Nextdoor Holdings, Inc.

Good afternoon. Thank you for attending today's next door Q3 2024 earnings call. My name is Cole and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to queue for a question, you can do so by pressing star one on your telephone keypad. I'd now like to hand it over to John Williams, head of investor relations. Please go ahead.

Thank you, Operator. I'm John T. Williams, Head of Investor Relations. Good afternoon, and thank you for joining us to review Nextdoor's third quarter 2024 financial results. With us on the call today are Nirav Tolia, Chief Executive Officer, 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 are subject to a variety of risks and uncertainties. Our actual results could differ materially from expectations reflected in any forward-looking statements. For a 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 Q3 2024 shareholder letter released today. With that, I'd like to turn the call over to Nirav.

Thank you, John T. Good afternoon, everyone. I'm happy to be here with you today to discuss our third quarter 2024 financial results and outlook. Since I returned to CEO around six months ago, our team has done a lot to focus our strategy in business, and we're stronger as a result. We're energized by the progress, but there's an enormous amount of work remaining and a long road ahead. That said, Q3 was a solid milestone on this journey as we improved user growth, revenue growth, and operational efficiency. Weekly active users, or WOW, reached 45.9 million, up 13% year over year. Revenue of $66 million grew 17% year over year. An adjusted EBITDA margin increased by 33 percentage points year over year and reflects improved revenue growth and employee productivity. We can certainly do more, but our results today reflect the progress I mentioned as we scale and evolve the business. Taking a higher level view, I'd like to highlight the three areas where we made significant strides in recent months. The first one is driving revenue growth. Advertisers using the Nextdoor Ads platform are benefiting from improved performance, which is driving better revenue retention. In Q3, we saw this most clearly in our mid-market self-serve channel. which continued to scale. Click optimization, which improves advertiser performance by leveraging machine learning to make ad content more engaging and relevant, is driving much of this improvement today. In Q3, click optimization drove an 82% increase in click-through rates and a 16% reduction in cost per click for campaigns using the feature. We see exciting potential here and are confident that these types of product improvements on our ad platform not only strengthen our relationships with advertisers, but also drive improved monetization and sustainable growth. The second area is improving operational discipline. Achieving sustainable growth requires disciplined allocation of resources. And in Q3, we again made financial and operational progress. The key driver behind this improved execution is our focus on building a winning culture. We continue to use a founder's mentality as our north star here. The benefits of acting like an owner are not solely the provenance of startups. the best companies successfully blend the dueling attributes of upstart and mature companies. A founder's mentality then combines innovation with execution, simultaneously delivering ongoing value while developing future value. Deliver means operating as effectively as possible and continually raising the bar in everything that we do. Develop means invention, such as the next initiative, our longer-term effort to transform our product and enrich the lives of neighbors everywhere. That brings me to the third and final area, transforming our product with Next. And as I've shared previously, Next is our ambitious initiative to make Nextdoor the essential network for local communities. One of the key pillars of Next is broadening our focus from intent-centric interactions, where users come with a specific need or goal to include discovery-centric interactions, where users visit Nextdoor simply to discover relevant and timely content. Let me dig into this a little bit more. Nextdoor today is optimized for intent-centric use cases, pressing needs like finding a trusty plumber, locating a lost dog, or keeping in touch during a hurricane or wildfire. These intent-centric use cases are essential to our neighbors and unquestionably deliver value. Yet we believe there is a great opportunity to pair the existing value of intent with the additive value of discovery-centric use cases. Discovery occurs when a user frequently visits a platform simply to stay informed rather than for a specific need. In fact, 86% of our users say they want to use Nextdoor to discover local content, presenting a clear opportunity for us to drive even deeper engagement by bringing new sources of relevant local information to Nextdoor. This is why we've made discovery the initial focus of Next. Our work will be a multi-phase effort as innovation is neither a predictable nor linear path. With that in mind, we don't expect to see meaningful signs of product-related progress until mid-2025. But we're optimistic that we're on the right track and look forward to keeping you updated along the way. A final note on Next. Transforming our product will require a dramatically improved user experience. With that in mind, we are delighted to announce that George Petschnig, former head of product design at the New York Times, has joined Nextdoor as Chief Design Officer. George has extensive experience and proven success in UX transformation and innovations in advertising and subscriptions. At the New York Times, he oversaw the most consequential Times app redesign yet. This is a big hire for us, and we're excited to have George here to help accelerate our efforts. We're executing with precision and purpose, and I'm proud of the progress we've made, delivering, improving operational performance, while developing next to realize our future prospects. It is challenging work, and we are still in the very early days, but we believe deeply in the potential for value creation, a revitalized platform, a renewed growth trajectory, and a reinvigorated company. I'll now turn it over to Matt to discuss our financial results.