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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-40994
NerdWallet, Inc.
(Exact name of registrant as specified in its charter)
Delaware
45-4180440
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
55 Hawthorne Street, 11th Floor, San Francisco, California 94105
(Address of principal executive offices) (Zip code)
(415) 549-8913
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Class A common stock, $0.0001 par valueNRDSThe Nasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Accelerated filer
Non-accelerated filer  
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
The registrant had outstanding 42,648,265 shares of Class A common stock and 31,685,652 shares of Class B common stock as of October 27, 2022.


Table of Contents
Index to Form 10-Q

Page



Table of Contents
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:
our ability to navigate macroeconomic challenges such as market volatility, inflation and an increasing interest rate environment;
our expectations regarding the benefits of our acquisition of On the Barrelhead, including expected accretive contributions to our revenue and adjusted EBITDA;
our ability to successfully integrate On the Barrelhead and achieve our expected synergies from this acquisition;
our expectations regarding our future financial performance, including total revenue, cost of revenue, Adjusted EBITDA and Monthly Unique Users;
our ability to grow traffic and engagement on our platform;
our expected returns on marketing investments and brand campaigns;
our expectations about consumer demand for the products on our platform;
our ability to convert users into Registered Users and improve repeat user rates;
our ability to convert consumers into matches with financial services partners;
our ability to grow within existing and new verticals;
our ability to expand geographically;
our ability to maintain and expand our relationships with our existing financial services partners and to identify new financial services partners;
our ability to build efficient and scalable technical capabilities to deliver personalized guidance and nudge users;
our ability to maintain and enhance our brand awareness and consumer trust;
our ability to generate high quality, engaging consumer resources;
our ability to adapt to the evolving financial interests of consumers;
our ability to compete with existing and new competitors in existing and new market verticals;
our ability to maintain the security and availability of our platform;
our ability to maintain, protect and enhance our intellectual property;
our ability to identify, attract and retain highly skilled, diverse personnel;
our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business;
the sufficiency of our cash, cash equivalents, and investments to meet our liquidity needs;
our ability to effectively manage our growth and expand our infrastructure and maintain our corporate culture; and
our ability to successfully identify, manage, and integrate any existing and potential acquisitions.
You should not rely on forward-looking statements as predictions or guarantees of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. These forward-looking statements are subject to risks, uncertainties and other factors described elsewhere in this Quarterly
1

Table of Contents
Report on Form 10-Q, in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021, and in our subsequent periodic filings with the U.S. Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q are made only as of the date hereof. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

2

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
NERDWALLET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
September 30,
2022
December 31,
2021
(in millions, except share amounts which are in thousands and per share amounts)
Assets
Current assets:
Cash and cash equivalents$138.4 $167.8 
Accounts receivable87.2 57.6 
Prepaid expenses and other current assets21.0 17.4 
Total current assets246.6 242.8 
Property, equipment and software — net47.1 34.9 
Goodwill110.7 43.8 
Intangibles — net68.3 27.6 
Right-of-use assets11.9 13.9 
Other assets0.7 1.1 
Total Assets$485.3 $364.1 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$5.8 $3.2 
Accrued expenses and other current liabilities48.6 32.1 
Contingent consideration — current30.3 30.5 
Total current liabilities84.7 65.8 
Contingent consideration — noncurrent 24.2 
Debt — noncurrent70.0  
Deferred tax liability — noncurrent1.2 1.8 
Other liabilities — noncurrent10.8 14.7 
Total liabilities166.7 106.5 
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock — $0.0001 par value per share — 5,000 shares authorized as of September 30, 2022 and December 31, 2021; zero shares issued and outstanding as of September 30, 2022 and December 31, 2021
  
Common stock — $0.0001 par value per share — 296,686 shares authorized as of September 30, 2022 and December 31, 2021; 74,322 and 66,722 shares issued and outstanding as of September 30, 2022 and December 31, 2021
  
Additional paid-in capital414.1 331.6 
Accumulated other comprehensive income (loss)(1.9)0.5 
Accumulated deficit(93.6)(74.5)
Total stockholders’ equity318.6 257.6 
Total Liabilities and Stockholders’ Equity$485.3 $364.1 
See notes to condensed consolidated financial statements.
3

