Nextdoor Holdings Inc

Previous wording

•Weekly active users (“WAUs”) were 41.8 million, an increase of 5% compared to the three months ended December 31, 2022.

Current wording

•Weekly active users (“WAUs”) were 45.9 million, an increase of 10% compared to the three months ended December 31, 2023.

Previous wording

•Average revenue per weekly active user (“ARPU”) was $1.33 and remained flat compared to the three months ended December 31, 2022.

Current wording

•Average revenue per weekly active user (“ARPU”) was $1.42, an increase of 7% compared to the three months ended December 31, 2023.

Previous wording

•Total costs and expenses were $390.6 million, an increase of 9% compared to 2022, including $11.1 million of restructuring charges.

Current wording

•Total costs and expenses were $368.9 million, a decrease of 6% compared to 2023, including $25.6 million of restructuring charges.

Previous wording

•Net loss increased 7% to $147.8 million in 2023, compared to $137.9 million in 2022.

Current wording

•Net loss decreased 34% to $98.1 million in 2024, compared to $147.8 million in 2023.

Previous wording

•Adjusted EBITDA loss decreased 2% to $74.1 million in 2023, compared to $75.5 million in 2022.

Current wording

•Adjusted EBITDA loss decreased 75% to $18.2 million in 2024, compared to $74.1 million in 2023.

Previous wording

In the fourth quarter of 2023, we announced a cost reduction plan (the “Cost Reduction Plan”) intended to right size the business and align the workforce and other expenses with our near term revenue expectations and long term business priorities. The Cost Reduction

Current wording

In the fourth quarter of 2023, we announced a cost reduction plan (the “Cost Reduction Plan”) intended to right size the business and align the workforce and other expenses with our near term revenue expectations and long term business priorities. The Cost Reduction Plan included a reduction of full-time employee headcount by approximately 25%. The execution of the Cost Reduction Plan was substantially complete by the end of the fourth quarter of 2023.

Previous wording

Beginning in September 2021, Apple introduced changes to the Apple email client available on its operating systems, which limit our ability to measure user engagement with emails containing monetizable content for users that use the Apple email client. The introduction of these changes impacts our ability to accurately calculate a portion of WAUs for periods following the adoption of the updated operating systems. Following this introduction, we use estimates for these user engagement numbers based on historical data sets, as well as data from users who engage with Nextdoor’s monetizable content on email clients other than Apple email.

Current wording

In recent years, changes made to third party email operating systems have limited our ability to measure user engagement with emails containing monetizable content. This impacts our ability to accurately calculate a portion of WAUs for periods following the adoption of the updated operating systems. To address this, we use estimates for these user engagement numbers based on historical data sets, as well as data from users who engage with Nextdoor’s monetizable email content. For additional information, please see the section entitled “Risk Factors –Certain of our market opportunities and key metric estimates could prove to be inaccurate, and any real or perceived inaccuracies may harm our reputation and negatively affect our business.”

Previous wording

1 Emails with monetizable content are emails with a primary purpose to regularly inform users about topics that are relevant to them, and are therefore appropriate for delivering ads to users. These emails comprise almost all of the emails that we send our users and include, but are not limited to, new, trending and top posts, weekly and anytime digests, welcome emails and urgent and emergency alerts. We earn revenue from delivery of ad impressions in emails with monetizable content on either a cost per thousand (“CPM”) basis, a cost per click (“CPC”) basis, or on a fixed-fee basis. While we have the ability to serve ads in all emails with monetizable content, we currently only do so on a portion of the total.

Current wording

1 Emails with monetizable content are emails with a primary purpose to regularly inform users about topics that are relevant to them, and are therefore appropriate for delivering ads to users, as well as emails that deliver sponsored ads. These emails comprise almost all of the emails that we send our users and include, but are not limited to, new, trending and top posts, weekly and anytime digests, welcome emails and urgent and emergency alerts. We earn revenue from delivery of ad impressions in emails with monetizable content on either a cost per thousand (“CPM”) basis, a cost per click (“CPC”) basis, or on a fixed-fee basis. While we have the ability to serve ads in all emails with monetizable content, we currently only do so on a portion of the total.

