Nextdoor Aktie

Good morning. My name is Leah, and I will be your conference operator today. At this time, I would like to welcome everyone to Nextdoor's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Nirav Tolia, Chief Executive Officer. Nirav, you may now begin.

Good morning, everyone, and welcome to Nextdoor's Q2 2026 Earnings Call. We appreciate everyone joining us today. I'm Nirav Tolia, Co-Founder, Chief Executive Officer, President and Chairperson of the Board. Joining me today is Indrajit Ponnambalam, Chief Financial Officer. I'd also like to take a moment to introduce Colin Bourland, our new Head of Investor Relations and Corporate Development. Colin has a strong background across finance, IR and corporate development, and he'll be leading our investor engagement efforts going forward. We're really excited to have him with us.

Thank you, Nirav. I'm excited to be here, and I appreciate the warm welcome. Hello, everyone. During this call, we may make statements related to our business that are forward-looking statements under federal securities law. 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, 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 Q2 2026 Nextdoor investor update posted on the Investor Relations section of our website today. And now I'll turn it back to Nirav.

Thanks, Colin. Q2 was a landmark quarter for Nextdoor with the strongest financial performance in our company's history. Platform WAU reached an all-time high. Revenue exceeded the high end of our guidance, and we delivered record adjusted EBITDA. Platform WAU grew to 22.9 million, increasing both sequentially and year-over-year for the second consecutive quarter. Revenue grew 15% to $75 million, and adjusted EBITDA reached $10 million, a 13% margin and a $12 million improvement over last year.

These are strong results, but what encourages me even more than the numbers is how we achieved them. For the past 2 years, we've talked about rebuilding Nextdoor for long-term sustainable growth. We haven't been looking for shortcuts or one breakthrough feature. Instead, we focused on steadily improving the product quarter after quarter, making it more useful, more relevant and ultimately more valuable for neighbors. This quarter, we're beginning to see those improvements compound.

The long-term success of Nextdoor depends on the health of our community and healthy communities are built by people contributing. Every time a neighbor asks a question, answers one, shares a recommendation, posts an update or help someone nearby, they make Nextdoor more valuable for everyone else. More contributors create more content, more content creates more relevance and more relevance gives neighbors more reasons to come back. When they come back, even more neighbors contribute. That's the flywheel we're building. Our job is to make it stronger every quarter, and that's exactly what we focused on in Q2.

Let me take you through some of the highlights, starting with how we make sure neighbors see content that feels relevant the moment they open Nextdoor. We continued improving our feed ranking systems so neighbors see the most engaging, useful and relevant content. We continued improving video throughout the platform, giving both neighbors and advertisers richer ways to communicate. We rebuilt our events experience, making it easier for neighbors to discover what's happening nearby. And we continue to use AI to improve the quality of our notifications, driving more engagement.

We also launched local journalist accounts, giving trusted local reporters a verified presence on Nextdoor and bringing higher-quality local news directly into neighborhood conversations. Now those may sound like separate product improvements, but they're not. They're all solving the same problem. When neighbors open Nextdoor, we want them to immediately find something that's useful, local and worth engaging with. But showing neighbors better content is only half the equation.

The other half is helping more neighbors create it because the most valuable content on Nextdoor comes from neighbors helping neighbors. So we focused on making it easier, faster and more rewarding to contribute. We added simple prompts that invite active commenters to share their first post, resulting in more neighbors posting for the first time. And we improved post insights, giving neighbors visibility into the real reach and impact of what they share because people contribute more when they can see that it matters.

The result, contributors reached a multiyear high in Q2. Unique posters grew. Post volume increased. Comments were up across the board. That's the flywheel in action. The future of Nextdoor isn't just built by getting more people to consume content. It's built by getting more neighbors to create it, and that's exactly the direction we're heading.

As we look toward the second half, I want to take a moment to explain how our thinking has evolved because I think it's an important story. When I returned as CEO, we began rebuilding Nextdoor around 3 core experiences: news, alerts and recommendations. And that work was essential. News and alerts helped restore utility to the platform. They gave neighbors more reasons to come back and reconnected us with what made Nextdoor valuable in the first place.

But recommendations revealed something even more important. And that is that what makes Nextdoor truly essential isn't the third-party content we surface. It's the content neighbors create for each other. And that is because Nextdoor is valuable because of the people behind it. A neighbor 2 streets away who recommends a plumber or answers a question with nothing to gain but helping someone else to make a better decision. That kind of content cannot be manufactured or aggregated or scraped from somewhere else. It can only be earned. And over the past year, that insight has sharpened our strategy.

The platforms that endure aren't just places where people post things. They're intentionally crafted ecosystems designed to make contribution easy, rewarding and self-reinforcing, where the value compounds as more neighbors participate. As we look ahead, we're laser-focused on building more of these systems. The two I'll call out today that are already delivering results are Faves and Ask. Faves is built around a simple insight. The most trustworthy recommendation isn't the one with the most stars. It's the one from a verified neighbor who lives nearby.

Every day on Nextdoor, neighbors ask who has the best plumber, the best pediatrician, the best pizza or the best landscaper. Faves turns these conversations into a living, trusted local guide, continuously updated by the community for the community. This fall, we'll bring back our annual Faves Award campaign with an all-new in-product experience where neighbors vote for their favorite local businesses across 20 categories, another reason to participate, contribute and strengthen the communities they live in.

The next feature, Ask takes this further. Once you have trusted recommendations, the natural question becomes, how do you help neighbors find them instantly? Ask uses AI to understand what a neighbor needs and surface the most relevant answer, whether that's a conversation, a trusted local business or another neighbor who's been through the same thing. What makes Ask unique isn't that it uses AI, but what's behind it, an archive of nearly 15 years of trusted, verified neighborhood-level conversations that no one else has.

AI simply makes that knowledge dramatically easier to discover and the system compounds. When a question hasn't been answered yet, Ask can surface answers from that same archive, keeping the conversation alive until other neighbors weigh in. That's how we think about AI at Nextdoor, not as a replacement for community, but as a way to make years of community wisdom accessible in real time.

When you take a step back, Faves and Ask are 2 expressions of the same fundamental advantage, a verified community of neighbors who trust each other and help each other. Content no algorithm or AI model can replicate on its own. We've made meaningful progress over the past 2 years, but what's changed most isn't simply the product. It's that we've rediscovered what made Nextdoor special in the first place. And if we keep investing in that, we'll build stronger communities.

Stronger communities create better content. Better content drives deeper engagement. Deeper engagement creates a stronger business and everything else follows from there. With that, I'll turn it over to Indrajit to walk through our financial results and our outlook in more detail.

Thanks, Nirav. As Nirav described, Q2 was another strong quarter that reinforced the progress we are making across the business. Let's walk through the details. Q2 Platform WAU was 22.9 million, up 5% year-over-year and up sequentially for the second quarter in a row, yet another all-time high for Nextdoor. When we reported Q1 results, we had just seen the first sequential inflection in several quarters. With 2 consecutive quarters of sequential growth, I'm now more confident that what we're seeing reflects the durable impact of the product investments we've made, not a onetime effect. As I've noted before, Platform WAU is a lagging indicator, which makes 2 consecutive quarters of improvement particularly encouraging.

Turning now to revenue. Q2 revenue was $75 million, up 15% year-over-year, finishing above our guidance range of $71 million to $73 million. Revenue growth was broad-based. Our self-serve channel remains the primary growth engine, growing 32% year-over-year, an acceleration from the 28% we reported last quarter, and it now comprises roughly 67% of total revenue with continued improvement in advertiser performance and revenue yields. Our growth was achieved without an increase in ad load, reinforcing that our revenue gains are coming from a healthier, more efficient ad product, not from increasing ad density on the platform.

Our U.S. direct sales team had a strong quarter. Growth was driven by deeper investment from existing customers with average revenue per customer up double digits year-over-year. Financial Services, Tech and Telco were standout verticals. And our video ad product continues to gain traction, a signal that advertisers are leaning into richer formats on the platform. On lead generation, one of our newer products, Opportunity Alerts, which helps local service providers connect with neighbors who are expressing real-time needs is showing encouraging traction at the intersection of neighbor intent and local business demand. It's still early, but the trajectory gives us confidence that we are on the right path to closing the gap between the intent that exists on Nextdoor and the monetization that should follow.

Turning now to profitability. Q2 GAAP net loss was $2 million or negative 3% margin, representing 21 points of year-over-year margin improvement. Q2 adjusted EBITDA was $10 million or 13% adjusted EBITDA margin. This compares to the $4 million to $6 million range we guided to last quarter and represents an approximately $12 million improvement year-over-year. Our beat versus guidance is driven primarily by revenue outperformance and continued disciplined cost management. We continue to drive productivity improvements across the organization.

Annualized revenue per employee increased 29% year-over-year in Q2, building on the gains we've driven over the past 2 years. We ended Q2 with $378 million in cash, cash equivalents and marketable securities, and we continue to have no debt on our balance sheet. Through the first 6 months of 2026, we generated $9.6 million of cash flow from operations, a meaningful increase from the $3.3 million we generated during the same time period in 2025.

Now let me turn to our financial outlook for the remainder of the year. For Q3 2026, we expect revenue of $76 million to $78 million and adjusted EBITDA of $6.5 million to $8 million. For full year 2026, we are raising our outlook for both revenue and adjusted EBITDA based on the positive momentum and outperformance we've seen year-to-date. We now expect to achieve low teens revenue growth for the full year and an adjusted EBITDA margin of approximately 10%. Underlying this outlook is our expectation that Platform WAU will continue to increase sequentially during the back half of the year.

Now let's turn to some Q&A, which we will structure in a similar manner as to the last 2 quarters. We'll start by taking live questions from our covering analysts. After that, we'll take some questions submitted by our investors. With that, operator, let's open the line for questions.

[Operator Instructions] Your first question comes from the line of Jason Kreyer with Craig-Hallum.

All right. Great to see the WAU kicking in 2 quarters in a row. It seems like that's coming earlier than expected. Can you just talk about what contributed to that? Is this just organic with just more utilization on the platform? Or do you have some deliberate strategies that you're deploying that's being seen as effective to grow the user base?

All right. Thank you for the question. And yes, we are very encouraged by the fact that now this is the second quarter where we've seen that WAU tick up. The strategy in general is to build a better product and to do so through lots of small improvements versus relying on one big bang that may or may not work out. I talked about in my opening remarks, some of the improvements that we made. And if you take those improvements and you continue to add them together, the compounding effect is the overall platform grows.

I mentioned in particular that we are now investing very deeply in rebuilding the core foundation of our community. And that comes down to user-generated content and how we're fueling contributor growth. And so that's a particular high point for us. But I would describe the progress as across the board, organic and durable. And so we're very encouraged by what we see. And while we can't point to one particular thing, we think that's actually a strength because you want to build a system where all of the improvements come together into something that then looks pretty significant. And that's what we hope we're building towards.

Got it. One follow-up. So you brought a lot of AI functionality into the platform over the last year. Can you just talk about how the benefits accrue to Nextdoor, where you see that in the KPIs, whether that's engagement or monetization or somewhere else in the numbers that we can't see?

Well, look, we continue to believe that AI is the biggest transformation in our industry since we've been not just with Nextdoor, but really since the beginning of the Internet boom. And so it's something that's going to be inescapable for all businesses. We do think that AI, as we've talked about, can assist us both making our company more efficient, but also in making the product experience and the advertiser experience better. And so whether that's on the product side, and I mentioned Ask in my early comments, and how we use AI to summarize and to better present our content or whether that's on the monetization side, where we're using AI and machine learning to create a better opportunity for advertisers to show the best ad at the best time to the best candidate, we will continue to lean into the technology.

And it's rapidly moving from something specific and a kind of vertical initiative, AI, into something that we think about more horizontally that's going to be utilized in all parts of our business and really all parts of our company. And so we do believe that we are well positioned in a world where consumers are starting to turn more towards agentic experiences than general search and things like that. And so we think not only our embrace of AI, but the trend of consumers seeking AI, those are both things that we can take advantage of.

Your next question comes from the line of Eric Sheridan with Goldman Sachs.

This is Alex on for Eric. If you think about some of the growth drivers of core ads monetization going forward, richer formats through video, more down funnel ads, increasing auction density. What are some of the 1 or 2 growth drivers that you see as having the longest runway? And what are some of the investments that you think you guys need to still make going forward to capitalize on that?

I'll start, and then I'll see if Indrajit wants to add something to it. The big thing that I will say is we continue to see more demand for our ad products regardless of the amount of inventory we have. And so as we grow engagement, we think our core display advertising opportunity gets larger and larger. In terms of the specifics, yes, you mentioned video and you mentioned self-service. I mean, Indrajit, you can probably add some color.

But I think the main point that I wanted to make was advertisers want to use Nextdoor because of the intent that our users express every single day. And so as we grow engagement on the platform, that display opportunity, just the basic display opportunity still has a lot of headroom and the ceiling is really, really high.

Yes. I would agree with Nirav. And I would just add, we think we have a lot of room to continue to make optimizations. We've made a bunch of steps over the last year, which you can see with our revenue per user metric improving, but pretty broad-based. We think the more engagement our users have on the platform, the more information we have on them, which is also valuable for our advertisers as well. So there's a compounding benefit of user engagement, which will help us on the monetization side. So I would say across the board, we have plenty of headroom yet to go across a bunch of different ad surfaces and ad formats.

Your next question comes from the line of Ryan Powell with B. Riley Securities.

This is Ryan on for Naved. So first question is with Platform WAU up 5% year-over-year despite the 9% pullback in brand and performance marketing in the second quarter. Could you talk about your updated timing for retargeting lapsed Platform WAU? And then if guidance for sequential WAU growth in second half assumes any step-up in brand and performance marketing spend? And then I have a follow-up.

Go ahead, Indrajit, you can start.

I think you probably have heard my tone change a little bit on Platform WAU, where the last couple of quarters, we said we expected it to grow over time, but there might be some short-term fluctuations. And so now we're feeling a little bit more confident based on our results year-to-date. And so we're sort of giving some forward-looking guidance on the fact that we continue -- that we expect that growth to continue the back half of the year. So that's sort of an important shift I wanted to note.

We're not quite ready to quantify exactly how much that increase will be because we're still working hard to do a whole bunch of things to the product to make that a durable long-term growth, but we do think it's going to grow. It is not related to any specific or significant marketing investments. So that will take more time.

I think as we continue to see retention of our users improve on the platform, as we see improving NPS on the platform, I think those will be key indicators for us on when we might step more on the marketing investment front, but we don't see that as a significant driver of growth for the rest of this year at least.

Understood. And then on ARPU growth, could you discuss the contribution from pricing versus impressions?

For Q2, I would say it was primarily pricing.

There are no further questions at this time. I will now turn the call back to Indrajit Ponnambalam.

Thank you, operator. As I mentioned earlier, we're now pleased to answer some questions that investors have submitted to us in advance. So I'll pose a question and then either Nirav or I will answer.

So first question is, I keep reading about how AI search summaries are cutting into traffic for sites that benefit from search optimization. Does Nextdoor depend much on search traffic to bring in new users? Or does growth come from somewhere else?

