenue categories to facilitate comparisons. Turning to guidance. We expect to deliver first quarter revenue in the range of $224 million to $232 million, up 9% year-over-year at the midpoint. In terms of profitability, we expect non-GAAP operating income in the range of $20 million to $32 million. .

Our first quarter guidance assumes similar trends to those we saw in the fourth quarter, namely revenue growth driven by an increase in performance marketing revenue outweighing organic revenue headwinds. We expect that margin compression caused by this ongoing revenue mix shift will be offset by year-over-year declines in brand marketing spend. Recall that in the first quarter of 2025, our brand spend included a Super Bowl ad an investment we did not repeat in 2026.

Looking at the full year, we're expecting non-GAAP operating income to land between $95 million and $110 million. We anticipate the first quarter and the third quarter will be our strongest quarters just like we've seen in the past years. For the rest of the year, we're modeling somewhat softer results compared to our first quarter guidance. This factors in the ongoing headwinds we're facing in organic search, along with our expectation that the recent surge we've enjoyed in banking, both in the fourth quarter and so far in the first quarter, will start to cool off as short-term interest rates drop further. With that, we'll open up for Q&A.

[Operator Instructions] Our first question comes from Michael Infante from Morgan Stanley.

I'd be curious on the LOM based referral traffic in terms of what you guys can see whether or not it's actually incremental to the business or if you're seeing some level of cannibalization relative to existing organic searches? .

Yes, I'll take that one. So we're definitely seeing what we believe is incremental People, I think, are searching more both on traditional search engines as well as LOMs. We see that in the industry data and then in terms of what we're seeing on our side, the conversion rates on that LOM referral traffic are much higher and growing rapidly. So we do believe it think of. .

Okay. That's helpful. And then is there a way to sort of help quantify how much of a drag the sort of persistence of these organic traffic headwinds are as it relates to the '26 profitability outlook? I'm just trying to understand how we should think about any potential continuation of this performance marketing intensity and if you view that as a form of medium-term headwind to margins. .

Yes, I'll take that. So I believe your question is how should we think about SEO headwinds. Is that right?

Yes, that's fair. .

Yes. So just first of all, we're not solving for a margin percentage. We're focused on adding NGOI dollars as we discussed. So given the mix get changes in Perforce marketing and organic revenue tends to be not as correlated to July and free cash flow and focusing on margin percentage targets would be limiting for our flexibility as we need to make the right economic decisions for our shareholders.

And so what -- it is true that what you have seen is correct, where we are experiencing a decline in organic revenue. But we have been, at least from a revenue perspective, more than offsetting that with our performance marketing revenue. And in order to -- and what I would guide to is, I think you could really take a look at our performance marketing spend trend over the last couple of years.

And I think that will give you a pretty good sense of how to think about our revenue growth from a performance marketing standpoint in the outer years. But at the moment, we're not guiding specifically to revenue channels.

Our next question comes from Jed Kelly from Oppenheimer.

Great. Just given the current landscape, you've got a strong brand and broad distribution with a lot of our financial service partners, how can you -- can you give us an update just on how you're thinking about vertical integration and how that strategy is going to create a more stickier relationship with the consumer?

Yes, it's a good question. Typically, we're caring like you said, our brand and reach with better consumer experiences, sticker consumer experiences. And yes, we're pretty happy with the way that's playing out. Typically, you go from a transactional relationship into a relationship with better unit economics and a lot more a lot closer relationship in terms of understanding what the customer needs.

So we continue to see opportunities there. We are quite often the preferred acquirer when we get into corp dev conversations. So we continue to look forward to just being prudent, but opportunistic on vertical integration.

And my guess would be a lot of these large LLM similar to like Google and search are going to go out and create a ton of relationships, right, direct relationships with banks and financial services partners. So shouldn't you guys an aggregator or marketplace or be -- is there a way to be positioned well? And have you thought about data sharing and other stuff with some of these emerging LLMs.

Yes. It's a good question. I mean I think if you think about the scenario where you're trying to do some form of Agentic shopping or LLMs or trying to get more integrated. There's kind of 2 obstacles you really need to think about -- so the first is regulatory. For example, you can't get an insurance quote from someone without an entrance license. And so if you look across, for example, credit, insurance, mortgages and investing, the required licensing fusions need deterministic and compliant outputs, not probabilistic answers.

