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Nextdoor Holdings, Inc. (KIND)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $65.2M (+17% YoY) and WAU reached 45.9M (+10% YoY); KIND delivered its first positive quarterly adjusted EBITDA ($3.0M, 5% margin) and $11M operating cash flow, supported by stronger self-serve advertiser performance and cost discipline .
  • Management is accelerating the “NEXT” product switchover, intentionally reducing ad load to deepen engagement; near-term headwinds include ~$7M revenue impact to Q1 2025 and a Q1 adjusted EBITDA loss of ~$13M, with 1H 2025 revenue growth expected to be approximately flat .
  • Advertiser mix is evolving: large advertisers are shifting budgets toward programmatic; KIND is integrating new SSP/DSP partners to improve ease-of-buy and expects benefits late 2025 and beyond .
  • Stock-relevant catalysts: positive EBITDA inflection and cash generation in Q4; tangible Q1 revenue/EBITDA reset tied to the NEXT switchover; progress updates on NEXT launch (mid-2025 timeline maintained) and programmatic integrations that could improve advertiser value and revenue uplift in 2H 2025+ .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA turned positive in Q4 ($3.0M; 5% margin) with $11M operating cash flow; margin improved ~30 percentage points YoY on revenue scale, lower S&M and personnel costs, and hosting/data efficiencies .
  • Self-serve advertisers drove growth; click optimization delivered 47% lower CPC vs non-optimized campaigns and represented >40% of self-serve revenue in Q4; ARPU rose 7% YoY to $1.42 .
  • Management reiterated mid-2025 NEXT launch, showcasing a clear strategy: richer local content, timely alerts, and community-powered recommendations using AI/ML to centralize evergreen neighbor recommendations .

Selected quotes:

  • “For the first time, we achieved positive adjusted EBITDA and operating cash flow” – CEO Nirav Tolia .
  • “Q4 adjusted EBITDA was $3 million or a 5% margin… Operating cash flow was $11 million” – CFO Matt Anderson .
  • “NEXT will use AI and ML to centralize recommendations in a new neighborhood hub” – CEO Nirav Tolia .

What Went Wrong

  • Near-term revenue headwinds: ad impression supply reduction due to intentional ad load cuts during the NEXT switchover; large advertisers shifting budgets toward programmatic dampened Q1 quarter-to-date revenue growth .
  • Guidance reset: Q1 2025 revenue guided to ~$53M and adjusted EBITDA loss of ~$13M; 1H 2025 revenue growth “approximately flat,” reflecting the switchover/testing period .
  • Engagement/usage risk during switchover: management expects impacts on WAU and impressions as they prioritize user experience over short-term monetization .

Financial Results

Core P&L and Usage (YoY growth, margins, and scale)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$63.292 $65.610 $65.228
Net Loss ($USD Millions)$(42.781) $(14.898) $(12.123)
Adjusted EBITDA ($USD Millions)$(5.979) $(1.317) $3.043
Adjusted EBITDA Margin %(9%) (2%) 5%
WAU (Millions)45.1 45.9 45.9

Cash and Liquidity (quarter-end)

MetricQ2 2024Q3 2024Q4 2024
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$457 $425 $427

KPIs

KPIQ4 2024
ARPU ($ per WAU)$1.42
Operating Cash Flow ($USD Millions)$11
Verified Neighbors (YoY growth)>100M total; Verified Neighbors +15% YoY

Notes:

  • Net loss per share: Q3 $(0.04) and Q4 $(0.03) basic/diluted, indicating improving loss per share .
  • Q4 revenue/EBITDA outcomes exceeded Q3 guidance ($63M revenue; $(2)M adj. EBITDA) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025—~$53New
Adjusted EBITDA ($USD Millions)Q1 2025—~$(13)New
Revenue Growth (YoY)1H 2025—Approximately flatNew
NEXT Launch TimingMid-2025Mid-2025 (target)On trackMaintained
Revenue ($USD Millions)Q4 2024~$63 (guide) $65.228 (actual) Beat
Adjusted EBITDA ($USD Millions)Q4 2024~$(2) (guide) $3.043 (actual) Beat

