Nextdoor Holdings, Inc. (NXDR) Earnings

Management highlights

- Overall Business Progress & Product Improvements * Q2 2026 delivered the strongest financial performance in Nextdoor's history, with revenue exceeding the high end of prior guidance and record adjusted EBITDA. * The company has focused on steady, incremental product improvements over the past two years rather than relying on single breakthrough features, to increase platform utility and relevance. Key improvements include upgraded feed ranking, expanded video functionality, a rebuilt local events experience, AI-enhanced notifications, and new verified accounts for local journalists. * Product investments centered on growing user-generated content by lowering barriers to contribution: new prompts to encourage first-time posts from active commenters, and improved post insights that let users see the impact of their content. This drove a multi-year high in contributor volume, with increases in unique posters, total post volume, and comment volume. - Strategic Evolution & New Feature Roadmap * Management has refocused the company on its core advantage: a verified, trusted community of local neighbors, where peer-to-peer content and recommendations create unique value that cannot be replicated by third-party algorithms or AI models alone. * Upcoming launches include a fully redesigned in-product experience for the annual Faves Award campaign, where neighbors vote for favorite local businesses across 20 categories, and the new Ask feature, which uses AI to surface answers to user questions from the platform's archive of existing community content, making accumulated community wisdom accessible in real time. - Organizational Updates * Colin Borland joined the company as the new Head of Investor Relations and Corporate Development, bringing deep experience in finance, IR, and corporate development to lead investor engagement efforts.

Guidance

- Q3 2026 guidance: Management expects revenue of $76 million to $78 million, and adjusted EBITDA of $6.5 million to $8 million. - Full year 2026 guidance: Management raised the full-year outlook for both revenue and adjusted EBITDA, driven by positive year-to-date momentum and performance outperformance. The company now expects low teens full-year revenue growth and an adjusted EBITDA margin of approximately 10%. - Management expects Platform WOW to continue increasing sequentially in the second half of 2026, and does not expect stepped-up user acquisition marketing investment to be a material driver of growth for the remainder of 2026.

Segment performance

Revenue: Q2 2026 total revenue was $75 million, representing a 15% year-over-year increase. The self-serve advertising channel, the company's primary growth engine, grew 32% year-over-year (an acceleration from 28% growth in the prior quarter) and accounted for 67% of total revenue. US direct sales also delivered a strong quarter, with double-digit year-over-year growth in average revenue per customer, and standout performance from the financial services, technology, and telecommunications verticals. Profitability: GAAP net loss was $2 million (a -3% margin), marking 21 percentage points of year-over-year margin improvement. Adjusted EBITDA hit a record $10 million (13% adjusted EBITDA margin), a $12 million year-over-year improvement. Platform WOW, a key engagement metric, reached an all-time high of $22.9 million, growing 5% year-over-year and increasing sequentially for the second consecutive quarter. Annualized revenue per employee increased 29% year-over-year, reflecting ongoing organizational productivity improvements.

Risks & headwinds

Management references that forward-looking statements are subject to material risks that could cause actual results to differ from projections, and directs participants to review risk factors included in the company's recent SEC filings, available on the SEC website and Nextdoor's investor relations page. No additional specific risks or operational failures were discussed during the call.

Analyst Q&A

• Q: With Platform WOW growing sequentially for two consecutive quarters, earlier than many expected, what is driving this growth? Is it organic platform utilization, or deliberate strategic investments? /

  A: The sequential Platform WOW growth is the result of compounding incremental product improvements across the platform, rather than one single major initiative. The company's core strategy is focused on deliberately rebuilding the platform's foundation around user-generated content and growing contributor volume. Management describes the progress as broad-based, organic, and durable, noting that the lack of a single driver is actually a strength, as the cumulative effect of many improvements creates sustainable long-term growth.

• Q: How is AI functionality rolled out over the last year benefiting Nextdoor, and where are those benefits showing up in KPIs? /

  A: AI adds value across both product and monetization. On the product side, AI powers features like the upcoming Ask tool, which summarizes and surfaces existing community content to answer user questions in real time. On the monetization side, AI and machine learning improve ad targeting, showing the right ad to the right user at the right time. Management also notes that Nextdoor is well positioned to benefit from the broader consumer shift toward trusted, agentic experiences rather than general search.

• Q: What core ad monetization growth drivers have the longest runway, and what investments are still needed to capture that opportunity? /

  A: Core display advertising still has substantial headroom, as growing platform engagement expands the overall ad inventory pool, and advertisers highly value the local purchase intent of Nextdoor's user base. Management adds that increasing user engagement also gives the company more first-party user data, which improves ad targeting value for advertisers, creating a compounding growth effect. There remains substantial room for optimization across all ad surfaces and formats, even within the core advertising business.

• Q: When could Nextdoor deliver GAAP net profitability, not just positive adjusted EBITDA? /

  A: GAAP net profitability is an explicit near-term priority for the company, not just a long-term eventual goal. The company already delivered positive adjusted EBITDA and positive operating cash flow for full-year 2025, and continues to close the gap between adjusted EBITDA and net income. The main gap between the two metrics is stock-based compensation, and SBC as a percentage of revenue has shrunk consistently as revenue scales and operating leverage improves, bringing the company closer to positive GAAP net income each quarter. Management declined to provide a specific firm timeline but confirmed profitability is the core direction of the business.