NerdWallet (NRDS)

Financial guidance platform NerdWallet (NASDAQ:NRDS) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 12.4% year on year to $215.1 million. Its non-GAAP profit of $0.34 per share was 7.3% above analysts’ consensus estimates.

Company Overview

Born from founder Tim Chen's frustration with the lack of transparent credit card information when helping his sister in 2009, NerdWallet (NASDAQ:NRDS) is a digital platform that provides financial guidance to help consumers and small businesses make smarter decisions about credit cards, loans, insurance, and other financial products.

Diversified financial services encompass specialized offerings outside traditional categories. These firms benefit from identifying niche market opportunities, developing tailored financial products, and often facing less direct competition. Challenges include scale limitations, regulatory classification uncertainties, and the need to continuously innovate to maintain market differentiation against larger competitors expanding their offerings.

NerdWallet competes with traditional financial advisors and media outlets, online financial marketplaces like Bankrate, Credit Karma, and LendingTree (NASDAQ:TREE), as well as search engines like Google (NASDAQ:GOOGL) that attract financial services advertising dollars.

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, NerdWallet’s 26.5% annualized revenue growth over the last five years was incredible. Its growth beat the average financials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. NerdWallet’s annualized revenue growth of 14.4% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, NerdWallet reported year-on-year revenue growth of 12.4%, and its $215.1 million of revenue exceeded Wall Street’s estimates by 11.3%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Diversified Financial Services companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Interest income and expenses play a big role in financial institutions' profitability, so they should be factored into the definition of profit. Taxes, however, should not as they are largely out of a company's control. This is pre-tax profit by definition.

Over the last four years, NerdWallet’s pre-tax profit margin has fallen by 16.6 percentage points, going from negative 10.5% to 6.2%. It has also expanded by 4.7 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue. This typically signals prudent management.

In Q3, NerdWallet’s pre-tax profit margin was 16.5%. This result was 12.4 percentage points better than the same quarter last year.

We track the change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

NerdWallet’s EPS grew at an astounding 264% compounded annual growth rate over the last two years, higher than its 14.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into NerdWallet’s quality of earnings can give us a better understanding of its performance. NerdWallet’s pre-tax profit margin has expanded over the last two years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, NerdWallet reported adjusted EPS of $0.34, up from $0.04 in the same quarter last year. This print beat analysts’ estimates by 7.3%. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data. This signals NerdWallet could be a hidden gem because it doesn’t have much coverage among professional brokers.

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, NerdWallet has averaged an ROE of negative 6.2%, a bad result not only in absolute terms but also relative to the majority of firms putting up 25%+. It also shows that NerdWallet has little to no competitive moat.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

NerdWallet has no debt, so leverage is not an issue here.

We were impressed by how significantly NerdWallet blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 6.3% to $12.77 immediately following the results.

Updated: December 4, 2025 at 10:57 PM EST

When considering an investment in NerdWallet, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

NerdWallet is a fine business. First off, its revenue growth was exceptional over the last five years. And while its relatively low ROE suggests management has struggled to find compelling investment opportunities, its astounding EPS growth over the last three years shows its profits are trickling down to shareholders. On top of that, its expanding pre-tax profit margin shows the business has become more efficient.

NerdWallet’s P/E ratio based on the next 12 months is 11.1x. When scanning the financials space, NerdWallet trades at a fair valuation. If you believe in the company and its growth potential, now is an opportune time to buy shares.

Wall Street analysts have a consensus one-year price target of $16.17 on the company (compared to the current share price of $15.55), implying they see 4% upside in buying NerdWallet in the short term.