Nextdoor Holdings, Inc.

Good afternoon. Thank you for attending the Q4 2023 Next Door earnings call. My name is Matt, and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call for an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I will now have to pass the conference over to our host, John Williams, with Next Door. John, please go ahead.

Thank you, Matt. I'm John T. Williams, Head of Investor Relations. Good afternoon, and thank you for joining us to review Nextdoor's fourth quarter and full year 2023 financial results. With us on the call today are Sarah Fryer, Chief Executive Officer, Nirav Tolia, Chief Executive Officer Designate, and Matt Anderson, Chief Financial Officer. During this call, we may make statements related to our business that are forward-looking statements under federal securities laws. These statements are not guarantees of future performance. They're subject to a variety of risks and uncertainties, Our actual results could differ materially from expectations reflected in any forward-looking statements. For discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC's website and in the investor relations section of our website, as well as the risks and other important factors discussed in today's earnings release. Additionally, non-GAAP financial measures will be discussed on today's conference call. Reconciliation of these measures to their most directly comparable GAAP financial measures can be found in the Q4 2023 shareholder letter released today. With that, I'd like to turn the call over to Sarah.

Thank you, John Key. Our Q4 results demonstrated renewed strength. We added a record number of organic verified neighbors for the second straight quarter and ended the year with more than 88 million verified neighbors, growing 13% year over year. Q4 WOW grew to 41.8 million, up 5% year-over-year and 3% sequentially. We expect this sequential growth in WOW to continue into Q1. Users remain active and engagement is high on our platform. Impression growth was strong. Session depth, which reflects the number of ad impression opportunities during each user session, increased by 36% year-over-year and accelerated versus Q3. ending the year at a record level. Our growth algorithm is simple. Continued user and engagement growth, new advertiser growth boosted by our self-serve capabilities, increasingly durable advertiser retention as more demand is delivered via our proprietary ad server, and a reduced cost base to better enable both growth and positive free cash flow. Our progress wasn't limited to user growth and engagement metrics. We're leveraging AI and machine learning across our platform in a variety of ways, from using our local knowledge graph to help businesses reach their target audiences, to improving notifications and optimizing ad delivery, to enhancing platform vitality. As we noted in our recently released 2023 transparency report, 26% of neighbors use the revised language suggested to them by generative AI to make their posts more constructive. And neighbor feedback suggests very high levels of satisfaction with our AI-based kindness reminder. So it's very clear that even at this early stage, the AI tools we've developed are having a measurable impact on our user experience, driving positivity. We also made progress delivering advertiser value and reducing advertiser effort. For the full year, we retained 90% of our top 50 customers. We saw continued strong performance from mid-market and SMB customers, many of whom have begun to see the benefits of our owned and operated ad platform and are benefiting from the performance optimizations we can now make. We get a lot of questions about our specific vertical exposures. For clarity in FY23, our top three advertising verticals were home services, retail, and tech and telco. though the contribution from each can vary greatly from quarter to quarter and year to year. We continue to decrease our vertical concentration and have seen increasing contributions from smaller but faster-growing emerging verticals like healthcare and government and nonprofits, which have more than doubled their share of the pie over the last two years. On the technology side, we made ongoing progress on our transformative Nextdoor Ads platform. In mid-2023, we achieved our goal of having 100% of ads from S&B advertisers served via the Nextdoor ad server, and we're pleased to say that almost all of our self-serve mid-market customers are now fully migrated. We expected this move to start to tip our mid-market business more and more towards self-serve, and that is happening. This should drive new revenue opportunities, but also improved advertiser performance and revenue delivery. Our ads platform is the foundation for delivering advertiser value and increasing ARCU growth through improved revenue yields. We're now beginning to leverage our unique local knowledge graph and help advertisers deliver increasingly relevant and personalized ads to neighbors on our platform. Simply put, we believe it's a game changer for Nextdoor and will prove to be a must-buy solution for advertisers of all sizes. Switching gears, as many of you have already seen, our board authorized a $150 million increase to our existing share repurchase program. Matt will have more to say about this in his remarks, but this is a clear demonstration of our confidence in our business and opportunity. Our focus on bringing new neighbors to the platform, growing engagement, and building powerful solutions for advertising customers hasn't changed, nor has our approach to making these things happen. Our Q4 results are a demonstration of how we continue to evolve and improve, an approach that will continue in 2024 and beyond. I'd now like to take a moment to discuss our recent announcement that I'll be stepping down as the CEO of Nextdoor. We've made great progress over the last five and a half years, scaling the business, tripling the number of verified neighbors on the platform, raising capital, taking care of our people, and going public, while always remaining true to our purpose and mission. I will be a neighbor forever and I'm enormously grateful for the opportunity to lead such a wonderful group of people here at Nextdoor. Having said that, I'd like to introduce or reintroduce for some Nirav Tolia as Nextdoor's incoming CEO. Nirav is well equipped to lead Nextdoor going forward. He co-founded the company and is a current board member, served as CEO prior to my joining and knows it well. He and I have had a very close working relationship And with a growing user base and strong advertiser momentum, the time is right to put the company back into his hands. Nirav is here with us today and will participate in our Q&A session. And I will be staying on into Q2 to support him and the team and to ensure a seamless transition. I've also signed our 10K, which was filed earlier today. And with that, I'll now turn it over to Matt.