Previous wording

Our WAU for the three months ended December 31, 2023 and 2022 was 41.8 million and 40.0 million, respectively, which represents 5% growth period over period.

Current wording

Our WAU for the three months ended December 31, 2024 and 2023 was 45.9 million and 41.8 million, respectively, which represents 10% growth period over period.

Previous wording

U.S. ARPU is higher primarily due to our decision to focus our earliest monetization efforts there, the size and maturity of our audience in the United States, as well the size of the U.S. advertising market. For purposes of calculating ARPU, revenue by user geography is apportioned to each region based on a determination of the location of the account where the revenue-generating activities occur. Our ARPU for the years ended December 31, 2023 and 2022 was $5.25 and $5.60, respectively, with the decrease due to stronger WAU growth relative to revenue growth.

Current wording

U.S. ARPU is higher primarily due to our decision to focus our earliest monetization efforts there, the size and maturity of our audience in the United States, as well the size of the U.S. advertising market. For purposes of calculating ARPU, revenue by user geography is apportioned to each region based on a determination of the location of the account where the revenue-generating activities occur. Our ARPU for the years ended December 31, 2024 and 2023 was $5.48 and $5.25, respectively, with the increase due to stronger revenue growth relative to WAU growth.

Previous wording

Growth in Monetization. Monetization trends, which are reflected in our ARPU, are a key factor that affects our revenue and financial results. To increase monetization, we are focused on serving more national brands by efficiently scaling our salesforce, increasing ad agency relationships, and enhancing our self-serve tools for customers of all sizes. We are also focused on increasing our user base and engagement in the United States and internationally, which will increase the opportunities for businesses to advertise on Nextdoor.

Current wording

Growth in Monetization. Monetization trends, which are reflected in our ARPU, are a key factor that affects our revenue and financial results. To increase monetization, we are focused on serving more national brands by efficiently scaling our sales force, increasing ad agency relationships, and enhancing our self-serve tools for customers of all sizes. We are also focused on increasing our user base and engagement in the United States and internationally, which will increase the opportunities for businesses to advertise on Nextdoor.

Previous wording

International Expansion. Our early proof points from launches in certain countries outside of the United States show user engagement across international markets on par with the U.S. market. We believe that increased international monetization presents an important opportunity for long-term growth, and we are working on localizing our product and expanding our operations to better serve our international user and customer base. We are still in the early stages of global expansion and will continue to evaluate expansion opportunities in our current international markets, and also in additional geographies. Over time, we believe that international WAUs can grow rapidly. We also believe that we can increase the monetization of users in international markets and that we can increase long-term ARPU for international WAUs from current levels. While we expect to grow ARPU for international WAUs, we still expect this to be lower than ARPU for U.S. WAUs. We expect that our international expansion will require significant investment. Although our investments in international expansion may adversely affect our operating results in the near term, we believe that they will contribute to our long-term growth. If our near-term investments do not lead to increased international WAUs and ARPU and expected revenue growth over time, we may not achieve or, if achieved, maintain profitability and our growth rates may slow or decline.

Current wording

International Expansion. We continue to assess opportunities to grow our international user base and expand monetization outside of the United States. While we believe that increased international monetization presents an important opportunity for long-term growth, our primary focus remains on improving our product experience and aligning our operations to best serve users and advertisers in our existing markets. We are taking a strategic and measured approach to international expansion, prioritizing investments in markets where we see the strongest potential for sustainable growth. Over time, we believe that international WAUs can expand meaningfully, and we see opportunities to increase monetization and ARPU in these markets. However, we expect ARPU for international WAUs to be lower than ARPU for U.S. WAUs. Our investments in international expansion are targeted and align with our broader strategic priorities. The success of these initiatives will depend on our ability to drive engagement and monetization in international markets. If these efforts do not lead to increased international WAUs and ARPU and expected revenue growth over time, we may not achieve or, if achieved, maintain profitability and our growth rates may slow or decline.

