Nextdoor Holdings, Inc. annual report, FY2022

Nextdoor Holdings, Inc. — FY2022 Form 10-K

Business context and reporting period. This annual report covers the fiscal year ended December 31, 2022; Q4 metrics are identified separately. Nextdoor operates a neighborhood social network funded primarily by advertising. At year-end, it was available in 11 countries and more than 305,000 neighborhoods; Q4 global verified neighbors totaled 78 million.

Financial and operating performance

MetricFY2022FY2021Change
Revenue$212.8 million$192.2 million+11%
Cost of revenue$39.0 million$28.8 million+35%
Total costs and expenses$357.0 million$287.0 million+24%
Operating loss$(144.2) million$(94.8) millionLoss widened
Net loss$(137.9) million$(95.3) millionLoss widened 45%
Adjusted EBITDA loss$(75.5) million$(43.7) millionLoss widened 73%
Cash used in operating activities$(60.5) million$(51.3) millionOutflow increased

Gross margin was approximately 81.7%, versus 85.0% in 2021; operating margin was approximately negative 67.8%, versus negative 49.3%. These percentages are calculated from reported revenue and expenses. Stock-based compensation was $64.4 million, up from $47.5 million. Accumulated deficit was $618.3 million.

Cash, cash equivalents and marketable securities totaled $583.3 million at year-end ($55.2 million and $528.1 million, respectively), versus $715.8 million at December 31, 2021. Current assets were $625.3 million and current liabilities $34.7 million. The company reported no debt outstanding. Investing cash outflow was $342.4 million, mainly reflecting purchases of marketable securities; financing cash outflow was $64.3 million, including $77.2 million of share repurchases.

Q4 WAUs were 40.0 million, up 11% year over year; Q4 ARPU was $1.33, down 19%. For the full year, the filing reports WAUs up 21% and ARPU of $5.60, down 9% from $6.13. U.S. revenue was $204.4 million and international revenue $8.3 million; substantially all revenue came from advertising.

Changes, outlook and risks

  • Revenue growth was outpaced by expense growth, and net and adjusted EBITDA losses widened. Management attributed revenue growth to advertiser demand and increased engagement; ARPU declined as user growth outpaced revenue growth.
  • Management expects operating losses and operating cash outflows to continue for the foreseeable future. It plans continued investment in product and advertising technology, sales, and international expansion; no specific financial guidance was provided.
  • Key risks include advertising-market and macroeconomic weakness, dependence on advertising, competition, privacy and content regulation, changes to third-party ad tracking and measurement, cybersecurity and platform availability, and execution risks in international markets. Apple email privacy changes also affect WAU measurement; the company uses estimates for some email engagement.
  • The board authorized up to $100 million in repurchases through June 30, 2024; $77.2 million had been used by year-end, leaving $22.8 million. No shares were repurchased in Q4.
  • The company lent $5 million to Opportunity Finance Network at 0.75% interest, under an agreement permitting up to $15 million of lending. A January 2023 headquarters lease amendment extended the lease through April 2032.
  • No material pending legal matters were reported. The auditor gave unqualified opinions on the financial statements and internal control over financial reporting; management reported controls effective at year-end.

Investor verification priorities

  • Reconcile Q4 versus full-year WAU growth and confirm the methodology and estimates used for WAUs and ARPU.
  • Assess whether advertising revenue growth and monetization can improve enough to offset rising operating costs and continuing cash burn.
  • Review liquidity and investment portfolio composition, including unrealized marketable-securities losses, and the cash impact of remaining authorized repurchases.
  • Evaluate the scale and persistence of stock-based compensation and its effect on reported losses and dilution.
  • Track privacy, ad-measurement, and content-regulation developments, alongside international growth and monetization progress.