8-K: Nextdoor Holdings Reports Positive Adjusted EBITDA in Q4 2024, Announces Product Transformation

Nextdoor Holdings, Inc. announced its Q4 and full-year 2024 financial results, highlighting positive adjusted EBITDA and progress on its product transformation, NEXT.

Summary

• Nextdoor Holdings, Inc. reported its financial results for the fourth quarter and full year ended December 31, 2024.
• Q4 revenue increased by 17% year-over-year to $65 million, driven by performance-optimized campaigns for self-serve advertisers.
• Weekly Active Users (WAU) grew by 10% year-over-year to 45.9 million in Q4.
• The company achieved positive adjusted EBITDA of $3 million in Q4, a 30 percentage point improvement year-over-year.
• Operating cash flow was $11 million in Q4.
• For the full year 2024, revenue increased by 13% to $247.3 million.
• The adjusted EBITDA loss for the full year was $18.2 million, compared to a $74.1 million loss in the previous year.
• Nextdoor is focusing on a product transformation called NEXT, expected to launch by mid-2025, which may have short-term business impacts.
• The company's cash and marketable securities totaled $427 million as of December 31, 2024.
• The company repurchased 31 million shares at an average price of $2.44 during 2024.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the achievement of positive adjusted EBITDA and user growth, but tempered by the expected near-term business impacts of the product transformation and reduced spending among large advertisers.

Positives

• Nextdoor achieved positive adjusted EBITDA in Q4 2024.
• Revenue growth persisted, driven by self-serve advertisers.
• User growth held firm with a 10% year-over-year increase in WAU.
• Margins and operating cash flow turned positive.
• The company has a strong cash position with $427 million in cash and marketable securities.
• Employee productivity improved significantly.
• The company is making progress on a product transformation (NEXT) that aims to improve user experience and engagement.
• The company reduced its fully diluted share count by 5% in 2024.
• The company exceeded 100 million Verified Neighbors at year-end 2024.

Negatives

• The company is anticipating a potential negative impact on near-term business results due to the NEXT product transformation.
• The company observed reduced spending among certain large advertisers as they shift budgets toward programmatic ad buying.
• The company expects year-over-year revenue growth in the first half of 2025 will be approximately flat.
• The company expects Q1 adjusted EBITDA loss of approximately ($13M).

Risks

• The product transformation (NEXT) may introduce uncertainty and impact near-term business results.
• Shifting advertiser preferences towards programmatic ad buying could impact revenue.
• The company's ability to successfully launch and monetize NEXT is critical for long-term growth.
• The company's Q1 revenue outlook reflects initial reductions in ad impression supply tied to the NEXT initiative roll out.
• The company's ability to attract new and retain existing customers and users, or renew and expand our relationships with them is a risk.

Future Outlook

Nextdoor expects Q1 2025 revenue of approximately $53 million and year-over-year revenue growth in the first half of 2025 to be approximately flat; Q1 adjusted EBITDA loss is expected to be approximately ($13M); the company remains on track to deliver NEXT by mid-year 2025.

Management Comments

• Nextdoor CEO Nirav Tolia stated, 'Our Q4 results reflect our continued progress and disciplined approach.'
• Nirav Tolia stated, 'We delivered positive quarterly Adjusted EBITDA for the first time as a public company, supported by continued user growth and improved performance for advertisers using our Nextdoor Ads Platform.'
• Nirav Tolia stated, 'We are now making a decisive shift from vision to execution on NEXT, our complete product transformation. We are encouraged by the useful early signals we have seen, and excited to deliver these changes by mid-2025.'

Industry Context

Nextdoor's focus on local community and advertising platform aligns with the broader trend of businesses targeting niche audiences for more effective advertising; the shift towards programmatic ad buying among large advertisers reflects a wider industry trend.

Comparison to Industry Standards

• Comparing Nextdoor to other social networking platforms like Meta (Facebook) and Twitter (X), Nextdoor's focus on local communities provides a unique value proposition.
• While Meta and Twitter have a global reach, Nextdoor's strength lies in its ability to connect neighbors and facilitate local interactions.
• In terms of monetization, Nextdoor's advertising platform competes with other local advertising solutions offered by companies like Yelp and Google.
• Nextdoor's ability to leverage its first-party data and AI/ML capabilities to improve ad performance is crucial for staying competitive in the advertising market.
• The company's focus on improving user experience and engagement through the NEXT product transformation is similar to efforts made by other social platforms to retain and attract users.

Stakeholder Impact

• Shareholders will be impacted by the company's financial performance and the success of the NEXT product transformation.
• Advertisers will benefit from the improved advertising platform and the ability to target local audiences.
• Users will experience a new and improved user experience with the launch of NEXT.
• Employees will be impacted by the company's focus on productivity and resource allocation.

Next Steps

• The company will continue to focus on the development and launch of NEXT by mid-2025.
• Nextdoor will evaluate and expand its programmatic partnerships in 2025.
• The company will host a conference call to discuss the results and outlook.
• The company will continue to enhance advertiser capabilities by introducing features that capture high-intent audience signals, drive clicks, improve brand safety, and move further down funnel towards conversion optimization.

Key Dates