Previous wording

Seasonality. Industry advertising spend tends to be strongest in the fourth quarter, and we typically observe a similar pattern in our historical revenue. Periods of significant growth and changes in the macroeconomic environment have partially masked these trends in historical periods.

Current wording

Seasonality. We typically observe seasonal improvements in advertising spend beginning in the second quarter, with those demand trends remaining stable through the fourth quarter. Periods of significant growth and changes in the macroeconomic environment have partially masked these trends in some historical periods.

Previous wording

Performance marketing costs related to user acquisition largely consist of the distribution of mailed invitations and, to a lesser extent, digital advertising. Performance marketing costs related to local business acquisition largely consists of digital advertising and, to a lesser extent, direct mail campaigns. Fluctuations in our performance marketing expenses are driven by a variety of factors, including but not limited to: our target geographies, whether we are acquiring users or businesses, assessment of return on investment of marketing spend, strategic priorities, and seasonal factors.

Current wording

Performance marketing costs related to local business acquisition largely consists of digital advertising and, to a lesser extent, direct mail campaigns. Performance marketing costs related to user acquisition largely consist of digital advertising and, to a lesser extent, the distribution of mailed invitations. Fluctuations in our performance marketing expenses are driven by a variety of factors, including but not limited to: our target geographies, whether we are acquiring users or businesses, assessment of return on investment of marketing spend, strategic priorities, and seasonal factors.

Previous wording

Revenue increased by $5.5 million, or 3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase was primarily due to an increase in advertiser demand for our product offerings, which we believe was driven by increased marketer spending as well as increased user engagement as measured by a 9% increase in 2023 WAUs. Full year ARPU decreased 6% reflecting stronger year-over-year WAU growth relative to revenue growth.

Current wording

Revenue increased by $29.0 million, or 13%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily due to increased advertiser spending as well as increased user engagement as measured by an 8% increase in 2024 WAUs. Full year ARPU increased 4% reflecting year-over-year growth in both revenue and WAUs.

Previous wording

Cost of revenue increased by $2.6 million, or 7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase was primarily due to a $1.3 million increase in third-party hosting costs due to rising user growth and engagement, a $0.9 million increase in allocated personnel-related costs, and a $0.4 million increase in third-party costs associated with delivering and supporting our advertising products.

Current wording

Cost of revenue increased by $0.2 million, or 1%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily due to a $0.6 million increase in third-party hosting costs due to rising user growth and engagement, a $0.4 million increase in advertising platform costs, and a $0.2 million increase in third-party costs associated with delivering and supporting our advertising products, partially offset by a $1.0 million decrease in allocated personnel-related costs.

Previous wording

Research and development expenses increased by $22.9 million, or 18%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase was primarily due to a $20.2 million increase in personnel-related costs, inclusive of restructuring costs, primarily driven by an increase in average headcount, a $2.4 million increase in third-party software costs, and a $0.5 million increase in allocated overhead costs reflecting an increase in average headcount.

Current wording

Research and development expenses decreased by $22.1 million, or 15%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was primarily due to a $21.3 million decrease in personnel-related costs, inclusive of restructuring costs, primarily driven by a decrease in average headcount, and a $0.4 million decrease in allocated overhead costs reflecting a decrease in average headcount, partially offset by a $0.6 million increase in third-party software costs.

Previous wording

Sales and marketing expenses decreased by $0.3 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily due to a $14.7 million decrease in performance marketing costs for user acquisition as focus shifted to organic user acquisition channels and a $0.9 million decrease in performance marketing costs to attract local businesses, offset by a $15.3 million increase in personnel-related and other costs, inclusive of restructuring costs, which was driven by an increase in average headcount.

Current wording

Sales and marketing expenses decreased by $15.9 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was primarily due to a $15.7 million decrease in personnel-related and other costs, inclusive of restructuring costs, which was driven by a decrease in average headcount, a $1.1 million decrease in neighbor services, and a $0.3 million decrease in performance marketing costs to attract local businesses, partially offset by a $1.1 million increase in performance marketing costs for user acquisition.

