Q3 2024 NerdWallet Inc Earnings Call
Especially as the rate environment improves or shoppers.
Speaker Change: The acquisition is an exciting step forward in our ability to offer more do it together and do it for me services as with <unk>. We believe we have an opportunity to leverage <unk> trusted brand to enhance next door lendings existing business during a cyclical recovery, while providing our consumers with a better experience.
Speaker Change: We believe this partnership will enable us to build deep and reoccurring relationships with consumers and take more market share while improving mortgage unit economics.
Speaker Change: Part of the reason for our focus on vertical integration is that these improved shopping experiences allow us to register more consumers in turn allowing us to reengage them over time with new features and opportunities to favor earn more money.
Speaker Change: As in Q2, the enhancements to our insurance shopping flows drove significant registered user growth this quarter with cumulative registered users now over $23 million. Additionally, we continued to invest in <unk> plus our new membership product as a reminder, Nirvana us rewards members for making smart financial decisions and <unk>.
Speaker Change: <unk> access to exclusive rates on certain products from participating financial institutions.
Speaker Change: This quarter, we launched insurance assistant a tool that analyzes members insurance rates and automatically re shops for better policies is available as well as the treasury bills account.
Speaker Change: <unk> plus is in its early days, we have already seen that members have a higher lifetime value than other registered users who themselves have five times the lifetime value of overall visitors, suggesting significant opportunity as we relentlessly improve the product.
Speaker Change: Before I pass it over to Loren I want to extend my thanks Terry.
Speaker Change: As you may have read Lauren will be leaving <unk> wallet in March.
Speaker Change: Lawrence joined <unk> in 2020 to lead our initial public offering and transition to a public company and she has been a great partner to me in this process in particular, she has done a fantastic job of building a great team.
Speaker Change: I'm grateful that we will have warren's assistance with ensuring an orderly transition in the meantime, thank you Arne.
Lawrence: Tim it's been an incredible journey.
Lawrence: I will be here for a little while longer we will have time for goodbyes next earning call for.
Lawrence: For now we're focused on closing the year out strong.
Lawrence: That and let's get into our Q3 results.
Lawrence: We ended the quarter above our revenue guidance range, delivering Q3 revenue of $191 million up 25% year over year.
Lawrence: Our revenue growth was primarily driven by the resurgence we have seen in our insurance vertical as well as SMB.
Lawrence: So we continue to face a cyclically depressed lending environment.
Lawrence: Let's take a deeper look at the revenue performance during the quarter within each category.
Lawrence: Credit cards delivered Q3 revenue of $45 million.
Lawrence: Declining 16% year over year.
Lawrence: Growth decelerated versus Q2 as underwriting tightened a bit combined with the pressures in organic search traffic that had been a bit more pronounced within credit cards.
Lawrence: While we've seen a recovery in other verticals, we still have room to improve in some areas of credit cards.
Lawrence: Conversely on the issuer side, we believe we are seeing some early signals of issuer appetite returning and have made some headway in improving areas of the organic search experience that we believe will help provide tailwind to our credit cards vertical in the long run.
Lawrence: Loans generated Q3 revenue of $24 million declining 28% year over year.
Lawrence: Our personal loans vertical declined 49% year over year and down 8% sequentially as the end market remains challenging.
Lawrence: Despite the recent rate cuts, we still believe that there is a backlog of consumer demand in personal loans as high loan rates continue to dampen consumer appetite to refinance credit card debt, while elevated delinquency rates have kept underwriting standards tighten.
Lawrence: Partially offsetting the decline in personal loans was growth in mortgages.
Lawrence: Q3 saw accelerating mortgage revenue growth as we are beginning to see the benefit of rate reductions in this vertical.
Lawrence: However, with the vast majority of household mortgages reported at under 5% rates, we do not expect to see significant acceleration in growth beyond these levels in the near term.
Lawrence: The growth in mortgages is still primarily driven by strength in home equity products as consumers access the record levels of equity in their home.
Lawrence: We believe that we remain in a prime position to take advantage of further increasing loan demand as it surfaces.