NERDWALLET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Table of Contents
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions, except per share amounts)
2022202120222021
Revenue$142.6 $98.5 $396.9 $280.1 
Costs and Expenses:
Cost of revenue11.7 7.5 27.6 21.3 
Research and development20.7 16.6 58.2 43.6 
Sales and marketing103.2 56.6 288.1 207.8 
General and administrative15.4 9.1 43.8 26.9 
Change in fair value of contingent consideration related to earnouts0.4 2.4 6.1 10.1 
Total costs and expenses151.4 92.2 423.8 309.7 
Income (Loss) From Operations(8.8)6.3 (26.9)(29.6)
Other expense, net:
Interest income0.5  0.6  
Interest expense(0.9)(0.4)(1.3)(1.1)
Other gains (losses), net (0.1) 1.1 
Total other expense, net(0.4)(0.5)(0.7) 
Income (loss) before income taxes(9.2)5.8 (27.6)(29.6)
Income tax provision (benefit)(9.9)13.6 (8.5)5.0 
Net Income (Loss)$0.7 $(7.8)$(19.1)$(34.6)
Net Income (Loss) Per Share Attributable to Common Stockholders
Basic$0.01 $(0.16)$(0.28)$(0.70)
Diluted$0.01 $(0.16)$(0.28)$(0.70)
Weighted-Average Shares Used in Computing Net Income (Loss) Per Share Attributable to Common Stockholders
Basic73.4 49.8 69.2 49.2 
Diluted75.0 49.8 69.2 49.2 

See notes to condensed consolidated financial statements.
4

NERDWALLET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Unaudited
Table of Contents
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)
2022202120222021
Net Income (Loss)$0.7 $(7.8)$(19.1)$(34.6)
Other Comprehensive Income (Loss):
Change in foreign currency translation(1.1)0.1 (2.4)0.3 
Comprehensive Loss$(0.4)$(7.7)$(21.5)$(34.3)

See notes to condensed consolidated financial statements.
5

NERDWALLET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Unaudited
Table of Contents

Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitStockholders’ Equity
(in millions, except share amounts which are in thousands)SharesAmount
Balance as of December 31, 202166,722 $ $331.6 $0.5 $(74.5)$257.6 
Issuance of Class A common stock upon exercise of stock options154 — 0.7 0.7 
Issuance of Class A common stock pursuant to settlement of restricted stock units262 —  
Stock-based compensation7.9 7.9 
Other comprehensive loss(0.3)(0.3)
Net loss(10.5)(10.5)
Balance as of March 31, 2022 67,138 $ $340.2 $0.2 $(85.0)$255.4 
Issuance of Class A common stock upon exercise of stock options629 — 3.6 3.6 
Issuance of Class A common stock pursuant to settlement of restricted stock units400 —  
Issuance of Class A common stock under Employee Stock Purchase Plan470 — 3.2 3.2 
Stock-based compensation11.6 11.6 
Other comprehensive loss(1.0)(1.0)
Net loss(9.3)(9.3)
Balance as of June 30, 2022 68,637 $ $358.6 $(0.8)$(94.3)$263.5 
Issuance of Class A common stock upon exercise of stock options343 — 1.9 1.9 
Issuance of Class A common stock pursuant to settlement of restricted stock units424 —  
Class A common stock withheld related to net share settlement of RSUs(17)— (0.1)(0.1)
Issuance of Class A common stock for business combination4,935 — 43.2 43.2 
Stock-based compensation10.5 10.5 
Other comprehensive loss(1.1)(1.1)
Net income0.7 0.7 
Balance as of September 30, 202274,322 $ $414.1 $(1.9)$(93.6)$318.6 

6

NERDWALLET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Unaudited
Table of Contents

Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitStockholders’ Equity
(in millions, except share amounts which are in thousands)SharesAmount
Balance as of December 31, 2020 48,853 $ $99.8 $0.6 $(17.7)$82.7 
Issuance of Class A common stock upon exercise of stock options1,076 — 3.1 3.1 
Issuance of Class A common stock pursuant to settlement of restricted stock units
50 —  
Class A common stock surrendered for employees’ tax liability upon settlement of restricted stock units(14)— (0.2)(0.2)
Repurchase of stock options(1.4)(1.4)
Repurchase of Class A common stock(30)— (0.4)(0.4)
Repurchase of Class F common stock(883)— (12.4)(12.4)
Stock-based compensation2.8 2.8 
Other comprehensive income0.2 0.2 
Net loss(12.9)(12.9)
Balance as of March 31, 202149,052 $ $105.5 $0.8 $(44.8)$61.5 
Issuance of Class A common stock upon exercise of stock options436 — 2.7 2.7 
Issuance of Class A common stock pursuant to settlement of restricted stock units166 —  
Class A common stock surrendered for employees’ tax liability upon settlement of restricted stock units(41)— (0.8)(0.8)
Repurchase of Class A common stock(11)— (0.1)(0.1)
Stock-based compensation5.1 5.1 
Net loss(13.9)(13.9)
Balance as of June 30, 202149,602 $ $112.5 $0.8 $(58.8)$54.5 
Issuance of Class A common stock upon exercise of stock options183 — 1.3 1.3 
Issuance of Class A common stock pursuant to settlement of restricted stock units169 —  
Class A common stock surrendered for employees’ tax liability upon settlement of restricted stock units(41)— (0.9)(0.9)
Conversion of Series A redeemable convertible preferred stock to Class A common stock58 — 0.5 0.5 
Stock-based compensation5.1 5.1 
Other comprehensive income0.1 0.1 
Net loss(7.8)(7.8)
Balance as of September 30, 202149,971 $ $118.5 $0.9 $(66.6)$52.8 
See notes to condensed consolidated financial statements.
7

NERDWALLET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
Table of Contents
Nine Months Ended
September 30,
(in millions)
20222021
Operating Activities:
Net loss$(19.1)$(34.6)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization25.6 19.9 
Stock-based compensation25.3 10.8 
Change in fair value of contingent consideration related to earnouts6.1 10.1 
Deferred taxes(12.5)4.6 
Non-cash lease costs2.0 5.8 
Other, net0.9 (0.6)
Changes in operating assets and liabilities, net of business combination:
Accounts receivable(18.7)(18.7)
Prepaid expenses and other assets(2.0)(4.8)
Accounts payable(4.0)(1.7)
Accrued expenses and other current liabilities15.9 15.2 
Payment of contingent consideration(11.5) 
Operating lease liabilities(1.7)(7.9)
Other liabilities(1.4)0.4 
Net cash provided by (used in) operating activities4.9 (1.5)
Investing Activities:
Capitalized software development costs(20.5)(15.6)
Purchase of property and equipment(4.3)(0.7)
Business combination, net of cash acquired(69.5) 
Net cash used in investing activities(94.3)(16.3)
Financing Activities:
Payment of contingent consideration(19.0) 
Proceeds from line of credit70.0  
Proceeds from exercise of stock options6.2 7.1 
Issuance of Class A common stock under Employee Stock Purchase Plan3.2  
Repurchase of Class A common stock (0.5)
Repurchase of Class F common stock (12.4)
Repurchase of stock options (1.4)
Repurchase of Series A redeemable convertible preferred stock (2.1)
Tax payments related to net-share settlements on restricted stock units(0.1)(1.9)
Payment of offering costs related to initial public offering (3.0)
Net cash provided by (used in) financing activities60.3 (14.2)
Effect of exchange rate changes on cash and cash equivalents(0.3)0.1 
Net decrease in cash and cash equivalents(29.4)(31.9)
Cash and Cash Equivalents:
Beginning of period167.8 83.4 
End of period$138.4 $51.5 
8