Does that isn't optional for any intermediary, whether it's us or some kind of Agentic solution? And second, the financial institutions need to buy in and participate. So for example, An insurance company can easily refuse a quote an AI agent that are shopping around by inserting a multifactor authentication step, right? The 2 study marketplaces really only work if lenders and insurers want to participate they bear real cost to quote and service demand.

And if agent-driven traffic hurts their margins or compliance posture, they can simply block it. So I do think there will be changes in terms of how consumers engage. But in financial services, usefulness at scale requires both the licensing piece, the compliance infrastructure and the institutional buy-in, not just Agentic. So we think we're pretty well positioned to make do with all that.

Our next question comes from Justin Patterson from KeyBanc .

Great. Could you talk a little bit more about how AI is being leveraged internally to improve just both products as well as just the underlying content? And then I'll have a follow-up after that.

Yes, sure. I mean we're leveraging AI pretty broadly. So I think you mentioned there's 2 dimensions. There's the -- first, the internal operations. We're thinking hard about how we can use it to augment our existing workforce and the born efficiency we can drive there, the more value you can deliver for consumers. So whether that's across coding or back office or empowering our sales people to be more useful for customers, that's a big initiative.

And then in terms of the consumer-facing side, yes, it definitely opens up more nondeterministic product flows. Like I mentioned earlier, though, we really have to be careful about compliance there and auditability. And -- but we do think we can provide a lot more service per agent or adviser as well as some fully digital solutions in the future, and we're working hard on that.

Got it. And then for the last question, you've got a really successful vertical integration strategy for the past few years. As you look at just your vertical coverage today, are there any other areas where you see opportunities to be -- go out in the market and just augment some of the services you offer today?

Yes, we do. There's a lot of different corners in a lot of different verticals. So we have a pretty nascent effort in terms of NerdWallet insurance experts. So that's area of focus for us. I think can improve the user experience to improve the economics of the insurance marketplace as well, but there's others as well. .

[Operator Instructions] Our next question comes from Justin Whitney from William Blair.

It's Ralph Schackart, actually. Just a quick question traffic sources. So you've been in the performance channel now for a while. Just kind of curious if you could maybe take a step back and sort of frame what's working for you here, what strategies and channels are really starting to contribute to the overall platform? And then as you have worked with these channels for a while, can you help us think through the efficiencies you might be finding? Obviously, there's a different profitability profile between performance and organic. But just maybe speak to the efficiencies that you're finding and/or working on. .

Yes. I'll take that. I mean performance marketing has been working pretty well for us. We think our brand is a halo across all of our performance marketing efforts. We think the what we know about the consumer and our data infrastructure is a big part of enabling that as well. And then we also think our vertical by vertical expertise is also factor that helps, especially across channels like meta or CRM in terms of driving improvements, in terms of efficiencies, over time, we find that being a one-stop shop across many different products has advantages.

So we're thinking hard about how to use the various parts of our business to strengthen every other part of our business with internal cross merchandising. And so yes, those things all start to work together well over time. I think it's a big factor behind our success.

I am showing no more questions at this time. I would now like to turn it back over to management for closing remarks.

All right. Thank you all for your questions today. As always, I'd like to give a huge thank you to the NerdWallet for their continued hard work over 2025. I'm looking forward to sharing our results in Q1 with you in a few months. Thank you. .

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the NerdWallet, Inc. Q3 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference call is being recorded. I would like to hand over the conference call to our first speaker, Mr. Robb Ferris, Vice President for Finance. Please go ahead.

Thank you, operator. Welcome to the NerdWallet Q3 2025 Earnings Call. Joining us today are Co-Founder and Chief Executive Officer, Tim Chen; and Chief Financial Officer, Jun Lee. Our press release and shareholder letter are available on our Investor Relations website and a replay of this update will also be available following the conclusion of today's call. We intend to use our Investor Relations website as a means of disclosing certain material information and complying with disclosure obligations under SEC Regulation FD from time to time.

As a reminder, today's call is being webcast live and recorded. Before we begin today's remarks and question-and-answer session, I would like to remind you that certain statements made during this call may relate to future events and expectations and as such, constitute forward-looking statements. Actual results and performance may differ from those expressed or implied by these forward-looking statements as a result of various risks and uncertainties, including the risk factors discussed in reports filed or to be filed with the SEC. We urge you to consider these risk factors and remind you that we undertake no obligation to update the information provided on this call to reflect subsequent events or circumstances. You should be aware that these statements should not be considered a guarantee of future performance.