Speaker Change: As Tim mentioned, we expect to see approximately a one to two percentage point benefit to our Q4 revenue growth from the recent acquisition of next door lending and the revenue going forward will be reported as part of our loans revenue category.
Speaker Change: SMB products delivered Q3 revenue of $28 million growing 12% year over year.
Speaker Change: We continue to see pressure in SMB loan originations with rates remaining elevated and underwriting remaining tight.
Speaker Change: However, this was more than offset by growth in our renewal portfolio, which showcases the benefit of our vertical integration strategy and the reoccurring nature of the vertical when we pursue a higher touch experience.
We also delivered growth with our other product offerings.
Speaker Change: While we do not expect to see a materially accelerating growth profile in the near term.
Speaker Change: We believe there is substantial opportunity to grow both the loans and other products businesses in the long term.
Speaker Change: Finally, our emerging verticals, formerly named our other verticals revenue product category finished Q3 with revenue of $94 million growing 129% year over year.
Speaker Change: As a reminder, after the regrouping of SMB products revenue emerging verticals consists of areas such as banking insurance investing and international.
Speaker Change: Insurance revenue grew 916% year over year in Q3 more than offsetting pressure in banking.
Speaker Change: We entered the quarter seeing consistently improving demand from both consumers and partners and believe that the end market will stay robust assuming inflation remains stable.
Speaker Change: Growth was also aided by our ability to improve the product experience by collecting a bit more information upfront to better route customers to relevant products for them.
Speaker Change: Partially offsetting this growth banking declined 26% year over year as we saw demand continue to decline alongside interest rates.
Speaker Change: Moving on to investments and profitability.
Speaker Change: During Q3, we delivered $22 9 million of non-GAAP operating income above our Q3 guidance range.
Speaker Change: Despite incremental in period cost savings during Q3, the non-GAAP profitability outperformance was not as large as revenue due to our success in scaling performance marketing.
Speaker Change: The meaningful year over year margin accretion was driven by both the partial quarter impact of our cost actions, we announced at the end of July.
Speaker Change: As well as reducing our brand investment within the quarter as campaign timing shifted into October.
We believe continuing to invest in brand advertising, even through cyclical trough will benefit the brand in the long term and we will be data driven on the level at which we spend during shorter timeframe.
Speaker Change: We also earned over $37 million of adjusted EBITDA.
Speaker Change: In the third quarter, we earned GAAP operating income of $6 6 million and net income of zero point $1 million.
Speaker Change: Which includes $7 $8 million of restructuring expenses, and a $7 $7 million income tax provision.
Speaker Change: Similar to what we've mentioned in previous quarters, we expect to be a cash taxpayer for the foreseeable future.
Speaker Change: Please refer to today's earnings press release for a full reconciliation of our GAAP to non-GAAP measures.
Speaker Change: Consumers continue to turn to the nurse for their money questions. We provided trustworthy guidance to 22 million average monthly unique users in Q3 down 7% year over year.
Speaker Change: The broad organic traffic challenges that we have been experiencing is the primary driver of the decline.
Speaker Change: We are seeing the largest pressure to our year over year growth occur in our learned traffic, which is typically non monetizing in the near term, though an important brand engagement tool for long term relationships with consumers.
Speaker Change: We expect to continue to see and you use decline year over year in the short term as we await normalization from these new levels and are comparing to a second half of 2023 that grew and you use over 20% year over year.
Speaker Change: Despite near term challenges and you've used this quarter had a two year compounded annual growth rate of 7% showcasing.
Speaker Change: Our ability to drive increasing consumer demand through the <unk> wallet brand.
Speaker Change: Onto our financial outlook.
Speaker Change: As shown in our Q3 results, we expect to continue delivering significantly improved levels of revenue growth. Despite many of our verticals facing cyclical headwinds.
Speaker Change: We expect to deliver fourth quarter revenue in the range of $164 million to $172 million.
Speaker Change: Which at the midpoint with increased 26% versus prior year.
Speaker Change: To give you more color on our Q4 revenue expectations.
Speaker Change: We would typically expect to see a seasonal decline of roughly low double digits in revenue from Q3 to Q4, which our outlook reflects.
Speaker Change: The primary driver of year over year revenue growth in the fourth quarter is still expected to come from insurance.