All right. I'll take this one, Indrajit. It's a great question. And the short answer is we've never depended on search traffic, and that's by design. Unlike most platforms, Nextdoor was never built for the open web. Our content is only accessible to verified neighbors within our private network. So Google can't index it, and that means that SEO has never been a part of how we grow. Instead, what we've built is a self-fueled distribution engine, direct traffic from neighbors who find Nextdoor useful, notifications that surface relevant local content directly and virality through neighbor invitations and word of mouth.

And so this is an organic growth mechanic that's not reliant on any outside traffic source. And that's the part that I find genuinely exciting. We're not just insulated from this AI search disruption. We may be a big beneficiary because we believe people will continue to migrate away from general search and towards direct trusted agentic destinations. And that's what Nextdoor is, and we think we're very well positioned for that world.

Great. Second question, as a shareholder, when do you think Nextdoor could be profitable on a straightforward GAAP basis, not just adjusted EBITDA?

So why don't I take this one? GAAP net income profitability is a priority for us. It's not just an eventual outcome. Just to level set, we've already delivered positive adjusted EBITDA and positive cash flow from operations for full year 2025. And we guided today to approximately 10% adjusted EBITDA margin in 2026. And you just heard me point out that our Q2 results reflected 16 points of year-over-year improvement in adjusted EBITDA margin. So we are making real progress on the profitability front.

Our team looks at net income profitability closely every quarter. For us, the gap between adjusted EBITDA and net income is primarily related to stock-based compensation. So as you guys can see in our financial results, SBC as a percent of revenue has been shrinking consistently over the last few years as we scale revenue and gain operating leverage, which is bringing us closer and closer to positive net income.

So we're not going to commit to a specific time period today, but GAAP net income profitability is definitely where we're driving the business, and we're closing that distance each quarter.

All right. Third and final question. Beyond core display advertising, what do you see as the next major monetization lever? And how large could it become?

I'll take this one, Indrajit, and this will build a little bit on the question that Alex from Goldman Sachs asked earlier. So first, let me just reiterate, we think there's real runway within advertising itself. Display is obviously one format, but we're still early on video. We're still scaling self-service. And there are ad products and formats that we haven't fully built yet. Remember that the self-serve channel alone grew 28% year-over-year in Q1. So even within advertising, we're not anywhere near a ceiling.

We do see an additional large opportunity, and that is local lead generation. Recall that from the very beginning of Nextdoor, one of our prime use cases has been when a neighbor asks who has the best plumber or recommends a landscaper or searches for a local business, all of that conversation around service providers. And that's verified trust-based intent from someone whose identity and address we know embedded in a community that already has a relationship with that business. We are increasingly monetizing this intent in products like search, opportunity alerts and even in Faves. And while we're not ready to size it today, we do see a very large opportunity ahead, and that excites us.

All right. Thank you, Nirav. With that, I'm going to turn it over to Nirav for some closing remarks.

Thank you, Indrajit, and thank you all for joining us today. Before we wrap up, I just want to leave you with one thought. Over the past 2 years, we've talked a lot about rebuilding Nextdoor. And this quarter, I think we saw the results of that work. Platform WAU reached another all-time high. Revenue grew 15%. Adjusted EBITDA improved by $12 million over last year. Those numbers do matter. But what gives me the most confidence isn't any single metric. It's that they're all moving together.

We're finally seeing the cumulative benefit of hundreds of product improvements working together. We're seeing healthier communities creating better content. We're seeing better content driving deeper engagement, and that deeper engagement is creating a stronger business. That was always the strategy. And over the past 2 years, we've rediscovered it for Nextdoor. As AI changes how people find information, we believe that what becomes increasingly valuable isn't just information, it's trusted information created by real people, real people that are helping one another solve real problems, and that's what we've been building for nearly 15 years. And I still think that we're just getting started.

So thank you for joining us today, and we look forward to updating you in the months and quarters ahead.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon. My name is Jasmine, and I will be your conference operator today. At this time, I would like to welcome everyone to Nextdoor's First Quarter 2026Earnings Conference Call. [Operator Instructions] You may now begin your conference.

Thank you, operator. Good afternoon, everyone, and welcome to Nextdoor's First Quarter 2026 Earnings Conference Call and Webcast. I'm Indrajit Ponnambalam, Nextdoor's Chief Financial Officer. With me today is Nirav Tolia, our Co-Founder, Chief Executive Officer, President and Chairperson of the Board.

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 Q1 2026 Nextdoor investor update released today.

And now I'll turn it over to Nirav.

Thank you, Indrajit, and good afternoon, everyone. I'm pleased to report that Q1 was a standout quarter for Nextdoor. Platform weekly active users reached an all-time high, revenue grew 14% year-over-year, and we delivered meaningful improvements in profitability.

Here are the highlights. Platform WAU reached 22.3 million, marking our first positive inflection point in several quarters. Revenue was $62 million, up 14% year-over-year. And adjusted EBITDA was nearly breakeven, a $9 million improvement year-over-year. These results represent a real step change in the business. And what's especially encouraging is the momentum we built as the quarter progressed.

In our last earnings call, we laid out the 5 key drivers of our investment thesis. In Q1, we delivered material progress across each of them. Let me walk through that progress focusing on the first 3, and we start, as always, with our unique core asset.

Nextdoor is built on a verified address-based neighborhood graph spanning 350,000 neighborhoods, [indiscernible] 110 million verified neighbors, roughly 1 in 3 U.S. households. This quarter, we continued to strengthen the integrity of that graph by expanding verification for both neighbors and local businesses. That's what keeps Nextdoor real and what makes every recommendation alert and conversation on the platform meaningful.

Next is high intent engagement, where we are revitalizing the core community experience. We introduced threaded conversations, pinned comments and smarter linking. We added richer media in the feed and improved performance through latency and infrastructure work. And for the first time, we began down ranking self-promotional content.

At the same time, Nextdoor continues to show up when it matters most. As we saw again this quarter, engagement increases during severe weather events and moments of local need. During the winter storms, neighbors turned to our platform for real-time updates on road closures, power outages and which local businesses were still open. This was yet another example of how our product can serve as an essential lifeline for communities.

Our third driver is monetization pathways, and Q1 was an important proof point. We entered the year with a clear thesis. Closing the monetization gap does not require a step change in user growth. It requires better matching of intent to outcomes. And in Q1, we saw that working across multiple surfaces. For example, local service providers reaching neighbors at the moment they're actively asking for recommendations and seeing strong engagement and conversion as a result.

I will leave it to Indrajit to cover the fourth and fifth drivers, our validated business model and founder's mentality. But as we look towards Q2, we will stay focused on continuing the momentum. Our priorities include improving content relevance, deepening engagement, expanding recommendations, strengthening distribution and advancing our AI and machine learning capabilities.

Speaking of AI, I would like to close with why I'm more confident than ever in Nextdoor's position in an AI-driven world. As machine-generated content increases, truly verified human content becomes more scarce and more valuable. We've spent 15 years building a network of over 110 million verified neighbors across 350,000 neighborhoods. That network generates first-party content that is continuously refreshed, rooted in real identity and grounded in local context. That foundation puts us in a uniquely strong position. AI allows us to unlock significantly more value from that network by making it easier to find relevant information, summarize conversations and connect neighbors to the people and insights that matter most in their local community.

But what truly differentiates Nextdoor is the connection to the people behind that information. The neighbor who knows the best contractor, the parent a year ahead of you making the same school decision, the local business that others genuinely trust. That's also what powers our recommendations experience. When a neighbor asks for a plumber or a babysitter, they're not just getting a list, they're getting trusted input from people nearby who've actually made that choice.

AI can make these connections faster, more relevant and more accessible, but it cannot replace the trust and context that comes from real neighbors. And that combination, AI-powered discovery built on a foundation of verified local identity is what gives us confidence in Nextdoor's position in the years ahead.

With that, I'll hand it over to Indrajit to walk through the quarter in more detail and discuss our outlook.

Thanks, Nirav. As Nirav described, Q1 was a strong quarter that reinforced the progress we are making across the business. Let me walk you through the details.

Q1 Platform weekly active users, or WAU, which measures users who engage directly on the Nextdoor app or website was 22.3 million. This represents a meaningful sequential increase from 21 million in Q4, reversing the prior sequential trend and hitting an all-time high for Nextdoor. Year-over-year Platform WAU was up slightly from Q1 2025 to 22 million.

This sequential improvement reflects the compounding impact of the product investments we've made over the past several quarters, more relevant content, smarter notifications and an overall better user experience. As I've said before, Platform WAU is a lagging indicator of the product investments we're making. We are encouraged by the sequential improvement, although we continue to expect short-term fluctuations in WAU in the coming quarters.

Turning now to revenue. Q1 revenue was $62 million, up 14% year-over-year. This represents a significant acceleration from Q4's 7% year-over-year growth and finished well ahead of our guidance range of $57 million to $59 million. Q1 is historically our softest quarter for advertising demand, which makes this performance especially encouraging.

Revenue growth was broad-based. Our self-serve channel continues to be a growth engine, growing 28% year-on-year and now comprising roughly 68% of total revenue, with continued improvement in advertiser performance, revenue yields and retention. Every major monetization channel contributed to growth this quarter from small local advertisers to large national brands.

Our ad stack improvements, including AI-assisted targeting and optimization and new ad formats are delivering measurable results for advertisers of all sizes, increasing eCPMs while reducing lower quality backfill.

Outside the U.S., we also expanded self-serve into Canada and brought click optimization to the U.K., our first ML-powered performance product in that market, delivering meaningful CPC reductions in our beta period.

Q1 GAAP net loss was $11 million or a negative 19% margin, representing 22 points of year-over-year margin improvement. Q1 adjusted EBITDA was near breakeven at negative $200,000. This compares to the negative $4 million to $6 million we guided to last quarter and represents an approximately $9 million improvement year-over-year. Even in our seasonally softest quarter, we achieved near breakeven adjusted EBITDA, a meaningful milestone that underscores the operating leverage in our model.

We continue to drive productivity improvements across the organization. Revenue per employee increased 31% year-over-year in Q1, building on the gains we've driven over the past 2 years.

Turning to capital allocation. During Q1, we repurchased 17 million shares for $29 million at an average price of $1.69 per share. We ended Q1 with $373 million in cash, cash equivalents and marketable securities, and we continue to have no debt on our balance sheet.

Today, we are also announcing that we have authorized a new $100 million share repurchase program effective through June 2028. This gives us the flexibility to act opportunistically while preserving our ability to invest in growth and pursue strategic opportunities.

As Nirav outlined, these financial results reflect drivers 4 and 5 of our investment thesis in action. A business model validated through the improved operating leverage in our financial results and the discipline around trade-offs that aligns network health with maximizing long-term shareholder value.

Now let me turn to our financial outlook. Given the momentum we are seeing, we are providing guidance for both Q2 and updating our full year 2026 outlook. For Q2 2026, we expect revenue of $71 million to $73 million and adjusted EBITDA of $4 million to $6 million. Based on our strong start to the year, we are raising our full year expectations. We now expect to achieve approximately 10% revenue growth for the full year and an adjusted EBITDA margin in the high-single-digit range, up from the mid-single-digit margin guidance I provided in our last earnings call. This reflects our expected revenue trajectory, continued operating discipline and expanding leverage we are seeing across the business.

Now let's turn to some Q&A, which we will structure in a similar manner to last quarter. We'll start by taking live questions from our covering analysts. After that, we will take some questions submitted by our investors.

With that, operator, let's open the line for questions.

[Operator Instructions] Our first question comes from Jason Kreyer with Craig-Hallum.

Great. Nice work. Wanted to start on the Platform WAU and maybe if you can just unpack the turnaround there. I'm curious the strategy, how the strategy evolves to take 100 million users that are on the platform and get more of those into that 20 million WAU and grow the more engaged audience over time?

Okay. Thank you for that question. And this is really kind of our primary objective at Nextdoor, which is making the most of not just our total registered audience of now over 110 million verified users but also attracting new users.

Now what I'll say is much of the work that we've done over the last 2 years, has been on, I'd say, repairing the foundation and putting ourselves in a position where we can reduce the things that we know may use short-term engagement but don't lead to positive NPS over time. And so you may have seen some things that made WAU go down. You may still see some things that make WAU go down. Over time, though, we're pretty confident that we're building a better foundation, not just for our existing users but to then enable us to resuscitate the lapsed users because there's a pretty big gap between 22 million and 110 million registered and then ultimately to attract new users to the platform as well.

I will mention that we have not been aggressive about trying to remarket to the lapsed users because we don't believe that the product is in a position yet where we're playing from a position of strength. But I'm delighted to say that we're seeing some results now that tell us that we're headed in the right direction. And that's why WAU trended up, and we feel really good about that.

Can you perhaps just double-click on kind of the platform and what's not where you want it, but what it takes to get where you want it, so you're more aggressive on that WAU growth?

Sure. It's actually pretty simple. We boiled it down to kind of one very critical user need. And that is when our neighbors come to Nextdoor, they want relevant content. And so if you're in a neighborhood that's not very active, it's hard for us to show you relevant content. If you're in a neighborhood where the discussion is varying off topic, you're not going to necessarily get relevant content. If you're in a neighborhood who hasn't visited in a long time and we don't have very good no model for you, we can't show you relevant content because we don't know exactly what you're looking for. Those are all things that we're addressing.

We're up-leveling the quality of content overall so that everyone has an opportunity to see more relevant content. We're focusing on neighborhoods that have less liquidity so that when those neighbors visit the platform, they find great content. And we're investing a ton in machine learning and profiling our neighbors in a way that we can personalize the experience and find the content that they're looking for.

But it really all comes back to one very simple thing, which is the more content we have, the better we can be at targeting that content and making it relevant to our users. And so most of our efforts are around increasing the quality of content on Nextdoor. And we need to increase quantity as well, but we're taking a quality-first view there.

That was great. Nirav, one follow-up maybe. Just you'd mentioned that momentum had built as the quarter progressed. Can you just elaborate on what transpired over the course of the quarter that improved that performance?

Yes. I'll give you something that we didn't talk about in the results that I think is a leading indicator that makes us very optimistic that we're headed in the right direction. And it's something that we wouldn't typically report because it's an early thing that then leads to lots of chain reactions on the platform. But that metric is we grew the number of unique contributors over this period of time. And what that means is we grew the number of people who are adding content to the system on Nextdoor.

We have a base of really great high-frequency users who create a lot of the content. In fact, if you look at most of these user-generated content platforms, 1% of the users create 99% of the content. The same is going to be true of Nextdoor. But if we can grow that base, then we start to see lots of really positive effects.

And in this period, we were able to grow that contributor base that resulted in more content, which resulted in more reasons for people to visit Nextdoor, more relevant content when they visit Nextdoor and all good things start to happen on the platform. And so one of the things that we've done over the last 2 years is we've gone pretty deep to understand the core aspects of the foundation of the system, so we can go and fix root causes versus just deal with a superficial layer on top.

WAU in and of itself, it's actually an output metric. It's not an input metric. An input metric is how many unique contributors do you have. And when we see that number growing, we have a lot of conviction that we're headed in the right direction.

