As last week came to a close, NerdWallet filed to go public. Given the late hour, our S-1 dive had to wait until today.
The NerdWallet IPO comes at an interesting time. The company provides financial product recommendations to both consumers and SMBs, meaning that it dabbles in the same market that fintech startups play in. And because NerdWallet is essentially a weaponized content play, we get to talk about the value of the written word.
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NerdWallet is pursuing a traditional IPO, meaning that it will raise primary capital in its public debut. Per its filing, the company intends to “use approximately $29.0 million of the net proceeds we receive from this offering to repay all outstanding principal amounts and accrued interest under certain promissory notes.” The rest will go to running and growing the company, or what lawyers like to call “general corporate purposes, including working capital, operating expenses and capital expenditures.”
The NerdWallet IPO is a liquidity event for several investing groups, including Institutional Venture Partners (IVP), which owns 17.5% of Class A stock ahead of the company’s public offering, RRE Ventures (6.5% of pre-IPO shares) and iGlobe Partners (6.0%). (Crunchbase has more regarding the company’s private fundraising history here.)
We want to know how COVID-19 impacted NerdWallet’s growth, how quickly it is expanding revenues in 2021, its historical profitability and recent trends thereof and how the company manages to stay trustworthy, a question that we’ll address through the lens of editorial independence. Sound good? Let’s have some fun.
COVID-19 and NerdWallet
The pandemic was not kind to NerdWallet, but because the firm had variable costs it could constrain, wasn’t disastrous to its overall business.
NerdWallet generated $228.3 million in revenues in 2019, a figure that rose only modestly to $245.3 million in 2020. For a venture-backed company, posting growth of around 7.5% can be lethal. At that pace of growth, who’d want to back a startup?
More recently, growth has sped back up, with NerdWallet posting $137.3 million in H1 2020 revenues, a figure that expanded to $181.6 in the first half of 2021. The latter figure represents growth of just over 32%, a much healthier number than what the company recorded in 2020.
The pandemic is partially to blame for NerdWallet’s slack 2020 growth. Here’s the company discussing what COVID-19 did to certain lines of its business: