Nextdoor Holdings, Inc. Q4 FY2024 earnings call

• Nirav Tolia discussed the launch of NEXT, a reimagined user experience focusing on richer local content, timely local alerts, and community-powered local recommendations. The team has been testing parts of NEXT in 6 markets and is initiating the switchover to NEXT for all users by mid-2025. • Matt Anderson mentioned Q4 revenue growth driven by self-serve advertisers and improved revenue retention, ARPU increase, and the company achieving positive adjusted EBITDA and operating cash flow in Q4. The company has a strong balance sheet with $427 million in cash, cash equivalents, and marketable securities and 0 debt. • The team has made strategic additions, like hiring Georg Petschnigg as Chief Design Officer and promoting Michael Kiernan to Chief Revenue Officer, and has focused on building a robust foundation for future growth.

In Q4 2024, weekly active users (WAU) reached $45.9 million, a 10% year-over-year increase. Revenue grew 17% year-over-year to $65 million. For the first time, the company achieved positive adjusted EBITDA and operating cash flow. Weekly active users growth was driven by new user acquisition, improved notification delivery, and relevance. Revenue growth was from self-serve advertisers and improved revenue retention, with average revenue per weekly active user (ARPU) increasing 7% year-over-year to $1.42.

• Q1 2025 revenue is expected to be approximately $53 million with an adjusted EBITDA loss of approximately $13 million. • Year-over-year revenue growth in the first half of 2025 is expected to be approximately flat. • The company remains on track to launch NEXT by mid-2025. • The switchover to NEXT will impact near-term business results but is necessary for long-term success.

• Uncertainty around the transition to NEXT may affect short-term business results, including weekly active users and ad impressions. • Advertiser spending shifts, such as large advertisers moving budgets towards programmatic ad buying, could impact revenue. • Execution risks in the product transformation process, as shifting from vision to execution involves uncertainty.

Q: On the user side, how does focusing on deeper engagement with existing users translate to 12-18 months out?

A: Nirav Tolia said it's about deepening engagement with over 100 million verified neighbors to get more frequent and deeper engagement, which could translate to more visits and time spent.

Q: Is the ad impression headwind fully reflected in Q1 and will it continue?

A: Matt Anderson said the ad impression headwind is reflected in Q1 and that the supply dynamics are tied to NEXT and long-term growth, with the headwind being a result of testing and learning for durable growth.

Q: Where is Nextdoor in integrating third-party publishers for local content?

A: Nirav Tolia said they have several thousand third-party publishers and are focused on bringing content and enabling neighbor discussions around it.

Q: Can you elaborate on the strategic shift in customer and advertiser acquisition strategies?

A: Matt Anderson said there's a shift towards organic growth, lower personnel costs, and investing in product to improve tools for SMBs, with leverage expected from product improvements.