Our next question comes from Jamesmichael Sherman-Lewis with Citi.

Great to see the result. First, Nirav, revisiting your closing commentary on AI and Nextdoor trusted human content, could you talk more broadly about how you see the Nextdoor evolving, particularly following the introduction of features like threaded conversation and pinned comments but also as you onboard more publishers and reduce self-promoted content? What's changing?

Yes, that's a great question. And I'll just elaborate a little bit on the closing about AI because I've never actually been more bullish on the AI future for our industry and I've also never been more bullish on our opportunity to be a big part of that. Because I truly believe we're one of the few companies that can use the power of AI, which is furnishing machines and technology, but combine it with verified human content, data and profiles to really create kind of the best of both to take the best of technology and the best of humanism and provide the best solution for users as a result.

The feed itself will continue to be more personalized. So how do you use AI and really machine learning in a feed? You don't want the same experience for every user on Nextdoor. The users who really want news, they should see a lot of news. The users who actually want a lot of neighborhood conversation, they should see a lot of neighborhood conversation.

The history of Nextdoor has been that everyone in the neighborhood saw exactly the same feed. Well, that is no longer the case, and we see much better outcomes using AI to personalize the feeds. That's number one.

Number two, we will increasingly be experimenting with summarizing the feed by using AI so that you can get the value of reading lots of threads in a smaller little concise nugget. Now you see this all over the web, right? And so we should be doing this on Nextdoor as well. We need to make sure that we do it in the right way so that contributions and the ability to reply to these threads continues to happen. But we're seeing, I think, some encouraging different results and experiments that we're doing that give us the conviction that we can use AI in one of the most powerful ways that you can use it, which is to summarize and make more useful existing user-generated content.

The final thing I'll say is we're starting to think a little bit more deeply about are there services other than the feed that can be really valuable on Nextdoor, whether that's your messaging inbox or whether that's another surface altogether such as groups or for sale and free. And we're very, very early, and that's just exploratory. But what we're realizing is we have more than the feed as a resource on Nextdoor.

We have multiple surfaces and we can use AI across all of those services, and we're doing the same thing. We are taking the best of AI technology, which summarizes and make things more personalized and make things more relevant, and we're combining that technology with verified human content that's proprietary that we generate from people that we know well. And we think that's long term and unbeatable combination.

That's very helpful. I appreciate the color. Second question here. On your pillar for multiple monetization pathways, I realize we're very early days here, but things like opportunity alerts or maybe even a subscription offering could be interesting. Is there ultimately a meaningful non-ad revenue opportunity in the future?

Yes. I'm glad you asked that question because opportunity alerts has definitely been a big bright spot for us. And we are increasingly thinking about not just investing in the feed advertising revenue stream because that's growing. As you see, it's very vibrant, and we're performing for our advertisers. But we do believe that whether it's lead gen or things that we haven't even thought of, there are non-ads, nonfeed revenue opportunities inside Nextdoor.

Opportunity Alerts is one of the first, and it's something that is very powerful because it has strong product market fit. Opportunity Alerts works because neighbors come to Nextdoor looking for service providers, and we can go proactively to service providers and tell them that we will connect them or match-make them between the neighbors and the service providers that want to serve those neighbors based on expressed intent.

And so it's really good for neighbors. It's really good for the service providers, and it performs. And we see that both in the pricing as well as the retention. And so it's still early for Opportunity Alerts, but it is certainly one of the more exciting monetization vehicles that we've seen over the last couple of months.

Our next question comes from Naved Khan with B. Riley Securities.

This is Ryan Powell on for Naved. So first, we are wondering which of the new features you have launched or resonating most with users and how it's impacting the product pipeline? And then second, breaking down advertiser growth between large versus small advertisers on the platform?

Okay. Thank you for the question. I'll take the first and then Indrajit will take the second. We have a number of questions that were submitted by our investors. And so I'm going to come back to this in a little bit more detail, but I'll just start by saying that one of the features that our users are really excited about and I'm most excited about is a feature called Ask, which utilizes AI to take existing content from the 14 or 15 years of conversations that we have between neighbors, between verified human neighbors on our platform and uses that information to proactively answer questions either on demand in an agentic way or when neighbors come to Nextdoor and just post in the feed.

And so I'll talk more about that because the question was asked by one of our investors as well. And so give us a little bit of patience on that, they are much a much more elaborate answer, but that is a feature called Ask. And I'll just say that the really exciting thing about the feature is that it has given us many new ideas on how to deploy AI into the consumer experience.

And so while you hear a lot about AI transforming companies operationally, making them more efficient, making them more effective in the way that they do their workflows, we're doing that at Nextdoor, but we're also using AI inside the product itself. And that's what's really exciting about Ask because it's one of the first features we've seen where we can combine the power of AI with the user-generated content that has been our bread and butter for the last 15 years and create a better experience for users.

I'll let Indrajit talk about the composition of advertisers.

Yes. So it was a very good quarter on revenue growth, as you saw a 14% growth, and it was pretty broad-based across all of our revenue channels. So that's very encouraging. I'd say our strongest growth is probably in our direct sales business with our larger advertisers. Home services continues to be a standout category for us, but we saw quite a bit of growth in other categories such as telco and tech, healthcare, financial services, all performed well, sort of broad-based portfolio strength.

We saw a big uptake in advertiser interest in our video products. So that's very encouraging year-over-year. And you saw in my comments that self-serve continues to sort of be a larger share of our ad revenue as it's not necessarily managed to shrinking, but self-serve is increasing that's showing sort of advertisers are interested there.

SMB also grew and we saw strength across the board there, too. So home service being the strongest category. We saw meaningful increases in average spend per advertiser year-over-year, which is also encouraging for us. And then finally, search also, we sort of improved our monetization in search. So I would say it's a pretty broad-based solid quarter for us.

There are no questions registered. [Operator Instructions].

Great. Thank you, operator -- all right, I'll jump in. Thank you, operator. As I mentioned, we are now pleased to answer some questions that investors have submitted to us in the last couple of weeks. So actually our first two questions come from Eric Jackson, one of our investors. So first question, can you share more about the traction you are seeing on local business inventory, including onboarding pace and retention and marginal contribution economics?

Okay. I'm going to take that question. And I want to start by saying that we think of our opportunity with small and local businesses as a genuine win-win-win. And I'll explain what I mean by that. It's a win for local businesses because they largely lost their traditional advertising channels. There's no more Yellow Pages. The big platforms have largely left them behind. And so we can fill the gap there for them and give them a cost-effective and highly performant way for them to reach their customers.

And this is a win for neighbors because neighbors genuinely want to find and support businesses that they can trust that are in their local area. And because of the way Nextdoor works, neighbors are recommending these businesses. They're vouching for them. And so it's a great match between well-performing businesses and neighbors who are looking to spend money where they live.

Finally, it's a win for Nextdoor because this market reinforces our core mission of strengthening local communities, not to mention that it's structurally efficient to operate because it tends to be in the self-service category.

On the specifics, I'll say that spend per advertiser is growing, which is a really positive signal. Churn is roughly in line with what you'd expect in this part of the market, but it's still higher than we'd like. And that's an area of continued focus.

Now speaking of these structural events that I talked about, serving local businesses is a very efficient model for us. There's less overhead, better unit economics as we scale, and it's a key driver of the self-service growth that you've been seeing in our business. This really happened for a number of quarters now. We're still early, but the signal is positive, and this is an area that we're definitely leaning into.

Let me go to our second question on AI features, what are the early engagement metrics? And how is that translating to monetization, if at all yet?

Okay. I'm excited to talk about one of the features that I mentioned already Ask because I do believe that it opens up lots of different opportunities for us. So Ask is this exciting feature. And what's exciting about it, as I said, is the way that it's evolved because it says a lot about where we're headed. We launched it as an AI assisted. We actually called it phase. It was part of the new Nextdoor that we launched. Neighbors can ask questions and get answers generated from 14 years of verified neighbor conversations. It was a local agent. But it was real people from real neighborhood. It wasn't the open Internet. And so that local authenticity is something that we felt then and we understand today is absolutely true is something that just can't be replicated.

As we watched how users engage with this gave us a new idea. Why wait for people to find the feature, which was outside of the feed and then ask a question? It turns out there are conversations happening in the feed every single day. Members aren't online at that particular moment to respond. So we've begun to embed Ask directly into those gaps. And here's the important part. We use the power of AI to summarize and surface real answers and they are real answers from that 14-year corpus. So it's neighbors answering neighbors. It's just happening asynchronously, all enabled by AI.

The results have been very encouraged. Engagement's up, there are more comments, the quality of the conversation goes up, and there are more organic mentions of businesses. This has really given us a playbook for how we keep deploying AI across the product in ways that feel very native and differentiated to who we are.

There was that mentioned about monetization. I just want to say monetization is not a near-term objective for Ask, driving engagement is. Because ultimately, when neighbors are actively asking for recommendations and getting real answers from their neighbors, that is exactly the high intent environment our advertisers value. And we will develop the commercial layer on top of that healthy foundation.

Our third and final question came from a few investors. And the question is regarding your path to profitability and free cash flow is the past primarily revenue-led? Or are there structural cost reductions coming? So why don't I take this one as it's a great note to end our Q&A on.

So first, just as a reminder, we are already operating cash flow and free cash flow positive on a trailing 12-month basis. So the path to growing free cash flow is really about compounding what's already a good start.

Second, to address the question directly, we expect revenue to be the primary driver. Our business is beginning to demonstrate meaningful operating leverage, which means incremental revenue growth flows through to the bottom line at quite an attractive rate, which is encouraging. But that being said, we're not standing still either on the cost side. We will continue to leverage AI and many other technology advances to optimize how we operate, and we expect that discipline to be a consistent feature with how we run the business going forward.

So with that, Nirav, I'm going to turn it over to you for closing remarks.

Okay. Thank you, Indrajit. And I want to thank all of you for joining us today. This was a fun one because Q1 was the strongest first quarter in our company's history. Platform WAU inflected positively, reaching 22.3 million. Revenue grew 14% year-over-year, and adjusted EBITDA came in near breakeven in what is typically our seasonally softest quarter. Most importantly, as you heard from Indrajit, we're raising our full year outlook. And those are the numbers we think they tell a clear story.

Now what gives me the most conviction is not just a quarter. It's the moment we're in. As AI makes the digital world more synthetic, the network that is real, local and human becomes more valuable. And that is Nextdoor. That is what we're here to build. We know there's still significant work ahead to fully realize our potential, and we're going to remain focused on executing with ambition and discipline. But I think you've seen today that the progress is undeniable.

So we thank you for listening and for your support. We look forward to continuing to share the progress.

This concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

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. [Operator Instructions] Thank you. You may now begin your conference.

Thank you, operator. I'm Nirav Tolia, 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 Ponnambalam, 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. Nextdoor 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 in identity and location is our core asset. It is what differentiates Nextdoor, 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 2 years, we have 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 Nextdoor.

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 2 years ago to positive adjusted EBITDA in 2025. We expect 2026 will build on this momentum, and this is a 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 improved 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 the goal of maximizing long-term user value as notifications improve. As a result, we expect Platform WAU will continue to fluctuate in the near term, which is an intentional trade-off as we focus on relevance, retention and overall improved user experience.

Now let's turn to revenue. Q4 revenue was $69 million, up 7% 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 negative 6% margin, representing 13 points of year-over-year improvement. Q4 adjusted EBITDA was $8 million, an 11% 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 0 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 million 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. First, 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.

Thank you, Indrajit. You made a strong impact in a short period of time. The discipline, perspective and cross-functional leadership you're bringing are raising the bar across the company, and I'm excited about the role you'll play in our next chapter. We are fortunate to have you on the team.

Before we move to Q&A, I would like to wrap up our prepared remarks by specifically articulating our investment thesis, which rests on 5 pillars. First, our core asset, the neighborhood graph. Nextdoor is built on a verified address-based neighborhood graph covering 350,000 neighborhoods and more than 105 million verified neighbors, roughly 1 in 3 U.S. households. Because identity and location are verified, neighbors come to Nextdoor for utility, not passive scrolling. We have built a trust-based graph that is differentiated and difficult to replicate.

Second, intent-driven engagement. Our platform centers on real-world decisions, finding a service, responding to an alert, getting a recommendation. The value of the network appears when intent is high. We are not optimizing for entertainment and scrolling. We are optimizing for relevance and action.

Third, multiple monetization pathways. High intent creates commercial opportunity. We see substantial room to close the gap between user intent and monetization through contextual native advertising and lead generation, all that connects local demand with local supply. This is particularly compelling with small- and medium-sized businesses, a fragmented market with lower digital penetration and clear ROI expectations. Importantly, improving monetization does not require a step change in user growth. It simply requires better matching of intent and outcomes.

Fourth, a validated business model. We are demonstrating that this model works. We're capturing a differentiated high-intent audience. We have multiple monetization formats, advertiser retention and ROI are improving, revenue per employee is expanding. And as Indrajit outlined, operating leverage is emerging in our financial results. These are early but concrete signs of validation.

Fifth and finally, a founder's mentality. Turnarounds require a precise understanding of the core asset and disciplined execution around it. A founder's mentality brings both. This translates into an approach that prioritizes long-term thinking, disciplined capital allocation and an uncompromising focus on network health. It means resisting short-term monetization tactics that erode trust. It means making decisions that strengthen the platform over years, not quarters. That founder's mentality underpins how we are executing this turnaround and how we are investing for durable growth. It also shapes how we approach AI, which we strongly believe will drive a material transformation, not just for our company, but for our entire industry. We are not pursuing AI as a feature cycle. We are applying it to a proprietary asset built over more than 15 years, a verified address-based neighborhood graph that generates content and context that does not exist anywhere else. The value of AI here is not a generic capability. It is based on the uniqueness of our data and the community engine that produces it. By combining our hyperlocal real identity graph with AI, we can enhance relevance, improve advertiser performance, increase efficiency and most importantly, deepen our competitive moat. As such, AI does not compromise our thesis. It strengthens all parts of it.

The opportunity in front of Nextdoor has not changed. What has changed is the rigor and discipline with which we are executing. When viewed through the right lens, one centered on trust, intent and durable economics, Nextdoor represents a differentiated platform with a path to sustainable long-term growth that we believe remains underappreciated. And with that, we're happy to take your questions. But before we begin Q&A, let me briefly outline how we'll structure it. We'll start with questions from our covering analysts. After that, Indrajit will share some of the most common questions we received from individual investors over the past few weeks. We appreciate the engagement and look forward to the discussion. With that, operator, let's open the line for questions.

[Operator Instructions] The first question comes from Jamesmichael Sherman-Lewis with Citi.

Two here, if I may. First, encouraging to hear frequency and engagement quality improving. Can you add more color on the specific product changes that are resonating most with users as we look at the new UI, recommendations and notification changes, et cetera? And are you seeing any delta in usage trends from existing versus newer user cohorts? And then I have a follow-up.

Great. Well, James, Michael, it's good to hear from you. And I'll just give you the color on what we're seeing that's working. I'd say, in general, we are slowly but surely converting our product to something that feels much more utility-centric and is driven by intent. And so the things that are driving deeper engagement are whether they're big things like a greater focus on recommendations and local news and other things that give you the information you need to make decisions or whether they are smaller things that are at the ecosystem level, like more relevant notifications, using AI to better personalize the feed. It's a series of different things that we need to do because at the end of the day, the product experience is not just one feature. It's a set of lots of different features, and we have to make all of them better. And if we do, we start to see compounding. And I think we're starting to see the very beginnings of that, and we're excited about it.

You were going to ask a question Yes, a follow-up here. As we think about the advertiser base and specifically the momentum in the self-serve segment, -- can you revisit any budget trends by vertical or advertiser size? And specifically, any update on spending patterns from larger advertisers?

Okay. Thanks for the question. We did have the strongest revenue quarter in our history. And so I would say across the board, we saw strength from advertiser demand. And we continue to use AI to generate better outcomes for those advertisers. I'll let Indrajit chime in a little bit on a few of the specifics, but I think it was really better demand and better performance across the board.

Thanks, Nirav. Yes, I would echo what you said. It was pretty broad-based what we saw in Q4, which was obviously a very strong quarter for us. There were no particular verticals that stood out as significantly sort of outperforming the others. And as I mentioned in my remarks, we are seeing good trends on number of advertisers, net new ad revenue. So we feel like those are headed in the right direction.

[Operator Instructions] The next comes from Jason Kreyer with Craig-Hallum.

Just want to build on the last question. Any updates on building out a programmatic ad stack for the large advertisers? It's been kind of a year since we've talked about more volatility in that category. I think last quarter, you kind of said you were stabilizing things with SSPs and DSPs. So curious where that's at and if you think that can drive more growth throughout 2026 just as you get that stack fully implemented.

Sure. So we need to continue investing in programmatic formats and the programmatic ad stack in general because that's what large advertisers are seeking. What you heard a year ago is that there were large advertisers who said that they wouldn't consider us until we started to roll out those improvements to the platform, and we've done that. And so as we have done that, we've seen greater demand. As we continue to invest in that, we should see greater demand as well. But it's a part of the whole. I wouldn't call it out as a particular focus of ours. It's something that we need to do to be competitive, and so we will continue to do it. And we do expect demand to go up as a result. But it's not something that I would point to as some specific opportunity that we think is outsized that we're going after aggressively.

And Nirav, if I could just add, I think what we've seen over the last 12 months since we first introduced programmatic is really strong and improving performance on our direct sales ourselves. We're seeing strong demand from advertisers there, which we're able to monetize quite well. So I think programmatic has been a great supplement to that, but we're also encouraged by our own performance, too.

Great update. And then just maybe another one in terms of the evolution of recommendations. I know that you've kind of tweaked that kind of go-to-market or the rollout of recommendations over the last couple of quarters. What's in store for 2026? How broad is that rollout now? And how much does that change in the next few months?

It's a great question. And I would say that in 2026, recommendations and in general, making it possible to easily find the absolute best small businesses in your neighborhood is a major priority for us. And so whether that means ensuring that when neighbors ask questions, they are answered more quickly, whether that means using the power of AI to summarize old conversations or new conversations so that you can get multiple recommendations in one fell swoop or if it means bringing those great SMBs on the platform so they can respond directly to neighbors so that it's a closed-loop kind of experience, those are all things that we're focused on in 2026. We think this is one of the really unique advantages that Nextdoor has. We are a place where you come to get real recommendations from your neighbors. It's not bots that are creating the recommendations. It's not star ratings. It's neighbors that are willing to vouch for the small businesses that they believe in. And this is a value proposition that we need to get much better and much more forward in front of our consumers because there's nothing like it across the web.

The next question comes from Naved Khan with B. Riley Securities.

This is Ryan Powell on for Naved. So first, we appreciate the color in the prepared remarks, but we're wondering a little more on how much more work needs to be done on moderating the notifications and e-mails and whether the current frequency is about what you expect long term? And then I have a follow-up.

Okay. Thank you for the question. I think that we will never stop working to make the notifications more relevant. The way that it goes with notifications is that the more relevant they are, the more you can send. The problem with sending irrelevant notifications is it may not show up in the near term, but in the long term, it does, either through a lower NPS score or even worse when people unsubscribe. And so we've taken a very, very conservative view as it relates to notifications. We've made the difficult decision to focus on the long term. And as a result, we've pulled back quite a bit. And frankly, we'll continue to do that if it's the right thing for neighbors. So as we build more relevant notifications, we can be more aggressive with them, and we will. I'd say today, we still have a lot of work to do. And we're going to be much more long-term minded versus feel like we need to pump out as many e-mails and mobile notifications as possible just so we can pump up the metrics. What's really important to us is ensuring that when someone receives a notification, they feel like it's relevant to them. And until we can do that with real regularity, we'll continue to be conservative in how many we send out.

Great. That makes sense. And then second, on the Faves launch. Where are you currently in rollout? And how has it impacted the quality of content in neighborhoods that it is live?

Okay. It's a very good question. And Faves is part of that overall ecosystem of recommendations and small businesses. And in general, one of the things that we feel that Nextdoor should be truly great at, which is helping you find the best service providers, the best businesses, the best places to spend your money in your neighborhood. I don't think that this year, we will think about this as some large rollout. We're going to think about it as a series of improvements that are ongoing and iterative. And so at any moment, you may think that it's mildly improved. But if you look back at this over a year, I think you will see some major progress. So versus thinking about this as there was a launch and then we've got a big release next quarter and then another release the quarter after that, we're thinking about this much more like traditional web development, where we should have deadlines and milestones and releases every few weeks. And you should feel like the product is getting gradually better and better and better and better.

There are currently no other questions in queue. [Operator Instructions] With that being said, I'll pass it back over to the team for Q&A with the analysts.

Great. Thank you, operator. As Nirav mentioned, we are pleased to now answer some of the most popular questions that investors have submitted to us in the last few weeks. So let me start with our first question, which is on AI. What has been the progress of implementing AI features into the app? What are the main bottlenecks to implementing more AI features?

Okay. So let me start by saying that we are of the mind that AI is as transformative as anything that's happened in our lifetimes in the technology industry. So we're true believers when it comes to the power and potential of AI. We think that it should ultimately shape us and has shaped us already in 3 different ways. It should make the company more efficient. It should make the consumer product better and it should increase advertiser optimization and performance. We've done things in all 3 of those areas. And much like I described our Faves rollout as not one big bang, but rolling thunder that is increasingly just something that's natural and something that we look to as part of our normal cadence over time, that is the way that we will continue to implement AI solutions. We don't see AI as some vertical thing that we focus on that's outside of the main set of things that we're doing. We see AI as a powerful technology that needs to be the foundation of everything that we're doing. And so the real opportunity for us is to take our incredible community system, which is uniquely human and it's verified and you have actual neighbors that are creating content and combine that with AI to create content that ends up being higher quality, more relevant, but still uniquely human. And that's a very unique opportunity that we think exists for Nextdoor.

Great. Second question is on platform differentiation. How is Nextdoor truly different from other social media or home services apps on the Internet?

So I would go back to what I articulated with our investment thesis, and that's point number one. The core asset of Nextdoor is a neighborhood graph. It's a graph of people that have verified identity and real location. That then enables a trust-based network that's very different than the other social networks. That's difference number one. Difference number two is many of the social platforms today engage in what I would describe as one-to-many communication. There's content on the social network, and then there are consumers of that content. Followers is typically what you call those consumers. And you have one content creator that's communicating with lots of different followers. On Nextdoor, it's not one-to-many communication. It's many-to-many communication. It's more about community. You post on Nextdoor. And then what's really interesting is the responses that come to your post. And those responses are not just from one person. They're from a number of different people, and they're all your neighbors. And so it creates a completely different dynamic because it's not about the one big content creator and then you are responding to that content creator, but you're not talking to all the other people that are responding to the content creator. Nextdoor is a community-centric social network. And increasingly, that's different than the other things that we see across the web.

Okay. Third question is on vertical-specific monetization. Question was, would you consider leaning more heavily into vertical-specific use cases like home services and pet services?

So Nextdoor has, from the very beginning, been a very broad local social network, which means there are a variety of different use cases that may span from simply getting to know your neighbors to understanding what to do this weekend in your neighborhood to asking for help to find a lost pet to coming together in times of crisis to, of course, finding recommendations for the best businesses in your neighborhood. Those are a series of very different things. And even within those verticals like finding the best business in your neighborhood, there are lots of subverticals as well. So this is a big challenge for us. It's also an incredible opportunity. In the highest value verticals and service providers is one of them, we should actually build more vertically specific features and functionality. Whether that ultimately looks in the app like a series of channels or whether there continues to be a single monotonic news feed that then actually branches out when you need it to, -- those are the things that we will experiment with. But ultimately, we know that particularly for the highest intent and the best monetization use cases, we do need to push deeper and build more vertically specific solutions.

Okay. Thanks, Nirav. All right. Now on to our last question, which is related to cash management. A couple of folks -- several folks asked, what is your philosophy on the use of your cash? So why don't I take this one? First, as a reminder, we ended 2025 with slightly over $400 million of cash and marketable securities and no debt, which we view as a major strategic asset of ours. Also, as you saw in our results, we reported positive adjusted EBITDA and positive cash flow from operating activities for full year 2025, which we find very encouraging. And look, we do not assume that access to capital markets will always be readily available for companies of our size. So preserving liquidity gives us important operating and strategic flexibility. And for us, really any use of cash, whether for organic investments, external opportunities or capital return, it must all exceed our return on investment thresholds. So really, as we look at it, we continue to regularly evaluate all options for our cash, and we use those objectives as we evaluate the opportunities before us.

Okay. With that, we're going to wrap up this call. We really appreciate your interest in Nextdoor, and we look forward to continuing to communicate our progress on this turnaround. We are very optimistic about our future, but we know that there is a lot of hard work ahead. Stay tuned.

Thank you, operator.

This concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

Good afternoon. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to Nextdoor's Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. Thank you. You may begin the conference.

Thank you, operator. Good afternoon, everyone, and welcome to Nextdoor's Third Quarter 2025 Earnings Conference Call and Webcast. I'm John T. Williams, Nextdoor's Head of Investor Relations. With me today is Nirav Tolia, our Chief Executive Officer.

As a reminder, 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. Reconciliation of these measures to their most directly comparable GAAP financial measures can be found in the Q3 2025 Nextdoor investor update released today.

And now I'll turn it over to Nirav.

Thank you, John, and good afternoon, everyone. I'm Nirav Tolia, Co-Founder and CEO of Nextdoor. Q3 was a quarter of steady execution and our results are consistent with the plan we've communicated. We delivered our highest quarterly revenue ever and generated positive Q3 adjusted EBITDA. In addition, we are on track for positive adjusted EBITDA in Q4 and are reaffirming our expectation for full year 2026 breakeven.

Let's talk more about Q3. Revenue grew to $69 million, up 5% year-over-year and reflecting strong demand from self-serve advertisers who continue to be drawn to our Nextdoor ads platform. ARPU improved 8% year-over-year even amidst reduced ad load. On the large customer front, we delivered on our commitment to complete our programmatic supply integrations, enabling deeper collaboration with scaled parties who are looking to reach audiences on next door more efficiently.

Our self-serve channel continues to be a growth engine. Q3 self-serve revenue grew 33% year-over-year and made up roughly 60% of total revenue. Advertisers saw meaningful gains, including higher click-through rates and lower cost per click. We also grew our active customer base and associated net new advertiser spend.

In short, our ad tech investments are delivering results and we expect the introduction of new ad formats and deeper AI integration over the coming months may further improve monetization. Q3 platform WOU, defined as users who engage directly on the Nextdoor APRA website was $21.6 million, a modest sequential decline. This was driven by an intentional decision to reduce notification and e-mail volumes, reflecting our focus on engagement, quality over quantity.

In the short term, platform while may continue to fluctuate due to seasonality and our continued commitment to delivering the best user experience. As I've said many times before, we will deliberately make trade-offs even if they are difficult, all in the interest of driving long-term and sustainable growth.

Continuing Q3 GAAP net loss was $13 million. Q3 adjusted EBITDA was $4 million, a positive 6% margin, representing 8 points of year-over-year improvement. This reflects our strong revenue performance and continued focus on operating the company as efficiently as possible.

Further, revenue per day has now increased 21% year-to-date. And at quarter end, we had $403 million in cash, cash equivalents and marketable securities, along with 0 debt.

Now let's move on to our financial outlook. We expect Q4 revenue between $67 million and $68 million and adjusted EBITDA in a range between $3.5 million and $4.5 million. This implies full year 2025 revenue growth of 3% to 4% and an approximately $3 million adjusted EBITDA loss. We do continue to expect full year adjusted EBITDA breakeven in 2026.

Here are some key factors to consider related to our Q4 outlook. Our Q4 guidance reflects normal seasonality and a full quarter of savings from our recent workforce reduction, partially offset by incremental platform investments. We do not plan to increase ad load in Q4 or into 2026 as we continue to prioritize the best user experience. Consistent with this approach, we also expect to intentionally reduce new user acquisition efforts during Q4. Those are the numbers, and now I'm excited to go into more detail about our product, the true driver of long-term value.

The first phase of our transformation marked by the launch of the new Nextdoor, rebuilt our foundation. We reset our expense base, strengthened our team and instilled greater operating discipline. At the same time, we enriched the platform by pairing user-generated content with trusted third-party local information that drives meaningful conversations and real-world utility.

At quarter end, more than 4,000 local publishers are live on Nextdoor, and local news now accounts for approximately 7% of total feed content. We also created a real-time local alert system to help stay informed and safe during high-impact local events such as fires, inclement weather and utility outages. New integrations include WASS real-time traffic and road updates and instant earthquake alerts from the U.S. geological survey.

Looking ahead, we will continue leveraging third-party content to reinforce Nextdoor as the neighborhood of go-to source for what's happening nearby. This foundational work has helped clarify what users truly value and has given us a stronger and more sustainable baseline for growth. That said, the takeaway is clear. We must continue to dramatically increase high-quality content and distribute it more effectively to the right users at the right times.

So now we're entering the next phase. We're moving beyond the content feed to build a stronger neighborhood ecosystem, grounded in a vibrant, useful and trusted local community. Community driven content has always been part of our DNA. Our opportunity now is to modernize how we surface and connect it, focusing on the interactions that drive real-world outcomes, providing utility for neighbors and visibility for local businesses.

Authenticity is what matters, and we have a material opportunity to invest further in Neighbor recommendations. Neighbors want to know why a business is trusted. Real recommendations for VERIFI neighbors build that trust and we know that's what sets Nextdoor apart.

With this in mind, we plan to reinvent our recommendations ecosystem to turn authentic word-of-mouth into actionable insights that help Neighbors make smart decisions and help local businesses thrive. We believe these efforts can meaningfully improve engagement and monetization all across our platform.

Ultimately, our goal is to create more relevant and trusted connections that reflect how neighbors engage in the real world with each other and with local businesses. The first phase gave us stability and insight. The current phase is where we take bold swings and begin to see the results.

