Nextdoor Holdings, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Nextdoor operates a neighborhood-focused social platform, with substantially all revenue generated from advertising. The platform was available in more than 335,000 neighborhoods across 11 countries; the company said it reached one in three U.S. households.
Financial and operating performance
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Revenue | $53.1 million | $49.8 million | +7% |
| Gross margin | 81.2% | 80.1% | +1.1 percentage points |
| Operating loss | $(34.7) million | $(38.8) million | Loss narrowed 10% |
| Net loss | $(28.3) million | $(33.7) million | Loss narrowed 16% |
| Adjusted EBITDA loss (non-GAAP) | $(14.0) million | $(21.7) million | Loss narrowed 35% |
| Net cash used in operating activities | $(13.6) million | $(13.7) million | Cash use roughly unchanged |
| Cash, cash equivalents and marketable securities | $497.8 million | $531.1 million at Dec. 31, 2023 | Down $33.3 million |
Revenue growth reflected increased advertiser demand and engagement. Weekly active users (WAUs) rose 2% year over year to 43.4 million; average revenue per WAU increased 4% to $1.22. U.S. revenue was $49.9 million, up from $46.8 million; international revenue was $3.2 million, up from $3.0 million.
Total costs and expenses declined 1% to $87.9 million. Research and development fell 5%, primarily on lower personnel costs and headcount, while sales and marketing rose 2%. Stock-based compensation increased to $19.5 million from $15.8 million and represented a substantial non-cash expense. Interest income increased 24% to $6.8 million, primarily due to higher rates.
At quarter-end, total assets were $633.1 million and stockholders’ equity was $541.4 million. The company reported no debt outstanding; operating lease liabilities totaled $65.1 million. Cash and cash equivalents were $69.7 million, marketable securities $428.1 million, and restricted cash $11.2 million. The company reported an accumulated deficit of $794.3 million.
Material changes and capital allocation
- Operating loss improved as revenue grew and total expenses edged lower. Operating cash use remained similar year over year; cash flows from investing were $35.9 million, including net purchases and maturities of marketable securities and a $7.5 million OFN loan disbursement.
- The board increased the share repurchase authorization by $150 million and extended it to March 31, 2026. During Q1, Nextdoor repurchased and retired 4.45 million Class A shares at an average $2.19 per share for approximately $9.8 million; $163.0 million remained available at quarter-end. Cash flows also included a $5.3 million share-repurchase-program prepayment.
- Nextdoor’s note receivable from Opportunity Finance Network reached $15.0 million. The unsecured loans earn 0.75% and are due 10 years after each disbursement.
Outlook, commentary and risks
- The filing provides no specific revenue, earnings or cash-flow guidance. Management expects operating losses and operating cash outflows to continue for the foreseeable future, while stating existing cash, cash equivalents and marketable securities should meet short-term working-capital and capital-expenditure needs.
- On April 24, 2024, the company announced a restructuring affecting 40 employees, with estimated one-time charges of approximately $3 million, mostly expected in Q2 2024. The plan was expected to be substantially complete by the end of Q2.
- CEO and President Sarah Friar was expected to remain through May 8, 2024, when co-founder Nirav Tolia was to assume the role. Head of Revenue Heidi Andersen and Head of Legal & Corporate Development John Orta also planned to resign effective May 8; the filing says their departures were not due to disagreements with the company.
- Key risks include reliance on advertising revenue and advertiser spending, competition, macroeconomic conditions, monetization and user-engagement execution, privacy and advertising-measurement restrictions, content and regulatory exposure, cybersecurity, and dependence on third parties including Google Ad Manager and AWS. WAU calculations partly rely on estimates because of Apple email privacy changes.
- The company reported no material pending legal matters and said disclosure controls were effective as of March 31, 2024. Its marketable securities had $908,000 of gross unrealized losses at quarter-end; management stated a hypothetical 100-basis-point interest-rate change would not materially affect portfolio fair value.
Important facts for investors to verify
- Whether revenue growth, WAU growth and ARPU gains persist, and whether advertiser demand remains resilient.
- How operating losses, cash burn and stock-based compensation evolve relative to management’s cost-reduction efforts.
- The pace and total cash impact of share repurchases, including the distinction between completed repurchases and program prepayments.
- Actual restructuring costs and execution, and the effects of the CEO and senior-leadership transitions.
- Whether the reported WAU and ARPU measures remain comparable and reliable given estimation limitations and changes in ad targeting and measurement.