NERDWALLET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
Table of Contents
Nine Months Ended
September 30,
(in millions)
20222021
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Capitalized software development costs recorded in accounts payable and accrued expenses and other current liabilities$1.1 $0.3 
Purchase of property and equipment recorded in accounts payable and accrued expenses and other current liabilities 1.5 
Offering costs related to initial public offering not yet paid 0.2 
Supplemental Disclosures of Cash Flow Information:
Income tax payments$3.1 $0.3 
Cash paid for interest0.8 1.6 
Supplemental Cash Flow Disclosure Related to Operating Leases:
Cash paid for amounts included in the measurement of lease liabilities$2.2 $6.8 
See notes to condensed consolidated financial statements.
9

NERDWALLET, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Table of Contents
1.The Company and Basis of Presentation
The Company — NerdWallet, Inc., a Delaware corporation, was formed on December 29, 2011. NerdWallet, Inc. and its wholly-owned subsidiaries (collectively, the Company) provide consumer-driven advice about personal finance through its platform by connecting individuals and small and mid-sized businesses (SMBs) with providers of financial products.
Basis of Presentation — The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and applicable rules and regulations of the U.S. Securities and Exchange Commission (SEC) regarding interim financial reporting. Accordingly, the accompanying unaudited interim condensed consolidated financial statements do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the Company’s financial position and results of operations for the periods presented. The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year or any other future period.
Acquisition of On the Barrelhead, Inc. — On July 11, 2022, the Company completed the acquisition of On the Barrelhead, Inc. (OTB), a data-driven platform that provides consumers and SMBs with credit-driven product recommendations. See Note 5 Business Combination for further discussion.
Significant Accounting Policies — During the nine months ended September 30, 2022, there have been no material changes to the Company’s significant accounting policies as disclosed in Note 1 – The Company and its Significant Accounting Policies in the notes to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Recently Adopted Accounting Pronouncements — In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, Measurement of Credit Losses on Financial Instruments, establishing ASC Topic 326, and amended the guidance thereafter (ASC 326). ASC 326 requires the measurement and recognition of expected credit losses for financial assets held at amortized cost; the Company’s financial assets that are in the scope of ASC 326 includes the Company’s accounts receivable, certain financial instruments and contract assets. ASC 326 replaces the prior incurred loss impairment model with an expected loss methodology, which results in more timely recognition of credit losses. The Company adopted the provisions of ASC 326 as of January 1, 2022 (two years after the effective date for public business entities due to the Company’s election under its EGC status), and such adoption did not have an impact on the Company’s financial condition and results of operations within its condensed consolidated financial statements.
In October 2021, the Financial Accounting Standards Board (FASB) issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), to address diversity and inconsistency related to the recognition and measurement of contract assets and contract liabilities acquired in a business combination. The guidance in ASU 2021-08 states that an acquirer should recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. The amendments in ASU 2021-08 will be applied prospectively to any business combinations that occur during or after the fiscal year of adoption. The Company adopted the provisions of ASU 2021-08 as of January 1, 2022, and such adoption did not have an impact on the Company’s financial condition and results of operations within its condensed consolidated financial statements.
10

NERDWALLET, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Table of Contents
2.Revenue
The following presents a disaggregation of the Company’s revenue based on product category:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)2022202120222021
Credit cards$57.4 $36.1 $157.2 $88.9 
Loans28.4 32.2 86.7 96.8 
Other verticals56.8 30.2 153.0 94.4 
Total revenue$142.6 $98.5 $396.9 $280.1 
The contract asset recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet related to estimated variable consideration was $5.2 million and $3.0 million as of September 30, 2022 and December 31, 2021, respectively.
3.Fair Value Measurements
The Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy are summarized as follows:
(in millions)Quoted Prices
in Active
Markets
(Level 1)
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Carrying
Value
As of September 30, 2022
Assets:
Cash and cash equivalents — money market funds$130.7 $ $ $130.7 
Certificate of deposit 2.0  2.0 
$130.7 $2.0 $ $132.7 
Liabilities:
Contingent consideration$ $ $30.3 $30.3 
(in millions)Quoted Prices
in Active
Markets
(Level 1)
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Carrying
Value
As of December 31, 2021
Assets:
Cash and cash equivalents — money market funds$164.9 $ $ $164.9 
Certificate of deposit 2.0  2.0 
$164.9 $2.0 $ $166.9 
Liabilities:
Contingent consideration$ $ $54.7 $54.7 
Level 3 liabilities consist entirely of contingent consideration, and the changes in fair value are as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)2022202120222021
Balance as of beginning of period$29.9 $44.2 $54.7 $36.5 
Payment  (30.5) 
Change in fair value, recognized in earnings0.4 2.4 6.1 10.1 
Other 0.1  0.1 
Balance as of end of period$30.3 $46.7 $30.3 $46.7 
11