Furthermore, during this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, except where we are unable without reasonable efforts to calculate certain reconciling items with confidence. With that, I will now turn it over to Tim Chen, our Co-Founder and CEO. Tim?

Thanks, Robb. This quarter, we exceeded our guidance for revenue and non-GAAP operating income. In a moment, Jun will talk through our results in more detail and you can also find more information in the earnings release and shareholder letter posted on our Investor Relations website. In the meantime, I want to highlight that these results are a testament to 2 longer-term initiatives, extending our reach with consumers and improving operational efficiency.

The first longer-term initiative is our effort to build on our key competitive advantage, our trusted brand and distribution. While our mission has always been to provide financial guidance to all consumers, our product offering has historically been geared toward the prime market. Over the past 12 months, we've undertaken efforts to expand our shopping experiences by offering more products to below prime consumers, broadening our appeal. This has allowed us to scale our performance marketing capabilities, which have in turn offset headwinds in organic search. Beyond performance marketing, we are seeing momentum with referrals from large language models or LLMs, where our trusted brand has made us the most cited source in our competitive set. Although our traffic from LLMs is currently small, these consumers appear to convert at a much higher rate than traditional organic traffic. So we will continue to invest in growing this channel.

The second longer-term initiative shaping our results this quarter is our focus on operational efficiency, which has allowed us to get more miles per gallon and deliver margin expansion. We're still at an early stage in our journey and have only scratched the surface of our addressable market. The big opportunity we're pursuing is to use our trust and distribution advantages to convert our traffic into a loyal owned audience that we can reengage directly with personalized nudges when there's an opportunity to make a smart money move. We will do this by making it a no-brainer to come to NerdWallet for all your money needs, enhancing our guidance through our land and expand, vertical integration and registration and data-driven engagement strategies.

And now I will pass it over to Jun to cover our financial results in more detail.

Thanks, Tim. As Tim mentioned, our third quarter results exceeded our guidance on all metrics. As we have discussed over the past couple of quarters, I believe the key drivers of long-term shareholder value creation are sustainable growth, strong free cash flow generation and disciplined capital allocation. With growth ahead of expectations, trailing 12-month adjusted free cash flow increasing and sizable share repurchases in the quarter, our focus is beginning to pay off.

Total revenue in the third quarter was $215 million, up 12% year-over-year, exceeding our guidance range of $189 million to $197 million. Revenue outperformance was primarily driven by banking, up 96% year-over-year and personal loans up 91% year-over-year. Our insurance business was up 3% year-over-year, a bit better than expected. However, our SMB product and credit cards verticals declined year-over-year, driven by organic search headwinds. We delivered third quarter non-GAAP operating income of $41 million, above our $23 million to $27 million guidance range. Notably, we underspent on brand marketing versus our target by $8 million as we reevaluated our brand strategy during the quarter.

In Q4, we expect to return to more typical levels of brand spend. Excluding this onetime brand spend benefit, our NGOI performance was driven by revenue outperformance, improved efficiency in performance marketing and conservative expense management. GAAP operating income for the third quarter was $34 million. Over the last 4 quarters, we generated over $85 million of adjusted free cash flow and ended Q3 with a cash balance of $121 million. Please refer to today's earnings press release for a full reconciliation of our GAAP to non-GAAP measures.

In terms of capital allocation, during the quarter, we completed $19 million of share repurchases, reflecting our confidence in NerdWallet's long-term prospects on our belief that these repurchases were an attractive use of our capital, especially at prevailing share prices. Looking ahead, we'll continue to focus on creating long-term shareholder value through disciplined capital allocation, including both opportunistic share repurchases and bolt-on acquisitions to accelerate our vertical integration strategy. Going forward, we expect less margin expansion year-over-year due to organic search headwinds, a lower prior expense base as we fully lap our Q3 2024 reduction in force and planned investments in the business.