Speaker Change: And while we expect to continue facing tight lending conditions across both credit cards and loans, we will have slightly easier year over year comps and personal loans in Q4.
Speaker Change: Moving to profitability.
Speaker Change: We expect Q4 non-GAAP operating income in the range of $8 million to $11 million.
Speaker Change: Our non-GAAP operating income outlook assumes a full quarter of our expected cost reductions as a result of the actions we announced in July.
Speaker Change: And as a reminder, last quarter, we provided an outlook for Q3 brand expenses to be lower year over year and for Q4 brand expenses to be higher euro per year.
Speaker Change: Our Q3 results and Q4 outlook are consistent with that guidance as Q3 brand expenses were down approximately $7 $5 million year over year in Q4 is expected to be up a bit less than that year over year.
Speaker Change: As we look at the second half in aggregate at the midpoint of our Q4 guidance, we expect to improve non-GAAP Oi margin by over one point year over year.
Speaker Change: Our Q4 guidance equates to an expected full year 2024, non-GAAP Oi margin of approximately five eight to six 2% of revenue.
Speaker Change: And adjusted EBITDA margin in the range of $14, 75% to 15% of revenue.
Speaker Change: The main driver of our expectations being near the bottom of our prior range is we see a larger portion of our revenue growth coming from paid marketing.
Speaker Change: As we've mentioned in the past, we view paid marketing as a means to an end and we'll continue to spend in a disciplined manner with the aim to be paid back within the quarter in which we spend and expect paid marketing to remain a larger component of our monetizing traffic in the future.
Speaker Change: Should there be further federal funds rate reductions, we would expect a recovery in the interest rate sensitive areas of our business to come from both unpaid and paid channels that will help us overall margin accretion.
This gives us confidence that there is still a path to the medium and long term targets that we issued back in March.
Speaker Change: While we are not guiding to any 2025 expectations. At this time, we do expect to deliver margin accretion next year as we scale revenue and maintained cost discipline across our business.
Speaker Change: I would also like to take a minute to talk about capital allocation.
Speaker Change: Our philosophy has not changed we will continue to be acquisitive, when the timing opportunity and price are right and we also plan to opportunistically repurchase our shares.
Speaker Change: We seek to allocate capital towards uses that drive the highest risk adjusted rate of return.
Speaker Change: That being said our strategy will be to apply different discount rates to each form of discretionary capital allocation.
Speaker Change: During Q3, we repurchased five 8 million shares at an average price of $12 in 2009 <unk> per share.
Speaker Change: Subsequent to the end of the third quarter, we've exhausted the remainder of the $15 million share repurchase authorization that the board authorized in September.
Speaker Change: The board has approved a new authorization of $25 million.
Speaker Change: We also opportunistically entered the mortgage brokering market during a cyclical trough with the acquisition of next door lending.
Speaker Change: We are making progress on ensuring we meet our commitments to you our shareholders and remain proud of the way our nerds have rallied around an evolving landscape amidst organizational changes.
Speaker Change: And are working as hard as ever to improve the things within our control with that we're ready for questions operator.
Speaker Change: Certainly.
Speaker Change: Our first question comes from the line of.
Speaker Change: Michael and fun.
Speaker Change: From Morgan Stanley Your question. Please.
Speaker Change: Hey, guys. Thanks for taking my question, Tim I, just wanted to follow up on some of your organic traffic comments like if I just generally think about.
Michael: How are your share of a particular query has evolved over time or are you sort of thinking about some of the key initiatives that you have in place to sort of mitigate the impact of some of things that we're seeing in terms of both AI overviews, radnet et cetera, I know, you're obviously in the process.
Michael: Mix shifting your revenue composition towards the existing installed base over time, but I'm curious your views in terms of how you anticipated some of the medium term dynamics to play out. Thanks.
Speaker Change: Thanks for the question. So yes, just as a reminder for everyone.
Speaker Change: <unk> talked about learn and shop traffic as it pertains to organic search visibility. So I will just provide a little bit more color there and then dive into the rest of the question.
Earn bucket is not as commercial it includes things like how much should I save for retirement, our shop traffic is highly commercial and includes things like best mortgage rate comparison so.