As we move forward, we'll focus on a few key indicators: quality and quantity of content, depth of engagement and the value we create for advertisers. We will avoid chasing short-term metrics in favor of investing in durable compounding growth initiatives. Transformation takes focus. It takes courage and it takes time. It is not a straight line and it's neither predictable nor immediate but it represents the best path for us to unlock the next phase of growth for Nextdoor and create lasting value for our users, advertisers and shareholders.

Before wrapping up, I'd like to share an important leadership update. I'm pleased to announce that we've hired our next Chief Financial Officer, Indrajit Ponnambalam will be joining Nextdoor as CFO effective December 1, 2025. Indrajit brings more than 2 decades of experience leading high-performing finance and operations teams most recently as CFO at Premion, an industry-leading connected TV advertising platform and prior to that, at Match Group, Time Warner Cable and AOL. He has a proven track record of driving growth of achieving operational excellence and financial rigor at scale, and we are thrilled to have him on board.

In closing, we remain laser-focused on building a platform that makes neighborhoods more vibrant, more connected and more useful. At our core, Nextdoor is about real local connections that create value every day. That vision will continue to guide us in everything we do. Thanks for joining our earnings call today. I'll now turn it over to the operator to begin Q&A.

[Operator Instructions]

Our first question comes from the line of James Sherman Lewis from Citigroup.

First for me here, and by the way, we're only about 4 months out from the launch of the new next door and understood the commentary around it being a nonlinear transformation. But we'd love any insight you have into the underlying customer engagement, specifically that depth of engagement metrics that you mentioned. And then I have a follow-up.

Great. Thank you for the question. And yes, we're 4 months out and we are excited about the progress. You may remember that initially, we talked about the new Nextdoor as being focused on news, alerts and recommendations. We now have news as approaching 10% of news feed content. We know that alerts are essential to our users, and we've seen that in the metrics.

And then finally, I talked about in the comments that recommendations is the big swing that we plan to take next because we think it has the most potential of anything that we've worked on. What we're seeing with our user base gives us a lot of optimism. We know that we've made the content more relevant even amidst reducing notifications and keeping ad load exactly where it is.

What we also know is that 7% of new content, which is what the news represents is not enough. The way next door works best is when there is so much content that's showing up in your neighborhood that we can use AI and ML to show you the most relevant things for you, whether that's from a proximity standpoint or from your affinity standpoint.

And so the real focus for us is on dramatically increasing the amount of content. What we've learned from the new next door is when we add more high-quality content, we see deeper engagement. And so we now have the signal that we need to really bear down and do our best.

That's helpful. Second here and potentially a little bit more tactical. -- the notification changes in 3Q and the planned pullback in new user acquisition for 4Q. Can you update us on how you see your user acquisition strategies evolving into 2.

Yes, it's a great question. So the reason that we mentioned that is because as we continue to focus on the best user experience, -- the thing that we need to do is to ensure that the first time a user comes to Nextdoor, they have the best possible experience. We have a number of things that we plan to release over the next couple of months that we believe will create a better cold-start experience, and we use cold start to represent the first time that you come in to next door.

Today, when you come into Nextdoor, you see the same thing that someone who's been an ex door member for 10 years may see. And we know that it should be a different experience. And so as we work towards a specialized experience that will be fully suited for the new user to Nextdoor, it makes sense for us not to be aggressive and use your acquisition. We just wanted to make that statement. As an example of how we are looking at long-term value creation versus trying to make all the metrics go up in the short term.

Your next question comes from the line of Jason Kreyer from Craig-Hallum.

Nirav, so when you talk about adding more content, can you just give us a sense of where that comes from? Like are you talking about inspiring more user-generated content? Or is this an expansion of some of the third-party publisher partners that you've already started to ingest on the platform?

Jason, thank you for the question. And you kind of answered it, but I'll give you more specifics. So we've now got at quarter and 4,000 publishers that are pumping news content into Nextdoor. We think there's more upside there. And we certainly think that there's more upside in integrating more third-party alerts -- but as you indicated, we believe the greatest opportunity is where Nextdoor's DNA is, and that's user-generated content.

And so the next phase for us is to think less about integrating external content and to think more about ramping up our internal user-generated content engine on Nextdoor, which has really been, again, at the DNA of how we were created. We think that a natural place for that to start and potentially the most impactful is in Neighbor recommendations. And so you should expect to hear a lot more about that in the months to come.

That's great. Also, I just wanted to see if you could give an update on the build-out of your programmatic capabilities. curious on kind of what you're doing on platform. And then off platform, I know you recently did a deal with Yahoo!. So maybe a little perspective on both would be great.

Yes. That's a great question as well because we have spoken about this throughout the year. So the first thing to say very specifically is that we've completed the supply side platform integration earlier this year, and we are currently testing with DSPs. We have announced that off-platform deal with Yahoo!. So now an advertiser can go into Yahoo DSP, find next door audiences target against and then campaign directly from Yahoo.

The way we see this is a programmatic generally complements direct sold inventory and is additive. It was a capability that we were asked to add to what we were doing at next door, and we always knew that we would. We announced it back, I think, in the Q4 earnings call almost 6 or 7 months ago, and I'm delighted to say that we've actually lived up to what we said. And so we expect that to pay dividends again in the months and quarters to come.

Your final question comes from the line of Naved Khan from B. Riley Securities.

This is Ryan Polo on for Naved. So I wanted to ask another question on the alerts and notifications. So obviously, you mentioned that you had reduced the alerts -- was there an improvement in engagement for the alerts that you were surfacing? And then also, were there any differences in trends for users coming from alerts versus entering the app organically?

That's a great question. So obviously, if we are materially decreasing the number of notifications but yet experiencing a growth in revenue, you can see that the alerts and notification that we are sending are more effective. And so that's obviously playing out in the numbers, and we expect that to continue to play out. In terms of what we are seeing specifically in user behavior, the third-party alerts in particular around implement weather around now traffic with Wave and earthquake alerts from the USGS, those are particularly effective at resurrecting users who may not have been to next door in some time.

And so if we're very honest with ourselves over the past few years, we lost our way a little bit. And the content not as relevant as it should have been. -- alerts on the other hand, particularly the way we built the new alerts platform, which targets a particular area that is very specifically being affected by the alert those perform quite well.

And we think that they are a way to get lapsed users back onto the platform. And when they come back on the platform, because of the other improvements that we've made, they should come back more frequently.

Okay. I think that was our final question. And so I'd just like to make a few closing remarks. We are very excited about this next phase of our transformation. We know that our foundation is strong. We've stabilized the business, driven material gains in productivity and our products and operational changes are starting to bear fruit. But it's very, very important for us to say that we're fully committed to building the best product. There are no store cuts here, and we will make the necessary trade-offs to unlock long-term and sustainable growth.

And that's all because our conviction in Nextdoor's potential has never been higher. We have a clarified strategy, the team is super focused and now it's all about having the courage to do what it takes to win. So with that, thank you for joining the call and for your interest in Nextdoor.

And that concludes the meeting. You may disconnect.

Yes, I think we're right on time. All right, here we go. All right. Great. Look, we're going to get going with our next fireside chat for everyone who's not only in the room but listening. It's my pleasure to have the team from Nextdoor being part of the conference again this year. Nirav Tolia, CEO. Thank you so much for being part of the conference.

You came here last year, and we couldn't get into all ranges of this, but you talked about founder mode, you talked about what you wanted to build. And I think this summer, we've started to see what you wanted to build starting to get executed on. So there's a lot of different areas I want to talk about, a lot of different areas to go.

But level set for us. You were a part of this company at the beginning of its chapter and you did come back to the company more recently in the CEO role over the last couple of years. Talk a little bit about the journey the company has been on as a little bit informing of what your strategic priorities are today.

Sure. And thank you for having me back. It's great to be back here, and it's now been 1.5 years since I've been back at Nextdoor, and it's been great to be back in Nextdoor. So Nextdoor's mission and Nextdoor's opportunity is no different today than it was in the summer of 2010 when we started the company. And that is our very deep belief that local will have a single winner, the same way almost every other space in the consumer Internet has a single winner or, I guess, at broadest, has an oligopoly in terms of where you go, where consumers go when they have a specific need.

The specific need in our case is, I want to know what's happening around me. And when we started the company, we had this notion that social networks were on the rise, and that would be the way that people would find information. And I think that assumption has turned out to be largely true. The problem for us at Nextdoor is that as that social networking world evolved, we didn't evolve with it. And I'll get into some of the specifics and what we're trying to do to make sure that we can now get with it. But I ran the company for the first 9 years as a private company.

Then we hired Goldman Alum, Sarah Friar, who at that time was the CFO at Square. She took the company public through a SPAC. And because of COVID and some of the increases in usage that we saw around COVID time, the company looked pretty healthy and had a successful IPO. But then as COVID started to come down and many companies realized that there was this bump that wasn't a real bump in usage but just a temporary one, Nextdoor was in that group.

And you obviously see the stock down significantly. And so when I came back, the idea was very quickly to understand why are we not growing? Because ultimately, the stock is down, not because we're going to run out of cash or because we don't think that local is a large opportunity. It's because we haven't been able to prove that we can be the winner in local. And you can look at that proof by, how we're scaling, right? Because if we actually take on share, we should be growing revenue and ultimately should be profitable, et cetera.

And so what I believed as a member of the Board, even when I wasn't CEO was that all the value for Nextdoor is generated by its product. That's a very deep belief we have. I mean typical Silicon Valley company where product development should be the hub of the company.

And we should be great at building local community and local product in general. And I think we had gotten pretty far away from doing that. And so when I came in, there was this idea of, "Okay, what needs to be done." And when you come in and you know that it's a turnaround and you know that it's going to require transformation, you can go on like Elon Musk, you can say, "I'm going to cut everyone, and we're going to start from scratch." And sometimes I wonder if I shouldn't have done that. Or you can go in and say, "Let me try to assess what's here," and then systematically try to make things better. And that's really the approach that we took.

One of the reasons we took the approach is I wasn't new to the company. I've been on the Board. I was a co-creator of the product. And even though there is a very big difference between sitting on the Board and being an operator, I felt like I knew some of the things that needed to happen. Now as I sit here, 1.5 years later, most of the management team is new. Much of the company is new as well. And so in retrospect, I would say, I wish that we had made some changes more quickly because sometimes you realize it's easier to hire new people and sign them up for a new vision, than it is to take existing people and change their perception of what the vision should be.

But I think we're in a pretty good place now. We've launched the new Nextdoor as of the middle of July, and the very, very simple idea behind the new Nextdoor is can we move our platform from an episodic use case-driven platform, where there are certain times I need Nextdoor, and it delivers for me to, I want to check Nextdoor every day because I feel like it's going to tell me things that I'm not even sure that I'm looking for.

And if you think about the way that folks use X, if you think about the way that you open the New York Times every morning, the way that you think about Instagram, TikTok, those are things that are more discovery centric, where you want to know what's going on in your world. So you go there and you consume content and you see what's going on, right? And that should be the case for what's going on around you.

But it hasn't with Nextdoor, I think, for a very simple reason, which is we have relied almost solely on neighbor generated content, and that works really well, particularly around some of these episodic use cases such as, "I've lost my dog." Well, at that point, you need your neighbors to help you find your dock. I'm in the middle of a typhoon or a hurricane or the Palisades fires, you need your neighbors to come together and help you. Even when you're looking for a service provider, I need a plumber, a doctor, a dentist, your neighbors are a great source of information.

But if you want to know all the things that you could do this weekend in your neighborhood, you can rely on your neighbors but your neighbors themselves probably don't know every single thing nor do they have the incentive to tell you what every single 1 of those things is.

And so with the new Nextdoor, we've started to integrate third-party content. We started with local publishers, that's actually been received extremely well. And it's just really the tip of the iceberg. Nextdoor should be a place like TikTok or Instagram that you open up. And because we know where you live, and because there's no other place that aggregates all the local information that you could want to know, that should and can be Nextdoor.

Okay. There's a lot to mine in there, and I think we're going to try to talk through most of it as we get through the session. But let's anchor around the NEXT initiative and the rollout. What are the key learnings so far for the business? And how should we be thinking about those key learnings, building in momentum, building in scale beyond the next couple of months as we get deeper into the second half of this year and really is the jumping off point for the next couple of years for the company.

It's a great question, and I was in a one-on-one with an investor earlier today, and the investor said, "Okay, you've launched the new Nextdoor, do you feel like it's complete." And I thought to myself, my gosh, I really hope that I never feel like our job is complete because we're a piece of software, right? And we should get better and better and better over time.

So let me tell you what I think we've established and you asked what we've learned and then where we're going from there, what I feel really good about in relation to the new Nextdoor is, if we take a step back and say, okay, what is our hypothesis or our strategy for how we're going to drive long-term engagement. That strategy is that there are 5 things that we think are essential to deliver to consumers if we're going to build the indispensable local application, the new Nextdoor focused on 3 of those.

So we focused on news, but let's actually define that more broadly as information and really third-party information. The second thing that we focused on was alerts. The third thing that we focused on was favorites, and then there are 2 things that we didn't focus on that I think are very, very fertile for Nextdoor to focus on, but we can't focus on everything at once. And I'll just mention those, so you have the full picture.

The fourth is classified, and we do have a for-sale and free section, but we think there's a lot of opportunity in classifieds and the fifth is local groups. So let's not talk about classifieds or local groups today because we haven't actually spent any time on those. But the thing I feel really good about is when I think about that architecture, that foundation, that sense of, if you deliver these 5 things, can you become a daily habit, we've learned with the new Nextdoor that people do want local news.

They do appreciate seeing things without having a specific intent to see that thing. And so if we can get the sources right, if we can get the algorithms right so that you get personalized information and if we can bring in much more content, we think that this news alerts and Faves, triad, which is only 3 of the 5, as I mentioned, that's an incredibly good start. So 1 of the things that you do when you're building consumer apps is, you have a hypothesis, you build against that hypothesis, and then you see what the feedback is.

The hard thing is if you realize after building and learning that your hypothesis is wrong. The better thing is your hypothesis is right, but your features are not mature. That's where we are today. So to give you a very specific example, when we integrated local news publishers, we increased the total amount of content on the platform by 10%, okay, that was a good thing. What we really need to do is increase quality content by 10x. So it tells us, yes, information is something that people want. But the amount of information we have today, we need all the publishers, we need all of the local events.

We need all the small businesses publishing things inside. We need all the schools, the churches, the temples. We need all of those people publishing content, and we need to look at AI to understand how can we prompt conversations without even having a third-party publisher insert it into the feed. So these are things that we've learned on the alert side, and this is the second pillar, right, if you think about news, alerts and Faves, these are the 3 pillars.

On the alert side, we found that because we know where our users live, we have a really unique opportunity to target information, in this case, alerts, in a way that no 1 else can, whether it's the really, really urgent things like there is a crime that's happening next door, across the street, et cetera, or there's a tornado and your house is in the tornado's path or whether it's things that you don't necessarily think of today, like power outages and construction delays, all of those things are useful for you in a neighborhood context, but they are incredibly valuable when we take it from a neighborhood context to we know where you live.

So with a power outage, for example, in the old days of Nextdoor, the power would go out and a neighbor would go and say, "Hey, neighbors, my power is out, is anyone else's power out?. Okay, that was all right.

Now we're getting information directly from utility companies. And when they give us the information, we can send a notification just to the homes who are affected by the outage. Because if your power is not out, you don't want to know that there's a power outage, right? If your power is out, you want to know who's this affecting, when do they think this is going to be resolved. And now we have that information, we're delivering it directly to them, right?

We are -- I'm not sure that we have -- I've said this publicly. I think we -- I'm not sure if we've announced it, but we've got a partnership coming up with Waze, where we are the first company that Waze is giving their traffic data to the first consumer company. We're not paying for it. Once again, because we know where you live, if there's a road closure or there's a construction delay, we don't just blast it out to the entire neighborhood, which is what we did in the past.

Now it's really just going to that small proximity of homes that are affected. And so alerts, we think, is an incredibly fertile place, but you don't have an alert every day, right? That's actually the challenge with alerts, right? And then finally, on Faves, we have something very unique on Nextdoor, we have recommendations where individual neighbors are vouching for their favorite businesses. It's a system that can't get gamed because we know that you are you, and you live in a particular place.

So if a business says, I want 50 customers to go and up-vote me on Yelp or up-vote me on some other recommendation platform, they can do that. You can't do that on Nextdoor. On Nextdoor, there's a finite number of your neighbors. And when they give some local coffee shop, the Fave button, they can't do that with other coffee shops. And so what you will increasingly see as a directory of small businesses on Nextdoor that's not focused on comprehensiveness, but solely focused on quality.

We have a very strong hypothesis that you don't need to know the 50 dry cleaners in your local area. You just need to know the 5 best ones. You don't need to know that there are 100 dentists that your kids can go to, you just need to know the 5 that neighbors care about and think are the very best. And so that's a value proposition with Faves. And we applied AI to Faves in a way that I think gave us a vision, not just for a section of Nextdoor, but how we could infuse AI summaries throughout the product.

So again, just to answer your question more crisply, the main benefit of the launch of the new Nextdoor we're showing consumers that we were going to build better product, and that was something you do because it looks different and it has different features, and it operates differently. But the real benefit is the learning that it has created for us. So I would look much more closely at our fast follows and the releases that we're going to have between now and the end of the year to understand really what we think of as the new Nextdoor.

Okay. We'll do. You touched in your answer there about AI and there's elements of AI and machine learning that you will put in place as building blocks for where the company is going to go, obviously, a very prevalent theme here at the conference this week. But talk a little bit about what you're building and scaling with AI? And what do you think that might mean for the platform, both externally and possibly internally for the company as well.

Yes. My personal belief is that the AI transformation revolution whatever you want to call it, is certainly as big as people think and maybe even bigger. And I think the ramification is not just for consumer ramification, meaning how are we going to use these services. I think how we use these services will change whether these services survive or not.

So to give you a specific example, if I am a service that depends on Google for a lot of my traffic today, I think this AI evolution is going to put these companies under a lot of pressure. And so I feel good that Nextdoor controls its own distribution today and that our content is actually proprietary. I've said that plenty of times. What we've tried to do culturally at Nextdoor is make AI a necessity. I have another strong belief having been an investor in between the time that I left Nextdoor and came back and having looked at a lot of AI companies that the best usage of AI is either by companies that are native AI companies, meaning they're born to do AI or they're forced to do AI.

If you're a company that's actually doing pretty well and then you hear about AI and you start looking at how to actually involve in the process, I don't think you ever really get to truly being dependent on AI. You almost need to be born that way or it needs to be part of your survival. And so what we've done at Nextdoor is we said, "Look, this is going to be part of our survival."

In fact, we're building the culture around this idea that, we have to build great product, we have to actually completely embrace AI, and we have to do so has responsible stewards of capital. You haven't asked me, but we've made a lot of changes in terms of how we spend money and how we make investments because we want to create scarcity versus surplus. And if you have scarcity again, it goes back to that necessity of AI. And so if I tell people, you can't hire anyone else. But I will help you come up with 5 ways that AI can give you more leverage. That's the internal usage you're talking about. The way the consumers should see the product, I mean, gosh, I'll give you a couple of examples. We have 14 years of conversations and AI works best in a conversational format.

And so we were never going to be a really good search engine if you look at the way Google does search, which is keyword-based search. In fact, if you go to Nextdoor today and you type in dentists, it's not nearly as effective to do a search as it is to go to the feed and type in, "hey, neighbors. Does anyone know of a good dentist?" So the agentic evolution plays right into that natural language kind of conversation, right? So we should be able to summarize everything that's happened over the last 14 years. We should be able to analyze content and create prompts that create more comments on that content. And then the really exciting thing we should be able to do is we should take these LLMs, see what neighbors are discussing most and create new content based on what we've learned because we're the only place where we can capture local word of mouth, right?

I can't go to ChatGPT and ask it, what should I do this weekend? ChatGPT doesn't know where I live, and it doesn't actually know what all the events are, right? On Nextdoor, I can ask that query and I can get a summary, but the problem with Nextdoor today is, I have to be reading it 100% of the time because those 5 things are not posted all together today. They're posted haphazardly.

So I would expect that you'll see AI used you may not see the way that it's used internally. But in terms of the product itself, right now, it's in a section of the product called Faves. That's not even live nationwide, what you will see before the end of the year is you'll see it integrated throughout the product. So it will go from being a vertical thing to being much more horizontal.

Okay. Building on that because there's a lot of content that continues to scale, both as a result of AI and a result of social media broadly, how do you position the company to be a trusted source for users? When you think about that landscape against the authentication of being connected with people in close proximity and businesses in close proximity on your platform.

There were a number of foundational decisions that we made when we started the company not knowing how they would play out. One of them was we had this idea that people would have to verify their address, use their real name, verify their address. And for many millions of users, the way they verified their addresses is we actually sent them a printed post card in the mail, right? So you want to talk about old school and some of that is not very cost effective, right?

But we did it because we believed that trust was the hallmark of a neighborhood social network. What that does for us today, and it's not that we planned it this way. But what it does for us today is, whether it's how businesses are rated or the quality of the information, there's no anonymity. There's no [ bus ] that goes into Nextdoor. It is your real neighbors or publishers that we have hand chosen to come on to the platform, and you can trace the content to its source at every point of the process.

And so this authenticity and fake information, false information, misinformation, disinformation, that's actually never been an issue for us. Now there are times when neighbor conversations get heated, right? And so you could say, look, there's a lot of sniping going on. There's some fighting going on between neighbors, et cetera. And that's something that I think we can also moderate better with AI.

But the misinformation, disinformation, because Nextdoor is not publicly accessible, and because when you do access it, it has to be through verified identity, that's something that we've built from the ground up that protects us. Again, something that I think, particularly when AI start creating content themselves, you probably started to see this on X, right? Now many of the comments on X after someone posts are created by bots. And how do you know that? You can't do that on Nextdoor. You can't create an account on Nextdoor unless you verify your address. I don't think a bot can do that, not yet at least.

Understood. I want to pivot towards monetization. There's a couple of different angles we can take here, just a framing of how you see the current advertising environment today, what you're trying to build to in terms of widening out the advertiser array and series of partnerships over the long term. And now that all sort of sums up to what monetization looks like in the medium to long term.

Sure. Let me say 3 things about monetization. The first is, even though it looks like we are growing at a very, very small rate or not at all. What's actually happening behind the scenes is there are a number of things we did over the last 5 or 6 years that were all about maximizing short-term revenue. We don't want to do those things anymore, whether it's increased ad load or duplicate ads or backfill that's served by ads that we think are lower quality.

If we had our druthers, we wouldn't generate revenue through any of those sources. Yes, it's revenue. So it's important, right? But we know that it's not great for users, and we know that long term, we'd like to have more durable revenue sources. So we have systematically removed some of that revenue because we've actually been able to grow the durable revenue. You don't see that. Because if we go -- like if duplicate ads is $3 million to $5 million of our revenue, and we say we're not going to show duplicate ads anymore. We have to fill that gap even to be flat, right?

So the first thing I'd say is, I mean, it looks like nothing is happening, but there's a lot of stuff that's actually happening behind the scenes. And over the last 4 years, the investment that we've made in building our own ad stack out that's actually been a very good investment for us.

You can see self-serve increasing. You can see CPMs going up, you can see ARPU going up, all the measures, the quantitative measures that we look at, they're all actually trending positive. All that said, the way to really make revenue, ad revenue sing on Nextdoor is to increase engagement. It's not to do all those micro optimizations, right? Because today, it's not like 5% of our inventory is monetized, if 5% of our inventory were monetized, well, then we just focus on advertising filling up 10%, 15%, 20%. That's not the case.

You go to Nextdoor today, you see a lot of ads, right? That's what we need to do to generate revenue. It would be much better if we doubled engagement and showed the same number of ads or the same ratio of ads to content as we do today, right? So that's kind of the first thing I'll say.

The second thing I'll say is we should be doing more than advertising to monetize, right? We know that there are companies like Yelp and Thumbtack and Angie's List that are all monetizing through relationships with service providers and 30% or so of our conversations on Nextdoor about service providers. So whether we partner with them or whether we build those kinds of services ourselves, we have to get beyond if I'm a dentist, and I mentioned on Nextdoor, the only way I can get a referral right now is by buying a CPM-based ad. That doesn't make any sense, right? We need to build a marketplace. There's no doubt about it. right?

And the third thing is, I think that there are additional revenue models in addition to advertising and connections to service providers that we're just starting to lean on. But again, the leverage to me for the company is not in additional business models, the leverage to me is an additional engagement. Because if you have that engagement, it will open up all kinds of opportunities. But if you don't, you're squeezing blood out of the stone. And pretty soon, the stone is dry, right? And that's really been the story of Nextdoor as a public company.

Understood. Okay. Keep moving us along here just in the interest of time. You talked about this a little bit earlier, but when you look at the array of who you compete with to be a source for local, broadly defined, how do you assess that competitive landscape today? What do you think some of the competitive advantages you have are? And where is the pockets of opportunity where you feel very strongly of right to win in the local landscape.

It's a really good question. I do not believe that with the exception of Zillow, which is, I think, now either approaching a $20 billion market cap or maybe above $20 billion in market cap. With the exception of Zillow, I don't think anyone has 1 big in local. So that tells you something right off the bat.

The companies that have done well in local are all still focused on episodic use cases, okay? They could be ones that are connecting you to a service provider or you need to make a reservation somewhere or you need to get connected to a doctor, right? It's not that daily engagement that I think ultimately makes you indispensable because even when I talk about some of these companies with consumers, many of them don't even know the brands and names of these companies, but they discover them because they go to Google and they do a Google search because they need something, and then ultimately, they end somewhere, which is really a marketplace play that has bought the traffic or somehow gotten the traffic from Google and then fulfills the transaction, but they don't even remember where they did that.

In an agentic world, I think those companies are in tough spot because I just want to go to an agent, and I want to ask the agent to fulfill my request, and I think that's going to happen. So we will do some of that on Nextdoor, but the advantages that we have and the real advantage we have is we control our own distribution and our content is proprietary.

So if you think about controlling your own distribution, whatever happens with Google, it's not going to affect us. Whatever happens with advertising rates on the Meta properties, that's not going to affect us. right? I mean we are all about sending our own notifications and having our own organic visitors. And we are in control of the quality of those notifications and the quality of our user experience. If we don't deliver in that quality, our traffic will go down.

But if we do the traffic will go up, the proprietary content really gives me a sense that we will be protected as all these agents take over because you won't be able to go to an agent, whether it's ChatGPT or Gemini or Claude or pick your favorite agent and say, "Tell me about my neighborhood," because that information tends to be word of mouth, it isn't digitized today, okay? So what gives us a right to play? Well, we know where you live, so we have a leg up on giving you the right information versus you needing to pull that information, we can push it to you.

And because we control our own distribution, we are not waiting for a middle person to send us that traffic, right? And because the content is unique, you can't get it anywhere else. So as long as we provide a quality experience, I don't think there is any competitor. In fact, I would say the competitor for us is ourselves, the competitor for us is not being relevant enough today. People don't rely on us as much as we need them to. And that's because we don't delight them day in and day out.

Now if you've lost your pet, we're probably going to make you a user for life because there's no place else you can go, right? If you're in the middle of the Palisades fires, you'll never forget Nextdoor, because of what it did in that time of crisis. But we can't rely on those things. We need to be able to say, look, this weekend, you're going to Nextdoor on Thursday because you know you're going to find out something cool that's going on. And then you're going to do it. And when someone asks you, "Oh, this is cool. How did you find out about this?" You say, "I found out on Nextdoor." And then the whole virality thing starts, right? So -- but I don't -- and we don't think internally about competitors.

We think about the quality of our own work. And it hasn't been good enough. So it needs to be better.

And that brings you back to your core theme around engagement more than necessarily monetization, it seems like monetization of the output engagement, sort of the input that you have to get more...

Yes. I think the interesting thing about monetization outside of advertising is that it can actually drive engagement, right? So if we had a magical way when you need a plumber, let's say that we're now talking about 2028, and you go to Nextdoor and you type in plumber. And the next thing that happens is your doorbell rings and there's a plumber at your door, right? That's really what we should facilitate.

Now that is monetization that will also increase engagement because what do we want at the end of the day? We want Uber for every service. That would be the expectation for my kids. My kids already say it. They're like, "But Daddy, can't you push a button and get that," right? And so we really need to force ourselves with AI and with the information we have to think deeply about what are all the things that if you push a button, we could send it to your doorstep.

And we know where you live. We know who's been recommended. We just need a way to tell the plumber, "Hey, by the way, someone is looking for a plumber." And that plumber knows that he's already 15 houses away, send him over to that house. right? So there are monetization mechanisms in the future. Classifieds is another 1 where most of the time, if it's a marketplace, it's actually creating engagement as well because you have a demand side that's coming in and looking, right? But the advertising itself today, I mean, the best way to make that better is to have more inventory. So it doesn't feel over commercial.

Then ultimately, you can go to where Meta ads, which is you know so much about your users and you have so much great content that the ads feel like content, but we're far from there today. And so are most people. I mean there are many, many, many entities that make money through advertising and very few where you would say the ad feels like content though, right? Meta has got that right, TikTok has got it right. Google AdWords. The ad feels like content. So you can get it that way, but it's not where we are today.

Okay. Understood. Let me squeeze 1 in quickly before we try to wrap it up. We talked a lot about growth and where the platform is going, bring it back a little bit lower down the P&L, how as a company and as a Board, do you manage growth investments with continuing to deliver on margins and maybe even wrapping in priorities for capital in the business as well?

Yes, it's a great question. I would say that in general, and this is probably the fact that I've started 3 companies as an entrepreneur, I believe much more in scarcity than surplus, as a way to build a culture and as a way to build a mindset. And I believe necessity is the mother of invention. And so I will probably be a little bit more hard-nosed about protecting our capital than deploying it without having a pretty good sense of what the ROI is going to be.

Now that said, if I see daylight, I have no problem pouring capital into that initiative, right? But I think historically, we've done a little bit of the -- if we just hire more people, we'll have better output. And if I felt like another 100 engineers could really push the product forward, I would be explaining to you why we're actually losing more money than we are today and what that's going to yield.