NERDWALLET, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Table of Contents
Contingent consideration liabilities related to acquisitions are measured at fair value each reporting period using Level 3 unobservable inputs. The fair values of the estimated contingent considerations are determined based on the Company’s evaluation of the probability and amount of earnout that will be achieved based on expected future performance by the acquired entity. The Monte Carlo simulation models simulated the applicable figures over the earnout periods to calculate the estimated earnout payments. These payments were then discounted to present value based on the expected payment dates of the contingent considerations. The weighted-average volatility was 51.0% and the weighted-average discount rate was estimated to be 12.5% as of September 30, 2022. The weighted-average volatility was 45.5% and the weighted-average discount rate was estimated to be 9.0% as of December 31, 2021.
4.Significant Condensed Consolidated Balance Sheet Components
Property, equipment and software, net includes capitalized software development costs, net of accumulated amortization, of $41.9 million and $32.1 million as of September 30, 2022 and December 31, 2021, respectively. The Company capitalized $8.9 million and $25.8 million of software development costs during the three and nine months ended September 30, 2022, respectively, and $5.8 million and $17.7 million during the three and nine months ended September 30, 2021, respectively. The Company recorded amortization expense related to capitalized software development costs of $5.7 million and $16.0 million during the three and nine months ended September 30, 2022, respectively, and $4.4 million and $12.2 million during the three and nine months ended September 30, 2021, respectively.
Accrued expenses and other current liabilities include operating lease liabilities of $3.0 million and $2.4 million, as of September 30, 2022 and December 31, 2021, respectively.
Other liabilities — noncurrent includes operating lease liabilities of $10.4 million and $12.7 million as of September 30, 2022 and December 31, 2021, respectively.
5.Business Combination
Acquisition of On the Barrelhead, Inc.
On July 11, 2022, the Company completed the acquisition of OTB under an Agreement and Plan of Merger and Reorganization.
Preliminary Purchase Consideration
The preliminary purchase consideration consisted of the following:
(in millions)Total
Cash consideration1
$75.7 
Stock consideration2
43.2 
Total consideration118.9 
Less: amounts considered separate from the business combination and attributable to post-combination expense3
(0.7)
Preliminary Purchase Consideration$118.2 
(1)    Includes $12.2 million of cash which is held in escrow for the settlement of breaches, if any, of certain representations, warranties, agreements and covenants.
(2)    Represents the aggregate fair value of 4.9 million shares issued of the Company’s Class A common stock based on the closing price of the stock on the acquisition date of July 11, 2022, which was $8.75 per share.
(3)    Primarily comprised of the additional fair value of unvested OTB option awards discretionally accelerated by the Company and attributable to post-combination expense.
Half of the stock consideration is subject to a lockup arrangement whereby such shares may not be sold or otherwise transferred prior to expiration of the 24-month period following the acquisition date. The final purchase consideration will be subject to customary closing adjustments, including for transaction expenses, indebtedness, cash and working capital.
12

