Nextdoor Reports First Quarter 2024 Results

Rhea-AI Summary

Nextdoor Holdings, Inc. (NYSE: KIND) reported Q1 2024 results with revenue of $53 million, up 7% YoY, and a Q1 WAU of 43.4 million, up 2% YoY. The company saw a GAAP net loss of $28 million, improved Adjusted EBITDA margin by 17 percentage points YoY, and raised full-year Adjusted EBITDA guidance, expecting positive free cash flow in Q4'24.

Positive

• Revenue increased by 7% year-over-year to $53 million.

• Q1 WAU reached 43.4 million, a 2% year-over-year growth.

• Adjusted EBITDA margin improved by 17 percentage points year-over-year.

• Full-year Adjusted EBITDA guidance was raised.

• Expected positive free cash flow in Q4'24.

Negative

• None.

Insights

Financial Analyst

Examining Nextdoor's Q1 2024 financials reveals a company experiencing modest revenue growth of 7% year-over-year, with revenues climbing to $53 million. It's encouraging to see the Weekly Active Users (WAU) count nudging upwards by 2% compared to the same period last year, albeit these numbers may not be indicative of explosive growth, they signal steady user engagement. A important indicator of fiscal health, the Net loss, has shown an improvement, shrinking to $28 million from $34 million in the previous year, which is a 17.6% reduction.

While the company is still operating at a loss, the reduction in net loss and the improved Adjusted EBITDA—down from a $22 million loss to $14 million—suggests that Nextdoor's cost-cutting measures and efforts to optimize their operations are taking effect. The announcement of an improved full-year Adjusted EBITDA outlook and the aim for positive free cash flow in Q4'24 may boost investor confidence in the company's trajectory towards profitability.

However, the persistent net losses and negative free cash flow raise questions about long-term sustainability. The investor should consider the balance between the company's efforts to grow and engage its user base and its capability to monetize this base effectively while controlling costs.

Market Research Analyst

Nextdoor's increase in WAU by a modest 2% is indicative of a stable, but not rapidly growing user base. This could be a double-edged sword for the company. While stability is certainly positive, the relatively slow growth rate may suggest that the company is approaching a saturation point in its current markets or facing stiff competition. Engagement, as suggested by the 36% improvement in session depth, indicates that current users are becoming more active, which could entice advertisers and, consequently, bolster self-serve advertising revenues.

From a market perspective, the company's strengths lie in its sizable cash reserves of $498 million and its focus on advertising platform improvements, which could lead to enhanced monetization opportunities. Nevertheless, investors should weigh these positives against the broader market dynamics, including user acquisition costs, the competitive landscape of social platforms and potential ad-spend shifts that could impact revenue streams.

• Revenue of $53 million, +7% year-over-year; Q1 WAU of 43.4 million, +2% year-over-year
• GAAP net loss of $28 million; Operating cash flow of $(14) million; Adjusted EBITDA margin improved by 17 percentage points year-over-year
• Raises full-year Adjusted EBITDA guidance; Now expects positive free cash flow¹ in Q4'24

SAN FRANCISCO--(BUSINESS WIRE)-- May 7, 2024--Nextdoor Holdings, Inc. (NYSE: KIND) today announced financial results for the first quarter ended March 31, 2024.

Nextdoor's highlighted metrics for the quarter ended March 31, 2024 include:

• Total Weekly Active Users (WAU) of 43.4 million increased 2% year-over-year.
• Revenue of $53 million increased 7% year-over-year.
• Net loss was $28 million, compared to $34 million in the year-ago period.
• Adjusted EBITDA loss was $14 million, compared to $22 million in the year-ago period.
• Ending cash, cash equivalents, and marketable securities were $498 million as of March 31, 2024.

"Q1 was a promising start to the year. WAU grew to 43.4 million, up 2% year-over-year and 4% sequentially, and engagement remains strong, as session depth improved by 36% year-over-year," said Nextdoor Executive Chair and incoming CEO Nirav Tolia.