Speaker Change: During our Q2 call our search visibility was broadly stabilizing and actually starting to rebound a little bit and then soon after our Q2 call things took a turn for the worse so with our shopping traffic things got worse in August and September, but then going into October rebounded back to a level that was a bit better even than where we were when we did the Q2.
Speaker Change: Paul.
Speaker Change: We think we did some things on our end to clean up the user experience that we're net positive now there were some exceptions. So for example parts of credit cards and personal loans are still lagging.
Speaker Change: Overall, we got a pretty good place or we got to a pretty good place on shopping pages in July we've figured out what to improve <unk>.
Speaker Change: <unk> for the far bigger bucket education oriented traffic that is less commercial in nature things got progressively worse throughout the quarter and recently stabilized at a lower level. So what's happening there is a renewed push by search engines to incorporate their own answers directly into the search results like you mentioned overviews.
Speaker Change: As an example, so for those of you had been falling search over the years. This isn't really anything new so for example at one point when you search for the weather It didn't show up directly in the results and eventually a module was inserted there.
Speaker Change: That trend towards the simpler stuff being pulled into search results is inevitable and we've always been more insulated from that but historically it happens in waves and sometimes haircuts. Our IMMU use so we've generally seen a rebase lining after any major changes and then eventual growth from there as you lap the impact.
Speaker Change: Oftentimes those changes are rolled back and so over the last 10 years I would say these changes come in waves and we're in the middle of a big wave.
Speaker Change: And as long as we focus on delivering consumer value, we're steering in the right direction and things tend to sort themselves out.
Speaker Change: So the headwinds driving our outlook for further immune deceleration in Q4 because of the full quarter impact of some of the stuff that happened with those headwinds, though in the long run.
Speaker Change: I do think and improving search experience is a win for the overall ecosystem and keeps it healthy and growing.
Speaker Change: And really I would say the silver lining here is that Q3 was pretty brutal as far as some of the headwinds we faced in organic search, especially in highly commercial areas.
Speaker Change: And being able to hit like a is at.
Speaker Change: 12% NGL high margin in Q3 in spite of that headwind.
Speaker Change: It was really a testament to some of the progress we've made in building our brand in a direct relationship with our users and our increasing competitiveness in other channels and so to your question I mean, I think <unk> is.
Speaker Change: We're doing a really good job registering a lot more users over time, especially as people are shopping.
Speaker Change: And then we're doing a better job re engaging them. That's a big area of focus in our third growth pillar registration and data driven engagement and then also just I think nextera lending is a great example of vertical integration as his thunder.
Speaker Change: With those things, we naturally end up building deep reoccurring relationships with consumers over time and we saw for example, the renewals book of Thunder really shining this quarter in spite of a pretty tough loan origination market. So those are two of the growth pillars that we think will really help us continue to grow there.
Speaker Change: Yeah.
Speaker Change: I appreciate that Tim I, just wanted to follow up on some of the insurance shrank, obviously really impressive growth you sort of alluded to the fact that youre expecting that to persist into <unk>.
Speaker Change: Do you think that will persist in terms of.
Speaker Change: We used into first half of 'twenty five as well I'm just trying to parse some of your.
Speaker Change: Our commentary on some of the organic traffic and I need you to accelerate as Sean which is being offset.
Speaker Change: <unk> more than offset by some of the insurance strength as well as some of the more interest rate sensitive verticals. Thanks.
Speaker Change: Short answer is yes, so what I'd say is our insurance revenue rate up 10, <unk> year over year, and Theres almost binary impact of the insurance carriers being able to reset their pricing and returned to profitability.
Speaker Change: We're back on now.
Speaker Change: There is for sure share gains happening.
Speaker Change: Super cycle happening at the same time, so I'll try to disaggregate that all of it in terms of the share gains.
Speaker Change: <unk> back to <unk> 'twenty, one right before that hard market.
Speaker Change: Up six Exterran, we think we've really gained share due to product improvements.
Speaker Change: And that comes from better matching customers with the most relevant products and.