Previous wording

General and administrative expenses increased by $8.3 million, or 12%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase was primarily due to a $10.5 million increase in personnel-related costs, inclusive of restructuring costs, which was driven by an increase in average headcount, partially offset by a $2.7 million decrease in insurance expenses.

Current wording

General and administrative expenses increased by $16.1 million, or 21%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily due to $22.8 million of impairment costs related to office space reductions, partially offset by a $4.0 million decrease in personnel-related costs, inclusive of restructuring costs, which was driven by a decrease in average headcount, and a $1.9 million decrease in professional fees. Refer to Note 13 to our consolidated financial statements for further information on the impairment costs related to office space reductions.

Previous wording

Other expense, net decreased by $0.8 million, or 62%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily due to the periodic re-measurement of monetary assets and liabilities denominated in non-functional currencies.

Current wording

Other expense, net decreased by $0.4 million, or 80%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was primarily due to the periodic re-measurement of monetary assets and liabilities denominated in non-functional currencies and gains and losses on marketable securities and foreign currency transactions.

Previous wording

Provision for income taxes decreased by $0.9 million, or 55%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily due to a decrease in foreign income tax expenses.

Current wording

Provision for income taxes decreased by $0.1 million, or 7%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was primarily due to a decrease in foreign income tax expenses.

Previous wording

We have generated losses from our operations, as reflected in our accumulated deficit of $766.0 million as of December 31, 2023. We incurred operating losses and cash outflows from operations by supporting the growth of our business. We expect these losses and operating cash outflows to continue for the foreseeable future. We also expect to incur significant research and development, sales and marketing, and general and administrative expenses over the next several years in connection with the continued development and strategic expansion of our business.

Current wording

We have generated losses from our operations, as reflected in our accumulated deficit of $864.1 million as of December 31, 2024. We incurred operating losses and cash outflows from operations by supporting the growth of our business. We expect these losses and operating cash outflows to continue for the foreseeable future. We also expect to incur significant research and development, sales and marketing, and general and administrative expenses over the next several years in connection with the continued development and strategic expansion of our business.

Previous wording

As of December 31, 2023, we had $531.1 million in cash, cash equivalents, and marketable securities. We anticipate satisfying our short-term cash requirements, including meeting our working capital and capital expenditure requirements, with our existing cash, cash equivalents, and marketable securities. In the long term, we may satisfy our cash requirements with cash, cash equivalents, and marketable securities on hand or with proceeds from any future equity or debt financings. Our ability to support our requirements and plans for cash, including working capital and capital expenditure requirements, will depend on many factors, including the rate of our revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings and features, the continuing market adoption of our platform, the number of shares repurchased under our Share Repurchase Program, and our ability to obtain equity or debt financing. Moreover, any actual or perceived instability in the U.S. or international banking systems may impact liquidity both in the short term and long term.

Current wording

As of December 31, 2024, we had $427.0 million in cash, cash equivalents, and marketable securities. We anticipate satisfying our short-term cash requirements, including meeting our working capital and capital expenditure requirements, with our existing cash, cash equivalents, and marketable securities. In the long term, we may satisfy our cash requirements with cash, cash equivalents, and marketable securities on hand or with proceeds from any future equity or debt financings. Our ability to support our requirements and plans for cash, including working capital and capital expenditure requirements, will depend on many factors, including the rate of our revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings and features, the continuing market adoption of our platform, the number of shares repurchased under our Share Repurchase Program, and our ability to obtain equity or debt financing. Moreover, any actual or perceived instability in the U.S. or international banking systems may impact liquidity both in the short term and long term.