In Q4, we expect to deliver revenue in the range of $207 million to $215 million, which at the midpoint will be up 15% versus prior year. We expect continued strength in banking and personal loans, offset by continued degradation in credit cards and SMB. In terms of profitability, we expect Q4 non-GAAP operating income results in the range of $20 million to $24 million. This assumes continued benefits from the improvements we've made to our shopping funnels and operational efficiency and that we continue to deploy performance marketing spend to take advantage of verticals with opportunities for profitable growth. We expect to generate full year 2025 non-GAAP operating income of $91 million to $95 million, an increase of $18 million at the midpoint compared to our previous guidance.

With that, we'll open up for questions. Operator?

[Operator Instructions] our first question comes from the line of Justin Patterson from KeyBanc. Just want to check if you're able to listen in.

Sorry, can you hear me now?

Yes. We hear you very well. Please go ahead.

Perfect. Sorry about that. I wanted to dive into LLM traffic a little bit more. I realize it's pretty small today, but very interesting that's converting at stronger rates. So I would love to hear about just some of the investments you're making to really grow that channel more and continue conversion.

Yes. Thanks for the question, Justin. I think there are a lot of similar characteristics with organic search that drive LLMs, some slight differences in terms of how they pick up certain context but it all comes down to the trust around the content that we provide. So I think a lot of those investments are actually quite similar to what we've been very strong in historically.

Our next question comes from the line of Ross Sandler from Barclays.

Tim, just following up on that last one. Has the growth in LLM traffic been a function of like the overall usage that you see out there for like ChatGPT and Gemini, which is kind of like adding hundreds of millions of users every few months? Or is there like something new that's going on whereby those products might be surfacing links or citations? Just any additional color on like what's happening today versus maybe a year ago? And then the second question is, so it looks like banking was the strong category this quarter. Can you just unpack that a little bit? Is that deposit? Is that other products? And what's kind of driving that uptick in demand from banking?

Yes. Thanks, Ross. On the first question, I'd say the primary driver to think about is actually AI overviews within Google Search. So because search is becoming more useful, people are searching a lot more. And so we are seeing traffic come through from AI overviews. ChatGPT and Gemini are also driving an increase there. So those are kind of the 2 major drivers in terms of the LLM traffic. When people come through that way, they're really high intent typically, they're really held in on finding something in a marketplace, for example. So I think that's what's driving some of the higher transaction rates there.

And then on the banking one, we continue to see a lot of strength there, both in terms of consumer demand as well as partner demand even as rates have come in a little bit. So that and we continue to work on improving our product funnels to better match users with the right intent. So nothing beyond that.

Our next question comes from the line of Ralph Schackart from William Blair.

You talked briefly about reevaluating the process or looking at brand spend. I think you maybe underspent by $8 million or so in the quarter. It sounds like you're going to probably pick that back up next quarter. But the question is, I guess, why did you go through the reevaluation process? And what did you learn after going through that process?

Yes, I'll take that one. Brand is our biggest asset, right? And you'll note that the brand spend was down significantly because, as you mentioned, we underspent by $8 million in Q3. We were really just reevaluating our brand creative strategy during the quarter. Really excited about some things to come in Q4. I won't spoil it for you, but we're always trying to figure out how to make things more impactful. So in Q4, we do expect to return to more typical levels of brand spend. Last year's Q4 '24 spend is a pretty good proxy.

Great. And just on the content side of the business, obviously, it's been more focused on sort of the higher-end consumer. Now that you're looking at below prime consumers, maybe talk about sort of there have to be a major shift in content strategy? Is it pretty easy to do? And will you have sort of the products available as well in the marketplace to sort of meet those needs of the below prime consumers?

Yes. So the way I describe it is we've always had content and products for all consumers, including low prime. It's really just historically, our monetization has skewed very heavily towards Prime because of the products that appeared in our marketplace. So it's really not a new strategy. It's really about filling out our panel with lenders and service providers to round out that marketplace. And what we're seeing is the second order impact there is it's making more competitive, making us more competitive in channels like performance marketing. And from a consumer perspective, honestly, we're just better serving unmet needs that we weren't serving before. So we feel good about that, too.

Thank you. I am not showing any further questions at this time. This concludes our Q&A. I would like to turn it back to Tim Chen, CEO and Co-Founder for NerdWallet.

All right. Thanks all for your questions today. As always, I'd like to thank the Nerds for their continued hard work over Q3, and I'm looking forward to sharing our Q4 results with you in a few months.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Thank you.