Earnings Call Themes & Trends

TopicQ2 2024 (prev)Q3 2024 (prev)Q4 2024 (current)Trend
NEXT product transformationIntroduced NEXT; focus on intent+discovery; meaningful product progress expected mid-2025 Expanded discussion; discovery-centric interactions; UX design leadership hire (Chief Design Officer) Switchover initiated; ad load reductions to deepen engagement; launch remains mid-2025 Accelerating toward launch
AI/ML usageML improving personalization/notifications; foundational for product and ads Click optimization and CAPI scaling; search campaigns showed >10x ROAS vs standard AI/ML centralizing recommendations; ad performance gains; 3x CAPI adoption vs Q3 Broadening application
Advertiser mix and programmaticSelf-serve momentum; top-50 retention 96%; nearly 50% revenue self-serve Enterprise spend returned; self-serve growth weighted to mid-market; improved retention Large advertisers shifting to programmatic; integrating DSP/SSP to improve ease-of-buy (late-2025+ benefits) Near-term headwind; strategic pivot
User growth & notificationsWAU +8% YoY; re-engagement via improved notifications; organic neighbor acquisition WAU +13% YoY; organic acquisition; notifications during storms boosted engagement WAU +10% YoY; younger demo growth; expect WAU/impression impacts during switchover Solid base; short-term impact expected
Capital allocation & leverageCost discipline; RIF/lease charges; Opex reductions; buybacks authorized Positive free cash flow expected Q4; share repurchases continued; strong cash Q4 positive adj. EBITDA and operating cash flow; year-end $427M cash; 31M shares repurchased FY24 Strengthening leverage

Management Commentary

  • Strategy and product: “NEXT is purpose-built… richer local content, timely local alerts, and community-powered local recommendations” .
  • Execution and profitability: “Q4 adjusted EBITDA was $3 million or a 5% margin… Operating cash flow was $11 million” .
  • Near-term trade-offs: “We are intentionally making short-term trade-offs to prioritize long-term value… expect impacts on weekly active users and impressions” .
  • Advertiser ease-of-buy pivot: “Large advertisers shifting budgets toward programmatic… integrating new SSP/DSP partners… expect contributions to growth in late 2025 and beyond” .

Q&A Highlights

  • Engagement vs growth prioritization: Management will focus on deepening engagement with existing users over 12–24 months; switchover testing across six markets; engagement metrics (visit frequency, time spent) are North Star targets during the learning period .
  • Ad impression supply: Expect limited supply growth in 1H 2025 due to deliberate testing and ad load changes; anticipate frequency improvements as NEXT rolls out mid-year .
  • Local content publishers: KIND has several thousand local publishers; unique differentiation comes from verified neighbor discussions around articles .
  • Programmatic shift: It’s too early to parse macro vs idiosyncratic drivers; focus is on making buying easier for large advertisers programmatically while maintaining performance improvements from the ad server .
  • Operating leverage: Broad-based leverage across functions; shift toward organic neighbor acquisition reduces S&M; plan to apply similar product-first approach to SMB acquisition tools .

Estimates Context

  • S&P Global consensus estimates were unavailable due to a mapping error for KIND at the time of analysis; as a result, comparisons to Wall Street estimates cannot be provided for Q4 2024, FY 2024, Q1 2025 or FY 2025 [SpgiEstimatesError].

Key Takeaways for Investors

  • Q4 execution was strong: revenue +17% YoY; first positive quarterly adjusted EBITDA and $11M operating cash flow, indicating improving unit economics and operating leverage .
  • Near-term reset: Q1 2025 revenue ($53M) and adjusted EBITDA ($(13)M)) reflect the deliberate ad load reduction during NEXT switchover; expect 1H 2025 revenue growth ~flat YoY—plan positioning for durable engagement-led growth thereafter .
  • Watch NEXT milestones: mid-2025 launch timing maintained; updates on user engagement metrics (frequency, session depth) will be key to gauging monetization ramp potential in 2H 2025+ .
  • Advertiser mix shift is strategic: programmatic integrations (SSP/DSP) aim to broaden large-advertiser spend access; monitor adoption progress and ease-of-buy improvements as a revenue catalyst in late 2025 .
  • Self-serve resilience: click optimization and ad server migration continue to lower CPC and improve CTRs—supporting ARPU growth and revenue retention; this channel underpins topline resilience in the transition period .
  • Capital strength: $427M cash and no debt provide flexibility to invest through the switchover while sustaining buybacks and focused opex; diluted share count reduced ~5% YoY in 2024 .
  • Trading lens: Expect near-term volatility around Q1 guide and switchover metrics; potential upside on evidence of accelerating engagement and advertiser programmatic ease-of-buy; risk if engagement uplift is slower-than-expected or programmatic ramp lags .