But today, I think it's really about the quality of ideas and execution, not the quantity of people. And so as we look -- and by the way, my Board, we have $400 million in cash. My Board did not pressure me or the rest of the management team to go to the street and say "We're going to be breakeven in Q4, we're going to be breakeven in 2026."

That was a decision that we made as a management team because we wanted to tell the company and the rest of the world, we are going to hold ourselves accountable for growing in a way that feels responsible to us. And we are going to change the categorization of the company from 1 that's losing money to 1 that's either breakeven or is on the path to profitability, right?

That said, if I felt like hiring 10 ML engineers could create that magical experience I just talked about where you push a button and the plumber shows up at your door. I would be articulating why we could do that. But today, the platform is so early in its reinvention that we need to continue learning and building and growing. And that's something that, unfortunately, I don't think you could throw people at.

Yes. Understood. So sticking with that theme of early, you have used the phrase, first chapter, to describe where you are. We only have a few minutes left. Let me turn the floor over to you, characterize where we are in first chapter today and sum up the conversation we've had, and some of the messages you want to leave with investors about where the company is going in the years ahead.

Well, look, I love Jeff Bezos talking about his day 1, right? And so I think you are blessed if you have an opportunity where you wake up every morning and you think, "Oh, my gosh, there's so much to do here." And I felt that way from the beginning of starting Nextdoor. That said, to get more specific to your question, where are we in the transformation journey, I think, is the really important question, right?

So I think there are kind of 3 phases, and they're not exactly sequential. There's some overlap, but it may help thinking about this as reset, rebuild, and then reaccelerate. And what investors, particularly public market investors want to know and what I get asked all the time is, when is the reacceleration going to happen, right? Because, yes, I can talk about reset and I can articulate rebuild and I can show people things, but ultimately, they want to see on a P&L. When have we now shifted to growing double-digit percentage revenue year-over-year, right, and that is not going to come until 2026, right? I mean we're not going to guide to it potentially even in 2026, we don't know yet.

We took a while to reset. I mentioned that there are many different ways you can reset a company and reset its culture, we took a little bit more of an intentional but slower way of doing that, right? We've been rebuilding and that is heavy where we are today, right? The result of that rebuild should be a reacceleration. But -- and I know that this is a very frustrating thing for investors today to hear and it's frustrating for me to say. But I'd say we're still early. We're still early. The reason we're early is not because, we don't know what we're doing or because we haven't found signal, it's because we want to be extremely careful this time around that we don't take shortcuts.

And because much of the ownership of the company is concentrated in existing Board members and management team members, right? We are actually playing for our own net worths, right, in addition to the investors out there. And we don't want to take the stock from $2 to $3. We want to take it from $2 to $20, but we don't see a shortcut in doing that. And so if that means that we have to wait a little bit longer, and we need to move a little bit more deliberately, but slower, we feel like that's the right trade-off.

Okay. Understood. And we're looking forward to the continuous updates and continuing the dialogue. Please join me in thanking Nextdoor for being part of the conference.

Thank you. Appreciate it.

All right. Good afternoon. I'm Jamesmichael Sherman-Lewis on the Citi Internet team here, and I'm thrilled to have with us today Nextdoor's Co-Founder and CEO, Nirav Tolia.

For those newer to the story, Nextdoor is a local social app with a user base spanning over 100 million verified neighbors and the company's platform transformation NEXT, just launched in July.

Welcome Nirav. Thank you for joining us today.

Thank you for having me.

So Nirav, you've been back as CEO for about 1.5 years now. We're moving towards this new product-led growth culture. Help us understand that mission and how you're balancing transformation as well as building on the existing Nextdoor business.

Sure. So I'll start with talking a little bit about what we think the opportunity is, and that is to build the indispensable essential local application. That doesn't exist today. We don't go to Google or any of the Meta properties or ChatGPT to find out what's going on around us. That one place where you can find out immediately the things you need to know about where you live, that doesn't exist.

It's been the mission for Nextdoor to try to be that entity from almost the very beginning. We started the company in the summer of 2010. And we think that we are now approaching a time where we have a large enough audience and there's enough content out there and there are technology tools like AI and other things that will enable us to be that place where, through the power of technology, you can quickly understand all the things you need to know about your neighborhood, your local community, where you live. And so that's the mission of the company.

Now you mentioned product-led growth. A lot of people say, why haven't you been able to achieve this mission, right? And in Nextdoor's case, I came back 18 months ago because the company was not in great shape. We've been growing steadily for 9, 10, 11 years. We went public, and then we experienced some headwinds. I think the main reason for that is while the technology industry always evolves, products need to evolve as well. Nextdoor's product did not evolve. And if you don't evolve your product, your users ultimately don't get enough value from that product and they don't actually inspire other people to use the product, and that's what product-led growth is.

Product-led growth is having a good enough product that the whole thing grows and ultimately, the whole thing means revenues and profits because of the quality of the product, not the quality of the marketing, not some strategic thing that you figured out that locks you in as the only choice for consumers, but you have such a good experience and such a good product that it grows as a function of itself.

And you mentioned that as part of the culture. I've been working in technology my entire career. The best companies are all PLG companies. They're all product-led growth companies. And so the big part of Nextdoor that has been missing and that we're trying to bring to the company now is a culture of building great product that ultimately will grow the company as a function of that product.

What you refer to as NEXT, that was kind of our internal code name. We've rebranded it now. It's the new Nextdoor. So the new Nextdoor, we launched in the middle of July, and it was fundamentally different. It is fundamentally different than the old Nextdoor in a couple of ways, which I'm sure we'll get into. But that's really the very beginning for us of trying to put a better product on the field.

And you use the word transformation. In this transformation that we are trying to ignite with Nextdoor, there are kind of 3 phases. One phase is the reset phase. You have to take an existing company, and you have to say, "Look, whatever we've been doing, it hasn't been working well enough. So let's reset the way we think about things. Let's reset the culture. Let's reset the priorities. Let's reset leadership," right? Those are very hard decisions that you need to make when you know that the trajectory is not the right trajectory.

The second phase is rebuild. You have to take the things that you believe will ultimately deliver value and you need to either create them, restore them, repair them, whatever it takes. And then finally, reaccelerate, where you have hit a seam, you've understood an insight, you've been able to deliver value in a way that you weren't able to before, and that will drive growth. I would say that for Nextdoor, we are in the early stages of rebuild.

So just to level set, right, the reset takes a little bit of time. You don't do these things sequentially. So while you're resetting, you can also be building and you can even be accelerating, right? But it's really about what is the highest percentage of your resources in any given phase going to. Is it resetting, rebuilding or reaccelerating? For us, right now, the highest priority is rebuild. And we're in the early stages of that. And if we build a better product and we have to learn from our users to do that, we're very confident that the reaccelerate will take care of itself.

So let's talk about the rebuild. It's a great segue into the new Nextdoor. We have the 3 pillars, news, alerts, recommendations or Faves. Before we go deeper into the new Nextdoor, can you level set on what it is and how the core use cases of the app are changing?

Sure. So let's think maybe a step back about the world of social networking in general. Social networks have become the place you go to get information to read high-quality content about a particular slice in your life. You think about LinkedIn, it's not only the place where you connect with people. It is the place you go to find out what those people that you're connected to are doing professionally. You think about X, it's the place you go to find out what's going on in any number of subject areas. You think about Instagram, it's the place you go to find out, in many cases, things you don't know that are being published by people that you may know or not know, right? The same is true of TikTok. It's a place you go to consume content. In all of these cases, content is the thing that gets you to visit the service, right?

So at a very high level, it's very, very, very simple with social networks. You need to have great content and you need to have enough of it that people are engaged on a daily basis or multiple times a day. And then you need to figure out the right distribution mechanisms for that content. And what we've really seen is personalization as the primary and most effective distribution mechanism, right? We are no longer in a place where even on LinkedIn, you only see content from people you're connected to. LinkedIn is now recommending content for you based on your profile. Facebook, there was an article about Facebook and Fast Company recently that said 70% of the content on Facebook is not from your friends.

And so as we think about the new Nextdoor, the old Nextdoor was almost 100% content created by your neighbors. Your neighbors is defined by some circumference around where you live, and it was all what we think of as user-generated content, right? It turns out, though, that all the information you need locally is much broader than just the information that's in your neighbor's heads. What if it's an event that your neighbors don't know about yet? What if it's some natural disaster that's coming that meteorologists are talking about? What if it's local news? What if it's things about politics that politicians are talking about, right? What if it's a new restaurant opening? What if it's a small business that has a new offering in some way, shape or fashion?

And so with the new Nextdoor, the first fundamental change we made was we said, look, we're no longer going to be just about neighbor-generated content. We are going to start to integrate what we think of as third-party content. So content outside of neighbor content onto the platform. The first part of that was local news. So we did partnerships with 5,000 local news publishers. We're bringing in 10,000 news articles per day. And we think that's a really good way to up the ante on the quality and quantity of content. It's just the beginning, though. We need to have every event that's going on this weekend in your neighborhood on the platform. We need to have every new restaurant that has come into your neighborhood, right? And even outside your neighborhood. We need to have every bit of information about the school calendar for the school that your kids go to. If you're religious, we need to have information from your church or your temple or whatever religious organization you're affiliated with onto Nextdoor as well because these are all planks of your local life.

So with the new Nextdoor, we said, first of all, we're going to bring in local news. Now that seems kind of obvious that if you're thinking about what's going on locally, you want to read local news, right? But it was a little bit risky for Nextdoor because we had never let publishers into the platform before. So we needed to test it. Now we've got a very positive response and it gives us a lot of conviction and courage that third-party content can be valued by neighbors. That neighbors want more than just the word of mouth that their neighbors are sharing, they just want information. When they see the information, they start discussing those things. So there is a neighbor-generated content piece, even that gets attached to the third-party content, but that was one major change.

The second major change is we know that Nextdoor is indispensable when there's a natural disaster or something that feels really important and high priority happening in the neighborhood. Typically, we think of natural disaster because it's easy to describe. It's a hurricane, a tornado, a fire. It could be a crime. But we've extended this now to include anything related to construction or traffic, anything that may be related to a power outage, right? You think about the utilities in your neighborhood when they go out, how do you get information about those services?

And so not only did we start to integrate with those services so we could bring the content in, we took the content, we made sure that it was relevant to you because we know where you live, and we know that the content is actually relevant for some service area, right? And then we created an entire kind of a surface, a map where you could go and look at all of those alerts in a way that you typically wouldn't before. Before you would just see a feed. And so you guys know how feeds work, right? If the feed is there when you visit, you see it. If the story and the feed is gone by the time you go there, you may not see it. But when it comes to alerts, you need something that's a little bit more permanent or at least permanent until that crisis passes, right? So that was the second biggest change.

The third and final change is we know that we're in a world where AI is going to disrupt everything. So a big question that we need to ask ourselves, an existential question is, what is Nextdoor in a world of agents? What is Nextdoor in a world where people completely -- they will expect us to be using AI to improve user experiences? Now in Nextdoor's case, we're very lucky. We have our own proprietary content, so we don't need to go buy content from someone. That content has never been published publicly. So we don't need to be worried that people can get to that content in some other place through some other LLM that's already used the content. And finally, we have our own distribution mechanism. So we don't have to be worried that the only way people can find our content is through a search engine or through some marketing channel or some other way that we don't control.

So I always felt that we had really good architectural foundation for playing in an AI world. What I wasn't sure of is when you take 14 years of neighbor conversations and you build an LLM essentially for every single neighborhood, what does that end up looking like? And what we found is it takes the content that is valuable and makes it incredibly valuable. It reads better. It's not just one point of view, it's multiple points of view. If you're looking for a service provider recommendation, you no longer just get a list of service providers, you can have context around those service providers. And then we can apply all the things that all the agentic companies are doing to make it better and better and better. And so that's the Faves part.

And Faves is really favorites. So it's the neighborhood favorites that neighbors recommend to other neighbors when neighbors ask questions for service providers or things to do or attractions or really anything they want to know about the neighborhood. Now this architecture, news, alerts and Faves. And I would think of news more broadly than just news publishers, you can think of news as inclusive of alerts, inclusive of the City Hall calendar, inclusive of the things that are on the school calendar. You can think of it more as the local information that's not created by neighbors, news, alerts and recommendations, that's actually a durable architecture that we will be working on for the next 10 years. It's not just something that we worked on for a year, we released and now we're moving on to the next thing. We think that's ultimately what people want when they open a local app.

So a lot to jump off there. I want to dig a little deeper here on the content because I think it's so key. News is now 5% of the feed. We know over half of users are engaging with publisher posts. When thinking about the AI content relevancy and ranking, how do you think about the optimal balance of publisher content with UGC? And is there a role for AI generated content in the future?

It's a great question. So there are actually two different questions. So the first one, how do we think about the optimal balance? Increasingly, the expectation consumers have is for full personalization. So for every user, there is a different profile that needs to be built on what they expect. Some users actually want all news. All they want is news. They don't want to see any neighbor-generated content. Some users actually just want to see neighbor-generated content. Other users want to see a mix of the two, right? There are going to be some users who want to see new restaurant openings. They're going to be others that don't. So it's incumbent on us with ML to actually start to build candidate sets and profiles so that when you come to Nextdoor, you see what matters to you.

Now we have a huge advantage there, which is we know exactly where you live, right? You're not just a user that's cookie, and we followed your cookie across the Internet, right? We know your exact street address. And then if you think about matching that exact street address with all of the kinds of information that exists out there to help us understand the kind of person that lives in a type of house, a type of neighborhood, a type of area, right? We can start to build a pretty sophisticated profile before you even start using the service. When you use the service, when you browse the feed, when you respond to notifications, when you post, then it starts to build a really rich profile for what you want and what you expect, right?

The only thing that's really missing is the profile gets richest, the more rich content you have. And so this brings me back to my first point, which is we need much more content on Nextdoor. If we just rely on neighbor-generated content, the only way that we're really going to see a nonlinear growth in content is by seeing a nonlinear growth in users. And we already have 100 million users. So while we can be a lot bigger in terms of users, we really need to be thinking about how do we 10x content with our existing user base.

Now that gets to the question you said, right, which is we think about using AI to do that. So one way that we have used AI to get more content into the feed is there's a news article, AI can be used to analyze the news article and AI can pick out a leading question to ask based on the article. So let's take some examples. There can be an article about something that's just happened in a city. There's a new building that's been sold. The AI can look at the article and say, "What do you think is the impact of this sale?" And that starts a conversation. We call them conversation starters, right? We saw a huge bump in the number of comments that were generated when we actually use these AI conversation starters. So that's kind of the very beginning.

I'll tell you something that we find a lot more interesting. We have this Faves section that you talked about. And if you go on the Faves section, which is not live across the country, it was launched in 60 DMAs, and we're systematically rolling out new DMAs. But if you go in there, you can ask questions like what's a great place to get ice cream with my kids? It's natural language conversational search versus text-based search. That's the way to think about it, right? Now that's natural for Nextdoor because Nextdoor has always been a conversational platform, unlike search engines where you go there and you type in plumber, right? The way Nextdoor has worked is the user has come on and said, does anyone know of a good plumber, right? And that's a different query than just typing in plumber, right?

