Nextdoor Holdings, Inc.

Good afternoon. My name is Tamia, and I will be your conference operator today. At this time, I would like to welcome everyone to Nextdoor's fourth quarter and full year 2025 earnings conference. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. Thank you. You may now begin your conference.

Thank you, operator. I'm Nirav Tole, a Nextdoor co-founder and CEO, and I'd like to welcome everyone to our fourth quarter and full year 2025 earnings conference call and webcast. Joining me today is Indrajit Panambalam, our chief financial officer. I'd like to extend a big welcome to Indrajit, who joined us in December. We are thrilled to have him as part of the Nextdoor executive team. Now, let's start today's call with our standard disclaimers. 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. A reconciliation of these measures to their most directly comparable GAAP financial measures can be found in the Q4 2025 Nextdoor Investor Update released today. All right, let's get started. This quarter, we know we're speaking to a broader audience than usual, including many retail investors joining us for the very first time. So I would like to start with absolute clarity about how we think about Nextdoor. How we've approached this turnaround and why we remain confident in the long term opportunity in front of us. Let's begin with our foundation next door is not a traditional social app. It is a trust based local network built on a verified address based neighborhood graph that connects real people to real places that graph grounded and identity and location is our core asset. It is what differentiates next door. and it becomes more valuable in a world where digital experiences are increasingly shaped by AI. The asset has always been unique. What has changed is how we are unlocking its value. Over the past two years, we've reworked the product experience to elevate the most relevant decision oriented content, the recommendations, services, alerts, local news, and information that people rely on when something in their real world requires action. Unlike many social platforms, Our value is not measured by passive scrolling. It shows up when intent is high and decisions are being made. Our strategy is to combine the strength of our trusted community with AI to surface the right local information at the right moment, increasing utility for neighbors and economic value for both local businesses and next door. We have paired this strategy with disciplined execution and a clear founders mentality, one that prioritizes long-term network health over short-term optics, capital efficiency over growth at any cost, and durable unit economics over temporary wins. With that context, Q4 was an important quarter. It reflected progress not only in our product and operating performance, but in demonstrating that this strategy is gaining traction. Turning to performance, while we still have significant work ahead, Q4 was our strongest quarter ever in terms of financial metrics. Revenue grew 7% year over year, and we delivered positive adjusted EBITDA with continued margin expansion. That progress reflects improved execution, disciplined cost management, and strengthening performance across our monetization platform. Comparing full year results, we have repositioned the company from an adjusted EBITDA loss of over $70 million two years ago to positive adjusted EBITDA in 2025. We expect 2026 will build on this momentum, and this is the result of structural changes in how we operate, not short-term optimization. On the user side, we continue to be focused on leading indicators. Platform WOW will not inflect overnight, nor does it need to for this model to improve. What matters most at this stage is engagement quality and intent. Our net promoter score improves steadily throughout 2025, and we are seeing encouraging increases in engagement frequency. Neighbors are returning more often for high value use cases, which reinforces the durability of the network. And on the advertiser side, we continue to invest in our proprietary ad stack and are seeing measurable gains, particularly in self-serve. Our AI driven tools have reduced friction in campaign creation, improved reporting transparency, and strengthened optimization performance. Advertiser retention remains solid Outcomes are improving, and these gains are being driven by better ad performance, not by increasing ad load. Overall, I will reiterate that Q4 reinforced that the strategy outlined earlier is translating into real material progress. I will now turn it over to Indrajit to review the quarter in greater detail and discuss our outlook.

Thanks Nirav, and hello to everyone joining us today. I'm excited to join Nextdoor at such an important time for the company. I've been impressed by the strength of the team and the opportunity ahead of us, and I look forward to partnering with my colleagues to drive sustainable growth and long-term shareholder value. Now, let's jump into the results. Q4 Platform Weekly Active Users, or WOW, which measures users engaging directly on the Nextdoor app or website, was 21 million, a 3% sequential decline, roughly in line with our expectations. This reflects our ongoing effort to prioritize engagement quality over volume. Specifically, our users have told us to get smarter on notifications, so we are working on those improvements with a goal of maximizing long-term user value as notifications improve. As a result, we expect Platform WOW will continue to fluctuate in the near term, which is an intentional tradeoff as we focus on relevance, retention, and overall improved user experience. now let's turn to revenue q4 revenue was 69 million dollars up seven percent year over year this was our highest ever quarterly revenue reflecting continued strong self-serve advertiser demand improved sales productivity and better yields driven by product improvements we saw year-over-year growth in both customer count and average customer spend while arpu increased 13% year-over-year, all without an increase in ad load. Advertisers benefited from higher click-through rates while we grew our active customer base and associated net new advertiser spend. In short, our ad stack investments are delivering measurable improvements. We're seeing positive effects in our self-serve platform, including incremental advertiser spend improving advertiser mix and retention, and better operating efficiency from a more streamlined sales model. As we continue to roll out new ad formats and apply AI to optimization and creative workflows, our focus remains on steadily improving monetization and advertiser outcomes over time. Our self-serve platform lets businesses of any size quickly create and run their own ads on Nextdoor. By removing friction for advertisers, we have created an efficient path for businesses to leverage our neighborhood data and AI to reach verified household decision makers and measure results clearly. Our self-serve channel was again a core growth driver and remains a key component of our monetization strategy. Q4 self-serve revenue grew 32% year over year and comprised roughly 60% of total revenue. Now let's move to profitability. Q4 GAAP net loss was $4 million, or a negative 6 percent margin, representing 13 points of year-over-year improvement. Q4 adjusted EBITDA was $8 million, an 11 percent margin, representing 6 points of year-over-year improvement, driven by revenue scale and continued broad-based operating expense leverage. Like revenue, Q4 was the strongest adjusted EBITDA quarter in our history. Our strong Q4 results allowed us to achieve positive adjusted EBITDA for the full year 2025, 12 months ahead of schedule, reflecting our continued focus on efficiency and productivity. Revenue per employee increased 26% year over year in Q4, which is another good proof point of our revenue growth and the operating leverage we drove through 2025. At quarter end, we had $405 million in cash, cash equivalents, and marketable securities, and zero debt. In Q4, we repurchased 2.5 million shares at an average price of $1.77. Looking ahead, we continue to prioritize operational investments that we feel will drive long-term value for the platform. Now, let's turn TO OUR FINANCIAL OUTLOOK. WE EXPECT Q1 REVENUE OF $57 TO $59 MILLION REPRESENTING 7% YEAR-OVER-YEAR GROWTH AT THE MIDPOINT OF THE RANGE. AND ADJUSTED EBITDA OF NEGATIVE $6 MILLION TO NEGATIVE $4 MILLION REPRESENTING NEGATIVE 9% ADJUSTED EBITDA MARGIN AT THE MIDPOINT. HERE ARE SOME FACTORS TO CONSIDER RELATED TO OUR Q1 OUTLOOK. our Q1 guidance reflects normal revenue seasonality, where Q1 is typically our softest quarter of the year. Second, we remain focused on optimizing the core user experience and driving quality engagement, so we are intentionally limiting our new user acquisition efforts and do not plan to increase ad load in Q1 2026. Given the multi-quarter nature of our product initiatives and their impact on usage patterns, we believe quarterly guidance is the most appropriate way to communicate our near-term outlook. That said, we are encouraged by our operating progress in 2025. For full year 2026, we expect to see continued revenue growth. We also expect to see adjusted EBITDA margins in the mid single-digit range. With that, I'll turn it back over to Nirav.