Speaker Change: And yes, we continue to see benefits from that roll in in Q3. It allows us to do for example paid marketing more profitably now in terms of the Super cycle Theres, a double tailwind and some puts and takes right. So the double tailwind is as carriers finally get approval to raise those prices. They suddenly one want new customers again, but to consumers are also.
Speaker Change: Shopping as they see premiums go up.
The offsetting factor to consider is that the end market is growing two or so as the rising actuarial risk from climate change for example is a huge tailwind on overall premiums. So premiums are up a lot since 2021, and we think thats more structural in nature.
Speaker Change: And also lastly, I'd say in terms of diversification you know today, our insurance category is heavily weighted towards auto and heavily indexed towards the digital channel. So looking forward, we're investing and diversifying and things like human assisted integrations and home and life as well as our insurance assist product and hurdle out plus where we monitor your ball.
Speaker Change: <unk>.
Speaker Change: And let you know when there is a better deal.
Speaker Change: That's great. Thanks, Tim.
Speaker Change: Yes.
Speaker Change: Thank you and as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone. Our next question comes from the line of Justin Patterson from Keybanc. Your question. Please.
Justin Patterson: Great. Thank you very much two if I can.
Speaker Change: Dan.
Justin Patterson: Just on performance marketing I know you talked about it in the past, but could you talk a little bit about just what the guard rails you have on there how much of that.
Justin Patterson: Really incremental in nature versus responding to some of the traffic headwinds how do you plan on managing that going forward.
Justin Patterson: Secondly, I would love to hear more about just asked about the new products like nerd wallet plus node on node AI are resonating. Thank you.
Speaker Change: Thanks, Jeff and I'll cover the first one on performance marketing and then Tim I'll take the question around new new products and so.
Speaker Change: In terms of performance marketing. Despite the recent challenges, we still see that over 70% of our traffic comes through organic or unpaid channels.
Speaker Change: And that's allowed us to reinvest in more acquisition channels like brand and performance marketing I, just want to reiterate and be incredibly clear our approach on how we operate performance marketing Hasnt changed we do so in a disciplined way aiming to be in quarter profitable and adding incremental non-GAAP Oi dollars.
Speaker Change: And keep in mind that performance marketing is a variable expense from our perspective, and we will dial up or down depending on the returns and we also view this as a means to an end as part of our registration and engagement initiatives we.
Speaker Change: We see increased spend as a positive as performance marketing as a flexible lever to add incremental non-GAAP OE dollars get more folks the opportunity to register and to continue taking share.
Speaker Change: Yeah and in terms of the newer products like our third our third growth pillar is registration and data driven engagement. So.
Speaker Change: With products like <unk> plus in nerd up in verbal advisors at all really falls into that camp right. We're trying to build deeper reoccurring relationships with our consumers and small businesses. So I guess broadly, saying I'd say, it's pretty early days across the board, but the cohort data.
Speaker Change: Is looking positive I mean people are engaging beyond that five X.
Speaker Change: What we see on the typical registered user.
Speaker Change: So we think that that trend is good it's really about continuing to iterate and improve on those products and drive more people into those experiences.
Speaker Change: Great. Thank you.
Speaker Change: Thank you and our next question comes from the line of Peter Christiansen from Citi. Your question. Please.
Speaker Change: Thank you for the question here and best of luck to Warren.
Speaker Change: Are you working with you.
Speaker Change: If I look back to the I think you called out 2021 as the previous.
Speaker Change: Cycle that youre seeing on the insurance side, and the fact that Youre youre indexed high too.
Speaker Change: Auto which is typically like a six month renewal period I think.
Speaker Change: Does that suggest.
Speaker Change: Can you talk to I'm, sorry outside of the auto sector can you can you talk a little bit about the strength that youre seeing in non auto and how much of the components that was to the assertion revenues.
Speaker Change: You saw this quarter.
Speaker Change: For all intents and purposes, I'd say the strength came from auto I mean, it's the biggest market by far for us.
Speaker Change: And yes.
Speaker Change: I'd really a nice there I mean, I do think home is going to be a bit of a.
Speaker Change: Longer delay in recovery I know theres more premiums working there increases working their way through the system there.