"Our advertising platform is driving higher self-serve customer spend and retention, our reduced cost base is unlocking margin improvement, and our balance sheet, with nearly $500 million of cash and investments, remains a strength. Given that momentum, we have increased our full-year adjusted EBITDA guidance and accelerated our timeline for generating positive free cash flow by 12 months. I am excited about our trajectory and renewed focus, and am confident that Nextdoor is well-positioned for the next phase of our growth."

For more detailed information on our operating and financial results for the first quarter ended March 31, 2024, as well as our outlook for Q2 and fiscal year 2024, please reference our Shareholder Letter posted to our Investor Relations website located at investors.nextdoor.com.
______________________
¹ We define free cash flow as operating cash flow less capital expenditures.

	Three Months Ended March 31,
(in thousands)		2024				2023
Revenue	$	53,146			$	49,771
Loss from operations	$	(34,749	)		$	(38,812	)
Net loss	$	(28,261	)		$	(33,716	)
Adjusted EBITDA(1)	$	(14,015	)		$	(21,661	)

⁽¹⁾ The following is a reconciliation of net loss, the most comparable GAAP measure, to adjusted EBITDA for the periods presented above:

	Three Months Ended March 31,
(in thousands)		2024				2023
Net loss	$	(28,261	)		$	(33,716	)
% Margin		(53	)%			(68	)%
Depreciation and amortization		1,387				1,451
Stock-based compensation		19,506				15,816
Interest income		(6,846	)			(5,513	)
Provision for income taxes		199				301
Adjusted EBITDA	$	(14,015	)		$	(21,661	)
% Margin		(26	)%			(44	)%

Nextdoor will host a conference call at 2:00 p.m. PT/5:00 p.m. ET today to discuss these results and outlook. A live webcast of our first quarter 2024 earnings release call will be available in the Events & Presentations section of Nextdoor’s Investor Relations website. After the live event, the audio recording for the webcast can be accessed on the same website for approximately one year.

Nextdoor uses its Investor Relations website (investors.nextdoor.com), its X handle (twitter.com/Nextdoor), and its LinkedIn Home Page (linkedin.com/company/nextdoor-com) as a means of disseminating or providing notification of, among other things, news or announcements regarding its business or financial performance, investor events, press releases, and earnings releases, and as a means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared in accordance with GAAP, we present certain non-GAAP financial measures, such as adjusted EBITDA and adjusted EBITDA margin, in this press release. Our use of non-GAAP financial measures has limitations as an analytical tool, and these measures should not be considered in isolation or as a substitute for analysis of financial results as reported under GAAP.

We use non-GAAP financial measures in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including in the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance. Non-GAAP financial measures provide consistency and comparability with past financial performance, facilitate period-to-period comparisons of core operating results, and also facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. In addition, adjusted EBITDA is widely used by investors and securities analysts to measure a company's operating performance. We exclude the following items from one or more of our non-GAAP financial measures: stock-based compensation expense (non-cash expense calculated by companies using a variety of valuation methodologies and subjective assumptions), depreciation and amortization (non-cash expense), interest income, provision for income taxes, and, if applicable, acquisition-related costs.

Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, (1) stock-based compensation expense has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy, (2) although depreciation and amortization expense are non-cash charges, the assets subject to depreciation and amortization may have to be replaced in the future, and our non-GAAP measures do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements, and (3) adjusted EBITDA does not reflect: (a) changes in, or cash requirements for, our working capital needs; (b) interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; or (c) tax payments that may represent a reduction in cash available to us. The non-GAAP measures we use may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP items excluded from these non-GAAP financial measures.

About Nextdoor

Nextdoor (NYSE: KIND) is the neighborhood network. Neighbors, businesses of all sizes, and public agencies in more than 335,000 neighborhoods across 11 countries turn to Nextdoor to connect to the neighborhoods that matter to them so that they can thrive. As a purpose-driven company, Nextdoor leverages innovative technology to cultivate a kinder world where everyone has a neighborhood they can rely on — both online and in the real world. Download the app or join the neighborhood at nextdoor.com. For more information and assets, visit nextdoor.com/newsroom.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240507321545/en/

Nextdoor Investor Relations:

John T. Williams

ir@nextdoor.com

or visit investors.nextdoor.com



Nextdoor Media Relations:

Antonia Gray

press@nextdoor.com

Source: Nextdoor Holdings, Inc.