NerdWallet, Inc. (NASDAQ:NRDS) Q4 2022 Earnings Call Transcript

Justin Patterson: Great. Thanks. Two if I can. Just building off of personalization, I know with the OTB acquisition, one of the key levers there was to improve personalization across the rest of the portfolio. I just would love to hear an update on just how that integration is proceeding? And whether we’ve seen that conversion benefit take place yet? And then secondarily, there’s been a lot of talk about chat out there. So, I’m curious whether trust the bot becomes a potential threat or even opportunity for NerdWallet over time? thank you.

Tim Chen: Yes, I’ll take that one. So, as a reminder, our general M&A thesis is that we can pair our top-of-funnel brand and reach with these best-in-class shopping experiences like OTB. So, the key components of the acquisition thesis look very promising. So, most notably, we’re seeing conversion from integrating their technology where, as I mentioned, we’re seeing double the match rate now for consumers coming through our improved personal loans flow. And we’re serving a larger audience, and we’re registering a lot more people than we were previously. That gives us a lot more to work with in terms of those personalized nudges going forward. That said, yes, the macro for loans is more challenging than we anticipated going into the second half of 2022.

So, we’re still working through certain components of integration as well. So, that’s kind of a headwind. But taking all that into consideration, super positive about what OTB will contribute to NerdWallet in the long-term, especially as we go into more of a recovery. Yes. In terms of the chat AI question, we see both risks and opportunities for NerdWallet. There are some obvious benefits in terms of using chat AI as a productivity tool for teams like content and engineering. I think more relevant to NerdWallet is how chat AI affects the future of search engines. And we really think about that by stepping back and thinking about what consumers are trying to do. So, today, you might go to a search engine to find a quick factual answer or you might also be looking for a more nuanced answer.

So, for quick answers, like what’s the temperature outside, the search engine gives you an answer immediately. For those more nuanced answers, there’s often subjectivity involved and more data needed. And that’s why you might seek out a brand you know and trust first and then turn to a search engine if you don’t have a go to. And then you got to really think about the dynamic of Internet marketplaces too. So, for example, if you’re looking for a loan and the bank increases rates on Tuesday at 9:00 A.M. that needs to be factored into the marketplace instantly. And that’s not something a machine learning model it can do in real time, right? So, now if we look forward to the futuristic part of this, I think about chat AI as being able to extend what search can do.

So, for example, it’s not a great website for wrap songs about 529 plans because nobody has a commercial incentive to create that web page because nobody searches for that. So, these bespoke and frequently asked questions are where you’ll get a much better result from chat AI than a search engine, especially if there’s a good training set to work off of. And so as we think about the opportunity for NerdWallet. Today, you need to have hundreds of thousands of dollars in investable assets to justify a financial adviser’s time one-on-one, it’s expensive. And so a chat AI trained on NerdWallet’s first-party data or marketplace data or house views, it can have an opinion, and it can provide a response at a much lower cost than a human and this lower cost can drive democratization of very personalized and bespoke money question help, right?