Nextdoor (KIND) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Weekly Active Users (WAU) reached 45.9 million, up 13% year-over-year [7] - Revenue of $66 million grew 17% year-over-year [7] - Adjusted EBITDA margin increased by 33 percentage points year-over-year [7] - Adjusted EBITDA loss was$ 1 million or a negative 2% margin, reflecting a 33 percentage point year-over-year improvement [26] - Productivity, measured by revenue per employee, increased by more than 60% year-over-year [27] - Cash, cash equivalents, and marketable securities totaled $425 million with zero debt [27] - Share repurchases of 8 million shares were executed during the quarter, reducing the fully diluted share count by 5% year-to-date [28] Business Line Data and Key Metrics - The Nextdoor Ads platform saw improved advertiser performance, driving better revenue retention, particularly in the mid-market self-serve channel [8] - Click Optimization drove an 82% increase in click-through rates and a 16% reduction in cost per click for campaigns using the feature [10] - Search campaigns targeting users based on their search history saw an over 10x return on ad spend compared to standard Nextdoor campaigns [25] Market Data and Key Metrics - U.S. WAU growth increased 16% year-over-year [20] - User growth was driven by engaging previously inactive users, personalized content delivery using machine learning, and timely notifications during major events [21][22] Company Strategy and Industry Competition - The company is focusing on three key areas: driving revenue growth, improving operational discipline, and transforming the product with the NEXT initiative [6][11][13] - NEXT aims to broaden the platform's focus from intent-centric interactions to include discovery-centric interactions, with a long-term goal of making Nextdoor the essential network for local communities [14][16] - The company hired Georg Petschnigg as Chief Design Officer to improve the user experience and accelerate product transformation efforts [18] - The company is aware of competition from Facebook Marketplace but is prioritizing NEXT before further investing in marketplace features like For Sale & Free [34][35] Management Commentary on Operating Environment and Future Outlook - The company expects full-year 2024 revenue of$ 245 million, implying 12% year-over-year growth, and adjusted EBITDA margin improvement approaching 25 percentage points year-over-year [29] - For Q4 2024, the company expects revenue of approximately $63 million, adjusted EBITDA loss of$ 2 million, and positive free cash flow generation [30] - The company remains committed to disciplined capital allocation and strategic investments in the business [27][28] Other Important Information - The company is leveraging machine learning to deliver more personalized content and improve advertiser performance [9][22] - The NEXT initiative is expected to show meaningful product-related progress by mid-2025 [17] Q&A Session Summary Question: Balancing organic growth strategies with paid marketing levers and updates on marketplace features - The company is almost solely focused on organic user acquisition, with minimal and decreasing paid marketing efforts [34] - The NEXT initiative will initially focus on expanding intent to include discovery, with marketplace features like For Sale & Free being a future priority [35] - Sales and marketing as a percentage of revenue decreased by 14 points year-over-year, reflecting the company's progress at scale [36] Closing Remarks - The company highlighted its growth in WAU and revenue, improved advertiser performance, and operational efficiency [39] - NEXT is positioned as the future of Nextdoor, with a focus on combining intent and discovery to create a powerful value proposition [40]