Previous wording

On May 31, 2022, our Board of Directors authorized and approved the Share Repurchase Program to repurchase up to $100.0 million in aggregate of our Class A common stock, with the authorization to expire on June 30, 2024. The timing of any repurchases will depend on market conditions and other investment opportunities, and will be made at our discretion. The Share Repurchase Program does not obligate us to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended, or discontinued at any time. During the year ended December 31, 2023, we did not repurchase or retire any shares of Class A common stock. As of December 31, 2023, we had $22.8 million available for future share repurchases under the Share Repurchase Program. On February 21, 2024, the Company’s Board of Directors authorized and approved an increase of $150.0 million to the Share Repurchase Program and extended the expiration date to March 31, 2026.

Current wording

On May 31, 2022, our Board of Directors authorized and approved the Share Repurchase Program to repurchase up to $100.0 million in aggregate of our Class A common stock, with the authorization to expire on June 30, 2024. The timing of any repurchases will depend on market conditions and other investment opportunities, and will be made at our discretion. The Share Repurchase Program does not obligate us to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended, or discontinued at any time. On February 21, 2024, our Board of Directors authorized and approved an increase of $150.0 million to the Share Repurchase Program and extended the expiration date to March 31, 2026. During the year ended December 31, 2024, we repurchased and retired 31.0 million shares of Class A common stock at an average purchase price of $2.44 per share for an aggregate repurchase price of $75.5 million. As of December 31, 2024, we had $97.2 million available for future share repurchases under the Share Repurchase Program.

Previous wording

Cash used in operating activities during the year ended December 31, 2022 was $60.5 million which resulted from a net loss of $137.9 million, adjusted for non-cash charges of $68.0 million and net cash inflows of $9.4 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $64.4 million of stock-based compensation expense and $5.7 million of depreciation and amortization expense. The net cash inflows from changes in operating assets and liabilities were primarily due to a $7.7 million increase in accrued expenses and other liabilities, a $6.9 million decrease in operating lease right-of-use assets due to normal amortization, and a $3.8 million decrease in prepaid expenses and other assets. These amounts were partially offset by a $7.1 million decrease in operating lease liabilities due to lease payments, and a $1.6 million decrease in accounts payable.

Current wording

Cash used in operating activities during the year ended December 31, 2024 was $20.2 million which resulted from a net loss of $98.1 million, adjusted for non-cash charges of $95.9 million and net cash outflows of $18.0 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $74.1 million of stock-based compensation expense, $22.8 million of non-cash impairment charges related to lease abandonment, and $3.9 million of depreciation and amortization expense, partially offset by $5.5 million of accretion on investments. The net cash outflows from changes in operating assets and liabilities were primarily due to a $8.1 million decrease in accrued expenses and other liabilities, a $6.9 million decrease in operating lease liabilities due to lease payments, a $5.1 million increase in accounts receivable, and a $1.6 million decrease in accounts payable. These amounts were partially offset by a $3.7 million decrease in operating lease right-of-use assets due to normal amortization.

Previous wording

Cash used in investing activities for the year ended December 31, 2022 was $342.4 million, which consisted of purchases of marketable securities of $711.9 million, a loan to Opportunity Finance Network of $5.0 million, and purchases of property and equipment of $3.2 million. This was partially offset by proceeds from maturities of marketable securities of $366.8 million and proceeds from sales of marketable securities of $10.8 million.

Current wording

Cash provided by investing activities for the year ended December 31, 2024 was $86.4 million, which consisted of proceeds from maturities of marketable securities of $198.5 million and proceeds from sales of marketable securities of $185.6 million. This was partially offset by purchases of marketable securities of $289.8 million and a loan to Opportunity Finance Network of $7.5 million.

Previous wording

Cash used in financing activities for the year ended December 31, 2022 was $64.3 million, which consisted of repurchases of common stock of $77.2 million. This was partially offset by $12.5 million of proceeds from the exercise of stock options.

Current wording

Cash used in financing activities for the year ended December 31, 2024 was $81.0 million, which consisted of repurchases of common stock of $75.5 million and $19.9 million of tax withholdings from stock-based awards, partially offset by $13.3 million of proceeds from the exercise of stock options and $1.1 million of proceeds from the issuance of common stock under the employee stock purchase plan.