NerdWallet CEO: ‘Distribution is King’

During NerdWallet’s Q1 earnings call, CEO Tim Chen took a question about the company’s vertical integration strategy.

“High level, the cost of launching financial products is decreasing rapidly, as everything from software to call centers to capital markets is getting more efficient,” Chen said. “Meanwhile, the cost of distribution is going up. That means now more than ever, distribution is king.”

With this in mind, the company is going hard on distribution.

“…we have decided to be more aggressive in placing our long-term bets,” Chen said. “We believe our brand and distribution moats represent a growing advantage as less powerful brands struggle to reach consumers efficiently, while AI simultaneously reduces the cost of offering financial products.”

Chen also said that it’s getting harder for single-product companies to continue competing.

“While this environment is increasingly challenging for newer entrants and single-product companies, our trusted brand leaves us in a strong position to capitalize on our massive consumer reach and distribution network.”

NerdWallet offers both consumer and smb products.

“SMB revenue was 25 million, down 15% year over year, driven primarily by organic search revenue declines in SMB products, partially offset by revenue growth in loan originations,” said John Lee, NerdWallet’s CFO of the first quarter. This downward trend as a result of the changing organic search environment has been a recurring theme for the last few quarters.