So what we see is every single week, tens of thousands of those posts are not answered immediately on Nextdoor. It may be 24 hours after they're answered. It may be 48 hours. In some cases, they don't get answered at all. That doesn't mean that we don't have the content. So what we should be doing and what we will be doing is we will take the AI results that we've already generated through the LLMs for each neighborhood. And when someone asks a question like, I'm looking for a great dentist for my kids. I'm looking for something to do this weekend. Are there any suggestions to replace to do a great hike? I'm looking for a place to board my dog when I'm out of town. Things that typically are asked over and over and over again, right? If someone happens to see it when you post it, and they respond, great. But the clock starts ticking as soon as you post.

At some point, the clock hits some number, whether it's 30 minutes, 3 hours or a day where it's going to make sense for us to use AI to generate an answer based on the corpus of data that we already have. That will be a game-changing experience on Nextdoor because now you'll go to Nextdoor and you know that you'll either get a completely fresh answer from your neighbors or if you don't get that, you'll get an AI-generated answer that's based on previous conversations. And in that answer, we can of course put at the very end. And if there are any neighbors who also recommend this, chime in here, right? So there are ways that we can use AI to lubricate these conversations and create more content in a way that we never could before.

That makes a lot of sense. So we're still early here in Faves in search. But is there a revenue and a monetization opportunity attached as you think about search and your data corpus?

Yes, there are a couple of things that we should be able to do. So the first and simplest is we are an ad-based revenue model today, right? So the more people use our platform, the more ad inventory we should create, the more revenue we should generate, the higher the top line is. And we've already said that starting Q4 of this year and in 2026, we're going to be breakeven. So in that case, any incremental revenue will actually flow right to the bottom line, right? So that's a very simple, more engagement, more revenue, more revenue, more profit, right? It should actually be that simple.

In addition, though, what we should be thinking about is in those conversations that neighbors have or that AI generates about small businesses, is there a way for small businesses to be part of the conversation? Not by putting an ad there, but by literally integrating into that dialogue, right? That's something they want, right? They even actually want to be involved in dialogues where neighbors are talking about their competitors, right? And so the thing that we're thinking about right now is if you could alert a small business, every time someone was talking about them or one of their competitors or really the space overall, and you could then send a notification to that small business to be part of that conversation, that would be commercially very valuable to the business, right? It's almost like a reverse search.

Why do small businesses buy their name on Google? Because when someone goes to Google and they type in the name of the small business or the name of a competitor, the business wants to have a presence there, right? The same way when neighbors are talking about your business on Nextdoor, we should give them a way to read the conversation or be part of it. That's a different business model than just an ad that goes right in there, right? So that's one of the ways that we should be able to start to extend so that it's not just advertising based on inventory, it's advertising based on intent.

Yes, very interesting. I think we should take a step back here because the next -- the new Nextdoor, pardon me, is really interesting. But how do new and existing users find out about the new Nextdoor? And then given platform WAUs are about 1/5 of overall verified neighbors, I'd imagine reattracting dormant users is maybe the first key focus here.

It's a great question. So we have 100 million verified neighbors, a little over 100 million verified neighbors, and we have just under 25 million that are visiting every week, right? So those are the statistics that you just said. At this point, we think it's a lot more important to take the 25 million that we have out of the 100 million, right, and turn that into 30, 35, 40, right? Then think about let's take the 100 to 105, 110, et cetera, right? Because ultimately, what you'd like is you'd want as large a percentage of your verified neighbor registered base to be actively using the product as possible, right? And that's really the opportunity for Nextdoor.

The weakness of Nextdoor is, as you said, only 1/5 of that installed base is used as a product every week, right? What if it were 1/3, what if it were 1/2, what if it were 80%, right? That would radically change the economics of the business, even on the existing user base. So that then begs the question, okay, how do you get the rest of those people to use Nextdoor? They clearly thought there was some value proposition because they joined at some point. And then for whatever reason, they're not using it frequently or they've churned or whatever the case is, right? That's where we think deeply about what we call reactivation. You and I have talked about this, right?

We have not actually started the reactivation yet. The reason for that is because I don't think you get multiple opportunities to tell someone who's decided, this isn't as valuable as I thought it was. You don't get multiple opportunities to go back to them and say, actually, you're wrong, come back. When you say, actually, you're wrong, please give us another chance. You want to show them something that you know is going to be really compelling. In fact, the way we should be thinking about reactivation is not just broadly, okay, we have people who haven't used the product in 6 months, let's send them all an e-mail saying, here's the new Nextdoor. No, we shouldn't do that for sure.

What we should do is we should say, where are the neighborhoods where there has been a super compelling conversation. Now let's take that conversation and let's send it to that dormant user and say, here's what you've missed recently on Nextdoor. Please come back. Now that's a wholly different kind of approach because that's not a generic marketing message, which is there's a new Nextdoor, please come back, right? That's -- there's something very specific that you've missed. And in many cases, it will typify what we're trying to build with the new Nextdoor, which is a fear of missing out if you're not on the platform all the time.

But that's something that takes a little bit more time to build, right, because it has to be personalization. You have to actually look at the quality of content that's there. And then you pick your moments and you initiate reactivation. That's the work that we're doing now. And I would expect that, that's going to happen in Q3 and Q4.

Now again, we could send a can and blast out to all of those dormant users. And for sure, we would get some performance back, right? And you'd see it in the metrics and that would be great. We'd go out on a quarterly call, and we'd say, look, look what happened to our users, right? But we want to do this in a way that whatever that bump is, it sets a new baseline. We don't want it to bump up and then it goes back down because people say, "Oh, there's a new Nextdoor. I'm going to go visit it." Well, what if they visit and the first thing they see is not a very compelling piece of content. Then they're never going to come back, and we cannot reactivate them again, right? So I think the reactivation thesis is a very powerful one for us, but we need to take our time and do it the right way.

Yes, that makes sense. As we build off that reactivation of dormant users and we think about attracting new users, are there more demos that we could expect to be added to the platform? I'm thinking about specifically with Faves and generative AI in search. Could younger demos potentially be added as well?

Yes. So historically, the demos where we've performed the best are suburban neighborhoods with folks that own their home or have made a significant investment in living in the neighborhood. Typically, they have kids or they are of the age where they typically have kids, right? And so that's kind of our sweet spot. Areas where we've struggled a little more urban environments with younger folks, I wouldn't necessarily say that college students are a vibrant potential opportunity for us. But certainly, once you graduate from college and you move some place for the first time, you're trying to figure out what's going on.

I would point to 2 types of content. I don't think it's really in the generative AI space per se, but 2 types of content. You can think of generative AI as a foundational layer for us that should make everything we do better versus it's a vertical initiative that may attract a certain type of demographic. Content on the other hand is the thing that ultimately gets people to visit the service. And so there are 2 types of content, for example, that will be much more valuable or equally valuable to suburban folks as well as urban folks, right? Alerts. If there's a power outage, if there's inclement weather, if there's crime, it doesn't matter if you're 8 years old or if you're 80 years old, you want to know about it. That's why we've really emphasize that kind of content because it is really kind of universally relevant, right? It's not for a particular demo. It's for everyone who lives in the neighborhood.

Now an example of one that's a little bit more unique or tuned for a particular demo is we are in the midst of testing events content. So one of the next big things you're going to see from Nextdoor is a big push on Thursday. I want to know what's going on this weekend in my neighborhood, right? We've not done that in a systematic way. It could have been random and neighbor would have said, hey, this weekend, I'm going to do XYZ or tomorrow, I'm going to do this thing or tomorrow, there's this book signing, right? But we haven't done it in a very systematic, predictable way, which is what people expect from us, right?

So as we roll out events, I can tell you as someone who has a full-time job or multiple full-time jobs and 3 kids under the age of 13, I don't have a lot of time to think about events outside of the events that I already have in my family, which are typically my kids sports, right? But when I was your age, right, when I was newly married or I was single, right, I wanted to know what was going on in my neighborhood. It was much more tuned for my age, where I was in my life and my demographic even where I lived, right? So as we roll out events, I fully expect that the younger demos will find that much more than maybe they find the discussion of where can I find a trusted babysitter, right? For kids, the babysitter thing doesn't matter at all.

This then goes hand in hand with the ML that I was talking about before, which is should we even show the babysitter post to someone who doesn't have kids? No, we shouldn't, right? And should we show the nightlife-centric post to the person who has 3 kids or who has a newborn, No, probably not, right? So these things kind of work in concert with each other. But again, the common denominator is a lot more valuable content. And so the thing that we have to ask ourselves all the time is, what are all the possible pieces of local content that you could imagine finding, all of that needs to be on Nextdoor, all of it. And unfortunately, or fortunately, if you just have one type of content, it's not sufficient to turn Nextdoor into a daily utility. But if you start to layer on multiple pieces of content, you should start to see the reason and the frequency for visitation to go up.

That's great. As we build this new Nextdoor vision, can we talk briefly on the monetization. Self-serve revenues have accelerated now 58% of total. And we also have this emerging nascent programmatic opportunity. What do you see as kind of the core revenue growth levers going forward and ad tech improvements that we can look forward...

So I'll start with what I think is table stakes, and then I'll get to maybe something that's a little bit more aspirational. So the table stakes, if you're a social network today is to have a suite of technology tools that make it super easy for anyone to come and advertise on your platform. That's the self-service thing you're talking about. And then that ultimately create better performance over time through learning who is the right person to show this add to, what is the right time, and what do we ultimately think will increase click-through rate, right? And so that's something that we've actually had some success building. You can see it in all of our metrics, the CPM is going up, the percentage of self-service revenue going up. And frankly, the fact that we've been able to sustain our revenue even amidst the platform that has historically not been growing that well, right?

And so all of the work that we've done on the ad stack, while it is table stakes, it's working. We can actually point very quantitatively to how it's working, and we feel good about that. That also gives me faith that we have the right personnel internally in product development that if we can do that on the ad stack side, we should be able to do that on a consumer offering side as well, right? But I do think that's table stakes.

Where it gets a little bit more aspirational is, first of all, if we can really drive engagement up, then obviously, we are driving much more revenue because our ad stack platform is now mature enough to take advantage of all of that opportunity, right? So that's a near-term big driver of revenue, right? But it's not easy to actually move engagement. I mean that's the reality. You look at all of these companies of a particular scale, right? It's not easy to double your engagement. It's not even easy to make engagement go up 10%, right? So that's kind of the slow and steady path.

The thing that's really aspirational, you talk about programmatic, what are all the additional ways that if we have a healthy, vibrant ecosystem, we could generate revenue. Programmatic is certainly one of them, right? Thinking about percentage of transaction and this idea that we talked about, which is almost a reverse search engine that we internally called opportunity alerts, where we tell a small business or we tell a business that there is an opportunity for business based on a conversation on Nextdoor, those are the things that are pretty exciting because they're not reliant on the supply of advertising. And the reason that's so important is we know how to generate more revenue today, show more ads.

Now there are 2 ways you can show more ads, right? One way is you can create more inventory. The other is you can increase ad load. One of the things that we've been told over and over again by our users is that our product feels too commercial. That's basically, I'm seeing too many ads, right? So we've made decisions in many cases to reduce ad load, right? And lots of analysts out there and lots of investors look at us and say, "Hey, you've been testing this reduced ad load thing, when is the ad load going to come back?" Well, I don't know if it should come back. I actually think a better way to solve that problem and generate more revenue is deliver more value to users so that they don't feel like we're just adding more ads.

Now you can do it 1 of 2 ways. You can increase the amount of noncommercial content or you can make the ads feel like content. We know that Instagram, I mean, if these days, if you look at Instagram, of the first 10 posts you see on Instagram, I'm sure over 50% are going to be ads. It's kind of mind blowing, right? But people still use Instagram because the ads are very good, right? So as we learn more about our users, I think we do have opportunities to make the ads feel like content, but we're very far from that today.

And so I would set expectations that if you're a founder of a company and founders think about the long term, founders think about foundational value, right? I didn't come back to Nextdoor because I wanted to snap my fingers and do all the short-term things that would do short-term revenue or do short-term engagement. I came to Nextdoor because I believe there was an opportunity to build the definitive app in local. And I don't think the way to get there is to increase ad load. I think the way to get there is to increase value. Now that can be frustrating because ad load is an easy way to generate more revenue. But in the long term, it's not something that users appreciate.

So drive usage and targeted relevance to get revenue. Yes.

I think there are 3 things: more usage, better targeting and then non-news feed ad opportunities.

Yes. Last couple of minutes, do we have any questions in the audience?

Regarding opportunity alerts, have you talked about a time line for when that would...

I would call that beta at best, which is to say very early. Now here's what's not early. Some very large double-digit percentage of the conversations on Nextdoor are about commercial service providers. So in terms of the demand of that kind of content, we're not early. We're early in thinking about what is the best way to take that existing demand and turn it into a commercial opportunity, right?

So we don't have to convince our users to ask for plumbers and dentists and doctors and babysitters, right? We just need to find a more intelligent way to monetize that versus just sandwich adds between those posts in the feed. And that's where we're really early, right? And it's exciting because a lot of times, I mean in these marketplaces you're building, you have to build supply and demand, right? Certainly, we've got the supply at that point of that kind of commercial content. We have to figure out the right way to connect it to the commercial entities. I wouldn't put that in any financial model, though, anytime soon. I would consider that to be upside.

All right. Last minute here. Let's hit on profitability. Revenue per employee is up 58%. We have a recent restructuring plan as well. Where should we think about areas of relative product investments relative to operating leverage?

So we have over $400 million in cash. And so we don't have the existential risk of we're going to run out of money that's why we need to get to profitability, right? But that said, as someone who started 3 companies and primarily done start-ups, where you are at existential risk every single day, I felt like it was very important culturally for us to say as a company, every dollar we spend is going to be sacred. And the way to do that is to say, we're going to be breakeven. We're going to be breakeven starting in Q4. We're going to be breakeven in 2026. And even though we have all the cash, it doesn't mean that we should use it.

That said, if we saw something, let's take opportunity alerts as an example. And it required a $10 million investment in 10 new amazing AI or ML engineers, right? Or we felt like there was a marketing campaign we could do that would be really effective in reactivating dormant users, right? We would certainly do those things, right? So we're not ideological about we're not spending any of the money, but we're setting that as the foundation because that makes necessity, the mother of invention versus a war chest being the mother of invention.

So I would think about the breakeven, and this is both Q4 and 2026. I would think of it less as, oh my gosh, we've made so much progress from a business standpoint that we're ready to start generating cash, right? And I would think of it much more as we are embracing the cultural norm that we're going to treat every dollar like it's our last. And when we start to inflect all of that incremental revenue, we can make a decision on are we going to reinvest it, are we going to decide that it's going to flow to the bottom line as profit, right? But we're going to be very, very judicious with the capital and with the way that we think about building this company in general.

Great to hear. All right. With that, I think we're out of time. Thank you so much for joining us, Nirav.

Thank you for having me.