NerdWallet, a personal finance company and online lead provider for mortgage and insurance companies, has deepened its roots in the mortgage industry by acquiring Next Door Lending, a mid-size brokerage, announced NerdWallet CEO Tim Chen on Oct. 29 during a third-quarter earnings call.
The internet lead provider reported a positive third quarter with revenue and non-GAAP operating income exceeding analysts' expectations. Though Chen admitted that the company has faced continued headwinds in “organic search and an anemic loans end market,” gains in insurance and small- and medium-sized businesses have offset those challenges.
"Having built their business from the ground up," Chen told NMP over email, "they embody the same entrepreneurial spirit that drives NerdWallet forward. Together, we look forward to delivering even greater value to our customers."
In the second quarter, NerdWallet laid out strategic areas of investment to operate the company more efficiently and attract more consumer traffic to their website. More recently, Chen stated that the end goals are improving consumers’ shopping experience, building deeper connections, and establishing more recurring relationships.
That’s ultimately what led NerdWallet to strike a $1 million dollar deal with Next Door Lending, a Michigan-based brokerage that's licensed in 25 states, and led by its two co-founders, CEO Doug Liska and President Jonathan Haddad.
Notably, Haddad is also Chairman of the nationwide trade association representing mortgage brokers, the Association of Independent Mortgage Experts (AIME).
“We also opportunistically entered the mortgage brokering market during a cyclical trough with the acquisition of Next Door Lending,” Chen announced in the third quarter earnings call, saying it’s intended “to provide mortgage shoppers with more hands-on guidance.”
The acquisition is expected to contribute approximately one to two percentage points of revenue growth to NerdWallet’s fourth quarter, Chen forecasted during the earnings call. Going forward, NerdWallet's revenue will be reported under its loans revenue category.
NerdWallet paid $1 million in cash for the outstanding equity interests of Next Door Lending, according to its filing with the Securities and Exchange Commission (SEC). Under the purchase agreement, closed Oct. 1, NerdWallet is also offering $3.5 million in performance-based earnout awards to certain Next Door Lending employees, which will be reported as compensation expenses through 2028.
“I have really enjoyed getting to know Next Door Lending’s principals, Doug and Jonathon, through this process. They are kindred spirits who bootstrapped their business and share our focus on operational efficiency as well as the consumer-first orientation with the customer reviews to match,” Chen added. “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.”
NerdWallet aims to leverage NerdWallet’s trusted brand to enhance Next Door Lending’s existing business during a market cyclical recovery, while providing their consumers with a better experience.
“We’re thrilled about this new chapter, as it opens doors for mortgage brokers everywhere,” Haddad said in a statement sent to NMP. “As a first-generation Middle Eastern American, I understand that homeownership is a powerful part of the American dream. This acquisition allows us to reach more consumers nationwide and build greater awareness around the benefits of working with a mortgage broker to help more people achieve that dream.”
Though Next Door Lending’s website has already been updated with NerdWallet’s branding and colors, its co-founders Liska and Haddad are still listed as executives.
“We remain a member-managed team,” Haddad told NMP. “Doug Liska and I are fully committed to staying on throughout.”
Though Haddad received backlash shortly after being appointed as Chairman of AIME in January 2024, mainly due to Next Door Lending’s use of trigger leads. But, Haddad reveals that AIME members were pleased with the news of the acquisition, signaling that brokers do not hold the same contempt for internet leads sold by companies like LendingTree, Bankrate, or NerdWallet.
“I’ve shared the news with our community, and the response has been incredibly positive,” Haddad told NMP. “Mortgage brokers are genuinely excited to learn more about our journey and how we achieved this milestone.”
According to Modex, Next Door Lending funded 1,757 total loans worth roughly $514 million in the past 12 months, closely matching its 2023 annual volume.