NERDWALLET, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Table of Contents
Retention Agreements and Inducement Awards
Concurrently with the closing of the acquisition, the Company provided employment offer letters to OTB’s employees, including compensatory retention agreements with the co-founders of OTB which could result in up to $15.0 million of cash awards. Cash awards under these retention agreements are payable in equal installments on the first, second and third anniversary dates of the closing of the acquisition. Also concurrently with the closing of the acquisition, the Compensation Committee of the Company’s Board of Directors granted restricted stock unit (RSU) awards under the NerdWallet, Inc. 2022 Inducement Equity Incentive Plan (the Inducement Plan) to employees of OTB who were offered employment with the Company, which RSU awards had an aggregate grant date fair value on the acquisition date of $17.5 million, including $12.8 million of RSU awards to the co-founders of OTB, $2.3 million of RSU awards to six non-management employees of OTB and $2.4 million of RSU awards to all fourteen employees of OTB. The $12.8 million of RSU awards to the co-founders of OTB will generally vest in full upon the third anniversary of the closing of the acquisition. The $2.3 million of RSU awards to non-management employees of OTB will vest annually over four years, with 20% of the RSUs subject to vest on each of the first, second and third annual vesting dates and the remaining 40% of the RSUs subject to vest on the fourth annual vesting date. The $2.4 million of RSU awards granted to all employees of OTB will generally vest over four years subject to a one-year cliff and quarterly vesting thereafter. RSU awards under the Inducement Plan are subject to the conditions of the Inducement Plan and the terms and conditions of the grant agreements covering such awards. Compensation expenses under these employment offer letters and vesting of awards under these retention agreements and Inducement Plan are generally subject to the employees’ continued employment with the Company, and the fair value of such compensation and awards are excluded from the Purchase Price and accounted for separately from the business combination. The value of cash awards under these retention agreements are recognized as compensation expense ratably over the three-year period following the close of the acquisition. The value of RSU awards under the Inducement Plan are recognized as stock-based compensation expense ratably over the respective vesting terms of the awards.
Preliminary Purchase Accounting
The acquisition has been accounted for as a business combination. The preliminary allocation of purchase consideration to the assets acquired and liabilities assumed is as follows:
(in millions)Fair Value
Preliminary Purchase Consideration$118.2 
Fair Value of Assets Acquired
Cash and cash equivalents6.9 
Accounts receivable12.2 
Intangible assets50.1 
Total assets69.2 
Fair Value of Liabilities Assumed
Accounts payable6.4 
Accrued expenses and other current liabilities0.6 
Deferred tax liability12.1 
Total liabilities19.1 
Less: Net Assets Acquired50.1 
Goodwill$68.1 
The preliminary fair value estimates of the net assets acquired are based on preliminary calculations and valuations, including preliminary work performed by third party valuation specialists, which are subject to finalization over the one-year measurement period from the acquisition date.
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NERDWALLET, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Table of Contents
The acquired intangible assets consist of definite-lived assets with preliminary estimated fair values and useful lives as follows:
(dollars in millions)Fair ValueWeighted-Average
Useful Life
(Years)
Developed technology$48.9 5.0
Customer relationships1.2 1.0
 Total intangible assets $50.1 4.9
The estimated fair value of acquired intangible assets was determined using the multi-period excess earnings method of the income approach for developed technology, and the replacement cost method for customer relationships.
The deferred tax liability of $12.1 million primarily relates to identified intangible assets.
The Company recorded goodwill of $68.1 million, which represents the excess of the preliminary purchase consideration over the estimated fair value of the assets acquired, net of the liabilities assumed. The goodwill is primarily attributable to synergies from combining the operations of the Company and OTB, as well as the value ascribed to the knowledge and experience of the OTB co-founders and employees. For income tax purposes, the acquisition is a stock purchase and goodwill is not tax deductible.
Acquisition-related costs of $1.2 million and $3.4 million were incurred during the three and nine months ended September 30, 2022, respectively, and are included in general and administrative expense on the condensed consolidated statements of operations.