Speaker Change: And it's also just a smaller end market, we are investing there as well as in life in Medicare, but those are still relatively nascent for us.
Speaker Change: That's helpful and then.
Speaker Change: As you think about string.
Strength in that particular vertical.
Speaker Change: Did you see any noticeable contribution to you registered.
Speaker Change: User growth in the quarter stemming from what you've kind of phone.
Speaker Change: Insurance was a call out there.
Speaker Change: So we really focused on increasing the personalization around the insurance shopping experience.
Speaker Change: So it naturally leads to registrations.
Speaker Change: And getting to know more about the consumer.
Speaker Change: And so as strength in growing our auto business does actually drive more registrations for us as well.
Speaker Change: Yes, the endgame there I mean, clearly the more we know about people with a more hopeful we can be and so we try to leverage that to.
Speaker Change: Fred Krom consumers into a deeper relationship with us just by being helpful, where we can.
No that totally makes sense clearly an opportunity to cross sell into other verticals there.
Speaker Change: Last one for me on the banking side.
Speaker Change: You've called out weakness in balance transfer for last couple of quarters, just curious if you're still seeing.
Speaker Change: That particular trend within banking.
Speaker Change: And perhaps maybe.
Speaker Change: Being a signal.
Speaker Change: For the overall lending segment as well just just on a timing perspective, just any views there.
So what I'd say there is underwriting is still tight.
Speaker Change: Pretty much all credit card categories, but on the flip side, we're seeing more normal balance sheet appetite, where issuers has gone from capping the amount of lending they wanted to take on to really opening up the tax when it comes to taking qualified borrowers.
Speaker Change: Take all we can give them, it's getting back in that direction. So that's a net positive macro backdrop.
Speaker Change: However, like in our credit card business there is still.
Speaker Change: So they were organic search hasn't bounce back.
Speaker Change: And that is creating headwinds in terms of us being able to capitalize on that improving issuer backdrop.
Speaker Change: But bigger picture, we think we've got a lot of room to grow there were still only single digit market share in cards, and then I guess on the banking.
Speaker Change: Call it the banking side the depository accounts.
Speaker Change: Our ability to forecast trajectory banking is admittedly a bit weaker given we haven't been through this type of interest rate cycle before and just.
Speaker Change: Contacts reminder, the fed funds rate target increased by about 450 bps between March of 2022 and March of 2023, which drove a lot of deposit shopping and the rate hikes ended in the first quarter of 2023, so not too surprising we're seeing year over year declines there.
As consumers have a little less interest in searching for savings accounts.
So our revenue was down 26% year over year in the third quarter and.
Speaker Change: It's just a tougher comp going into in a declining rate environment for us. The big question is how much free shopping are consumers going to do on the way down as your savings rate gets less competitive do you pick your head up and look around for new savings account, if so things could turn out better than we anticipate.
Speaker Change: We think big picture, though if rates stay above zero, we would expect to see a higher new normal and banking and to highlight this point Q3 remains about three times higher than in <unk> 'twenty one before.
Speaker Change: Before the rate hike started so essentially any non zero rate means deposits are valuable to banks and it also provides incentive for consumers to comparison shop.
Speaker Change: Alright, Thank you very much super helpful.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: And as a reminder, ladies and gentlemen, if you do have a question. Please press star one on your telephone. Our next question comes from the line of Ralph Schuchard from William Blair. Your question. Please.
Rafi you might have your phone on mute.
Speaker Change: Okay.
Ralph Schuchard: Thank you for taking my question.
Ralph Schuchard: Prepared remarks, you talked about seeing some issuers returns within the credit card segment, just kind of curious if you could provide some more color on that was that something that you know.
Ralph Schuchard: Occurred in Q3 and extended to where we are today just anything you could provide in terms of more detail on that and then I have a follow up.
Ralph Schuchard: Okay.
Hey, Richard.
Oh, yes, so I guess, what we were seeing in prior quarters, sometimes issuers were walking away from qualified.
Ralph Schuchard: Borrowers.
Ralph Schuchard: Our read on that was that they may have been a little bit conservative with managing their balance sheet.
Ralph Schuchard: In terms of coming post SBB rate and just maybe a bit of a weaker capital markets environment. So we think a lot of that is a reverse course and is starting to look a little more normal.
