Nextdoor Holdings, Inc. Q3 FY2024 earnings call

• Driving revenue growth: Advertisers on Nextdoor Ads platform benefited from improved performance, especially mid-market self-serve channel scaling. Click optimization drove 82% increase in click-through rates and 16% reduction in cost per click. - Improving operational discipline: Focus on founder's mentality, disciplined resource allocation, with revenue per employee up over 60% year-over-year. - Transforming product with NEXT: Focus on discovery-centric interactions, hired Georg Petschnigg as Chief Design Officer, multiphase effort with product progress expected mid-2025.

Weekly Active Users (WAU) reached $45.9 million, up 13% year-over-year. Revenue was $66 million, growing 17% year-over-year. Adjusted EBITDA margin increased by 33 percentage points year-over-year. The advertising segment drove revenue growth, with mid-market self-serve channel scaling and click optimization features driving improved click-through rates and reduced cost per click.

• Full year 2024: Expect revenue of $245 million (12% y/y growth), adjusted EBITDA margin improvement approaching 25 percentage points. - Q4 2024: Expect revenue of approximately $63 million (13% y/y growth), adjusted EBITDA loss of approximately $2 million, positive free cash flow generation.

Q: Can you first talk a little bit about how you're balancing your organic insight-based growth strategies for verified neighbors against your paid marketing levers, particularly in context of these newer discovery-centric use cases coming online as well as your retention/retrenchment towards the U.S. Market? And then as we look to the second pillar of NEXT, the exchanging of goods and services, we'd love to hear your updated thoughts on the Nextdoor for Sale and Free Surface as well as the competitive differentiation versus marketplace -- Facebook Marketplace.

A: Nirav Tolia: Thank you for the questions, Jamesmichael, and let me just answer them in the order that you asked them. So on the first is, we are almost solely focused on organic mechanisms for user acquisition, so I would say, that our paid marketing efforts are minimal and decreasing overtime and we don't anticipate any change in that in the near term or even mid-term. On your second question, around investing in the For Sale & Free Surface and marketplaces more generally, that is an opportunity that we think is really vibrant for us, and we're obviously aware of what Facebook and others are doing in that space. The next set of priorities for us are around NEXT, and the focus for NEXT, as we talked about, was expanding intent to include Discovery. That will not include the marketplace's surface in the near term, but as we continue to make progress with NEXT, a future phase will certainly include more investment in For Sale & Free and a more vibrant set of marketplace experiences for our users. Matt Anderson: Yes, I'll just add one thing to what Nirav mentioned on your first comment on our growth strategies for Neighbors. So substantially all of our Neighbors come organically, as you noted. That also has benefits though, as you think about our P&L so things like sales and marketing as a percent of revenue in Q3 it was down 14 points year over year. It's a function of a number of things, but one of the things that signals is the continued progress at scale we're having. So it's not just a signal of the health of the platform, but it also has downstream benefits in terms of our operating numbers.