Due to the extensive level of integration of OTB’s technology and operations into the Company’s operations following the closing of the acquisition, the Company is not able to quantify the acquisition’s contribution following the closing of the acquisition to the Company’s revenue and operating loss for the three and nine months ended September 30, 2022, as the ability to objectively quantify such amounts would require a significant level of estimation.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information is presented as if the OTB acquisition, including the related debt financing, was completed on January 1, 2021. The pro forma financial information includes the historical operating results of the Company and OTB prior to the acquisition, with adjustments directly attributable to the acquisition. Pro forma adjustments have been made to reflect the incremental intangible asset amortization to be incurred based on the preliminary fair values and useful lives of each identifiable intangible asset, incremental stock-based compensation related to inducement equity awards, incremental compensation related to cash retention agreements, incremental interest expense related to debt drawn to finance the cash portion of the purchase price, the adjustment of acquisition-related expenses, and the related tax effects of pro forma adjustments for the respective periods.
The unaudited pro forma financial information is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)2022202120222021
Revenue$144.8 $109.5 $441.9 $305.5 
Net loss(10.1)(13.1)(34.4)(40.1)
The unaudited pro forma financial information is not intended to present, or be indicative of, what the results of operations would have been for the combined company for the periods presented had the acquisition actually occurred on January 1, 2021, nor is it meant to be indicative of results of operations that may be achieved by the combined company in the future. The unaudited pro forma financial information does not include any cost savings or other synergies that resulted, or may result, from the OTB acquisition or any estimated costs that will be incurred to integrate OTB. Future results may vary significantly from the results reflected in this unaudited pro forma financial information because of future events and transactions, as well as other factors.
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6.Goodwill and Intangible Assets
The balance of goodwill, net is as follows:
(in millions)Nine Months Ended
September 30, 2022
Balance at beginning of period$43.8 
Acquisition of OTB68.1 
Foreign currency translation adjustment(1.2)
Balance at end of period$110.7 
No impairment charges have been recorded for goodwill in the nine months ended September 30, 2022 or the year ended December 31, 2021.
Intangible assets with definite lives related to the following:
(dollars in millions)Weighted-Average
Useful Life
(Years)
Gross
Carrying Amount
Accumulated
Amortization
Net
Carrying Amount
As of September 30, 2022
Technology4.6$55.3 $(6.7)$48.6 
User base5.119.4 (5.3)14.1 
Customer relationships2.012.2 (5.9)6.3 
Trade names0.4 (0.4) 
Foreign currency translation adjustment(0.7)
Total$87.3 $(18.3)$68.3 
(dollars in millions)Weighted-Average
Useful Life
(Years)
Gross
Carrying Amount
Accumulated
Amortization
Net
Carrying Amount
As of December 31, 2021
Technology1.8$6.4 $(2.8)$3.6 
User base5.819.4 (3.2)16.2 
Customer relationships2.811.0 (3.5)7.5 
Trade names0.4 (0.4) 
Foreign currency translation adjustment0.3 
Total$37.2 $(9.9)$27.6 
Amortization expense related to definite-lived intangible assets was $4.6 million and $8.4 million during the three and nine months ended September 30, 2022, respectively, and $1.9 million and $6.0 million during the three and nine months ended September 30, 2021, respectively. No impairment charges have been recorded for intangible assets in the nine months ended September 30, 2022 or the year ended December 31, 2021.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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Estimated future amortization expense related to definite-lived intangible assets as of September 30, 2022 is as follows:
(in millions)
Years Ending December 31,Amortization
Remainder of 2022$4.7 
202317.4 
202413.8 
202513.5 
202612.5 
Thereafter7.1 
Foreign currency translation adjustment(0.7)
Total$68.3 
7.Debt
Credit Facility — The Company maintains a Senior Secured Credit Facilities Credit Agreement with Silicon Valley Bank, which over time has been amended and restated (as amended and restated from time to time, the Credit Agreement). The Credit Agreement provides for a revolving line of credit of up to $100.0 million with the option to increase up to an additional $25.0 million, including a letter of credit sub-facility in the aggregate amount of $10.0 million, and a swingline sub-facility in the aggregate amount of $10.0 million. In September 2022, the Company amended and restated the Credit Agreement to extend the termination date from September 2, 2023 to December 2, 2023, and to replace the Eurodollar Loan option (which was LIBOR based) with a Secured Overnight Financing Rate (SOFR) Loan option, with any outstanding Eurodollar Loans to convert to SOFR Loans at the next interest period. Under the terms of the Credit Agreement, revolving loans may be either SOFR Loans or ABR Loans. Outstanding SOFR Loans incur interest at the Adjusted SOFR Rate (which is defined in the Credit Agreement as Term SOFR plus a Term SOFR Adjustment equal to 0.10% for 1-month interest periods, 0.15% for 3-month interest periods, and 0.25% for 6-month interest periods, and, in each case, subject to a 1.00% floor), plus a margin of either 3.00% or 2.75% depending on usage. The Company is charged a commitment fee of 0.30% per year for committed but unused amounts.