Ralph Schuchard: Great.
Speaker Change: One for our long.
Speaker Change: Last quarter I think for Q3 with a lot of the uncertainty that you saw with organic traffic you talked about the higher level of conservatism implied in the guide for Q3, just curious in terms of Q4 level.
Speaker Change: Level of conservatism did you apply there was it sort of the same as Q3 is that sort of stands change just any color you could add on that would be great. Thank you.
Speaker Change: Yes, maybe I'll take the opportunity to talk a little bit more about the revenue guide in total and then I'll address your specific question about conservatism as part of that so just as a reminder, that Q4 revenue guide.
Speaker Change: It was 164 to 172 million, which at the midpoint would be a 26% year over year growth rate, but down 12% quarter over quarter.
Speaker Change: And some additional context from Q3 to Q4, we tend to see a low double digit decline due to seasonality in areas such as credit cards student loans and mortgages.
Speaker Change: Our guidance for Q4 assumes normal seasonality for the business overall as well as most of our verticals.
Speaker Change: But we expect slightly worse than seasonal Q3 to Q4 and credit cards as a result of a full quarter of the commercial shirt search traffic pressure, but a better than seasonal Q4 in insurance as we see success in scaling and taking share.
Speaker Change: We've been pleased that we've been able to continue to drive revenue growth. Despite some of these organic search traffic challenges.
Speaker Change: We do not expect to see any major impact from rate decreases in the short term, but we are confident in our readiness to take advantage of a lower rate environment should rates come down and so I would say that our conservatism is the same in terms of our assumptions around Q3, and Q4 and the impact of the organic search trends being offset by some of the strength that we've talked about.
Speaker Change: In insurance.
Speaker Change: That's really helpful. Thank you.
Speaker Change: Thank you.
Speaker Change: This concludes the question and answer session of today's program I'd like to hand, the program back to management for any further remarks.
Speaker Change: We did get a last minute question or just popped up in the queue.
Speaker Change: And our final question then for today comes from the line of Jed Kelly from Oppenheimer. Your question. Please.
Jed Kelly: Hey, Thanks for squeezing me in I thought I had we had raised.
Jed Kelly: Just two questions one on insurance and scaling the performance marketing can you talk about how your performance marketing benefits as you start to deliver more volume.
Jed Kelly: And then just around mortgages can you talk about the strategy.
Jed Kelly: I'm leaning more into a brokerage versus partnering with them for a variety of lenders that might give you a little more breadth in terms of our lending partnerships. Thank you.
Speaker Change: Sure why don't I take the first one on performance marketing scaling in insurance and then Tim you can talk a little bit more about the acquisition.
Jed Kelly: Yeah.
Jed Kelly: So as we've talked about.
Jed Kelly: Our approach to performance marketing has not changed we will continue to do it in a disciplined disciplined way and our goal is to be in quarter profitable.
Jed Kelly: Adding incremental non-GAAP O Y dollars and so that applies to all of our verticals, especially in areas, where we see incredibly fast paced growth and we see a robust end market and so youll expect us to continue to lean in where we see good return and if we're not seeing those returns we can very quickly and easily pull back as well.
Jed Kelly: But we also I'll just remind everyone again fee performance marketing as a way to get more folks registered and then re engage with them over time as we continue to expand and develop our growth pillar around registration and data driven engagement.
Speaker Change: Got it.
Speaker Change: Let me just tack on two thoughts there clearly personalization is helpful. When we know more about the audience, we can better match them with people who are.
Speaker Change: While our carriers, who are well suited to serve that.
Speaker Change: And then the second thing is.
Speaker Change: Insurance is a growing area for us in our <unk>.
Speaker Change: Insurance carrier partners are quite quantitative rates. So as they look at the quality of referrals that are coming through that can have a positive feedback loop over time.
Speaker Change: Saying like Hey, Nirvana.
Speaker Change: Customers, who really understand the insurance product, who really understand why we're the best carrier for them and that can create a positive feedback loop as well on the mortgage brokering side.
Speaker Change: We really tried to.
Speaker Change: Okay.