NerdWallet announced earnings on Tuesday. In Wednesday’s trading, their stock (NRDS) was up 33%. Clearly investors liked what they heard.

Here’s how they summarized their quarter:

They unpacked their revenues by business unit:

Credit Cards

The NerdWallet team pointed to tighter lender conditions as the source of their 16% YoY decline.

Data from the St. Louis Fed confirms that story.

While the St. Louis Fed hasn't posted Q3 2024 numbers yet, their data shows that Q2 2023 origination volume (for large banks) was 19.65MM cards, while Q2 2024 was 17.63MM cards. That’s a 10% decline, roughly in line with NerdWallet’s YoY drop.

NerdWallet’s best Q3 for credit card (on public record) is Q3 2022, when they delivered $57.4MM in revenue. So this most recent quarter is a 21% decline from their 2-year ago peak in cards. That’s a bigger decline than what we’d expect from the St. Louis’ Fed macro data, which shows a 10% decline in large bank origination volume from Q2 2022 to Q2 2024.

Zooming up for a second, if you’re an affiliate marketer, you probably care about two things:

1. Is the channel growing?

2. What percentage of new cards originate through this channel?

Based on the data above, it seems like in the last two years the channel has been slightly lagging the pace of account origination in the industry, per the St. Louis Fed data.

To answer the second question, we have to make an assumption about NerdWallet’s revenue per transaction.

Their business skews upmarket, so I’d guess their average revenue per transaction (RPT) in the $200 - $350 range. Based on their Q3 2024 revenues, here’s a range of possible origination volumes per month:

Implied Transactions For $45.3MM / Qtr Card Business

So, on the high end of this range (226K originations per quarter), NerdWallet has a more than 1% market share of all large bank credit card originations (assuming their partner base is mostly large banks).

If we further assume that 5%-10% of new large bank credit card originations come from affiliate channels like NerdWallet (Credit Karma, Experian, Bankrate, The Points Guy, etc), that suggests that NerdWallet captures 10%-20% of the affiliate channel market.

With this kind of scale, it makes sense for prime card issuers to fight for their piece of this marketplace.

Other Facts And Figures

• Q3 ‘24 Monthly Unique Users are at 22MM, down 7% YoY due to “broad organic traffic pressure.”

• “Personal loans declined 49% year-over-year, as high loan rates continued to depress consumer demand and underwriting remained tight.”

• “Emerging verticals revenue increased 129% year-over-year to $94 million in Q3”, led by auto insurance.

• Closed the acquisition of Next Door Lending, a mortgage brokerage. Leadership expects the deal to “contribute approximately 1 to 2 percentage points of growth to our Q4 2024 revenue outlook.”

• NerdWallet’s Podcast — Smart Money — has scaled to 250,000 average downloads per month.

• CFO Lauren StClair who joined NerdWallet in November 2020 to lead the IPO, will be leaving the company in March 2025.

Closing Thoughts

NerdWallet’s great quarter (per the NRDS stock’s reaction) was driven by a material increase in their (auto) insurance business.

From a bank marketer’s perspective, the credit card and loans performance makes me wonder how they’ll re-establish a growth position in these businesses. They didn’t articulate (in my opinion) a clear strategy on how they’ll address the organic search headwinds they’re seeing.

Additionally, I don’t see NerdWallet as active in targeted marketing (like Credit Karma’s Lightbox, Experian’s Activate, and MoneyLion’s Spark), making me wonder how efficient their ads business will be over time relative to other affiliates marketplaces.

Zooming up, they have a terrific consumer brand and the “content DNA” to be able to navigate their way through the organic search headwinds, by leaning into other media properties like their Smart Money Podcast.

Given their scale in prime lending, bank marketers who compete in affiliates can’t ignore this channel, but their growth prospects (in the consumer lending category) are less certain given their organic search challenges and competitors that are doubling down on targeting platforms that make their ads more efficient.

One last note: You may be wondering if this article is an endorsement of NerdWallet as an affiliate marketing channel for lenders. The best way to answer that is with my actions: I recommend NerdWallet to my prime lender clients at New Market Growth because of (1) their scale in the market, (2) the strength of their brand and quality of their content, and (3) their consumer-first mission of “Provid[ing] clarity for all of life’s financial decisions.”

Disclosure: This article is for informational purposes only. Nothing contained herein constitutes business or investment advice, or the recommendation of or an offer to sell, or the solicitation of an offer to buy or invest in any investment product, vehicle, service or instrument.