On July 7, 2022, the Company borrowed $70.0 million under the Credit Agreement to finance the cash portion of the purchase consideration for the acquisition of OTB. This outstanding balance under the Credit Agreement of $70.0 million, which is a Eurodollar Loan with an interest rate of 5.43% as of September 30, 2022, represented the entirety of the Company’s outstanding debt as of September 30, 2022. The Company had no outstanding debt as of December 31, 2021. The available amount to borrow under the Credit Agreement was $28.3 million and $94.7 million as of September 30, 2022 and December 31, 2021, respectively, which is equal to the available amount under the Credit Agreement of $30.0 million and $100.0 million, respectively, net of letters of credit with Silicon Valley Bank of $1.7 million and $5.3 million, respectively.
The Credit Agreement contains covenants limiting the Company’s ability to, among other things, dispose of assets, undergo a change in control, merge or consolidate, make acquisitions, incur debt, incur liens, pay dividends, repurchase stock, and make investments, in each case subject to certain exceptions.
The Credit Agreement also contains financial covenants requiring the Company to maintain a minimum adjusted quick ratio and a minimum consolidated adjusted EBITDA if the adjusted quick ratio falls below a specified level, measured in each case at the end of each fiscal quarter. The Company is required to furnish audited financial statements within 90 days after the end of the fiscal year. The Company was in compliance with all financial covenants as of September 30, 2022 and December 31, 2021.
8.Commitments and Contingencies
Commitments and Other Financial Arrangements — The Company has certain financial commitments and other arrangements including unused letters of credit and commitments under leases. On July 7, 2022, the Company borrowed $70.0 million under the Company’s Credit Agreement to finance the cash portion of the purchase consideration for the acquisition of OTB. See Note 5 Business Combination and Note 7 Debt for further discussion. As of September 30, 2022, there were no other material changes to the Company’s commitments and other financial arrangements as disclosed in Note 8 – Commitments and Contingencies in the notes to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
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Litigation and Other Legal Matters — The Company is involved from time to time in litigation, claims, and proceedings. Periodically, the Company evaluates the status of each legal matter and assesses potential financial exposure. If the potential loss from any legal proceeding or litigation is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. Significant judgment is required to determine the probability of a loss and whether the amount of the loss is reasonably estimable. The outcome of any proceeding is not determinable in advance. As a result, the assessment of a potential liability and the amount of accruals recorded are based only on the information available at the time. As additional information becomes available, the Company reassesses the potential liability related to the legal proceeding or litigation, and may revise its estimates. Management is not currently aware of any matters that it expects will have a material effect on the financial position, results of operations, or cash flows of the Company. The Company has not accrued any potential loss as of September 30, 2022 or December 31, 2021.
9.Stockholders’ Equity
Equity Incentive Plans — The 2021 Equity Incentive Plan and the predecessor 2012 Equity Incentive Plan, both as amended, provide for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted stock units and restricted stock awards to employees, non-employee directors and consultants of the Company. At the Company’s 2022 annual meeting of stockholders on May 25, 2022, the stockholders approved an amendment to the 2021 Equity Incentive Plan to increase the aggregate number of shares of Class A common stock reserved for issuance thereunder by 8.0 million shares. Additionally, concurrent with the closing of the acquisition of OTB on July 11, 2022, the Compensation Committee of the Company’s Board of Directors granted RSU awards under the Inducement Plan to employees of OTB who were offered employment with the Company. See Note 5 Business Combination for further discussion. The 2021 Equity Incentive Plan and the predecessor 2012 Equity Incentive Plan, both as amended, along with the Inducement Plan (collectively, the Plans) comprise the equity incentive plans of the Company.
Stock Options A summary of the Company’s stock option activity for its Plans is as follows:
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