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01/11 14:01
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture. Financial performance shows modest revenue growth and improved EBITDA margins, but challenges remain with large advertiser sales and user engagement. The Q&A section highlights management's optimism and progress in platform development, yet lacks specific timelines or metrics. The share repurchase is positive, but restructuring costs and ongoing losses are concerns. Overall, the sentiment is balanced, leading to a neutral prediction.
Self-serve revenue $65 million, up 3% year-over-year. Growth driven by momentum in the self-serve channel, bringing in net new advertiser spending, improving advertiser diversity and retention, and unlocking operating leverage through a leaner sales force.
Platform WAU (Weekly Active Users) 21.8 million, up 1% year-over-year. Reflects steady user acquisition and continuous experimentation ahead of the launch of the new Nextdoor.
Adjusted EBITDA margin Negative 3%, representing a 6 percentage point improvement year-over-year. Improvement tied to team productivity and more efficient sales and marketing spend.
GAAP net loss $15 million, with a negative 24% margin. Reflects ongoing transformation efforts and restructuring costs.
Operating cash flow Positive for the third consecutive quarter. Reflects continued efficiency efforts and increasing cash flow conversion.
Revenue per employee Increased by 58% over the last 2 years. Coincides with nearly 30 percentage points of adjusted EBITDA margin improvement over the same time frame.
Cash, cash equivalents, and marketable securities $413 million, with 0 debt. Reflects a strong balance sheet and financial stability.
Launch of the new Nextdoor: The company completely rebuilt its core product to enable a more structured, real-time, and useful experience. This includes three foundational pillars: Local News, Real-Time Alerts, and Faves (AI-powered local assistant). These features aim to increase daily utility for users and create richer surfaces for advertisers.
AI-powered Faves: Currently in beta across six U.S. markets, this conversational AI assistant transforms search into an intent-rich experience, providing fast and trusted responses to neighbor questions. It is expected to scale more broadly in the fall.
Self-serve channel growth: Self-serve revenue grew 27% year-over-year, accounting for nearly 60% of total revenue. This channel is driving advertiser diversity, retention, and operating leverage.
Programmatic advertising integration: The company completed its supply-side platform integration and is on track to enable advertisers to purchase inventory through demand-side platforms by year-end, broadening demand.
Restructuring plan: The company announced a workforce reduction to reset its cost structure and accelerate its path to full-year adjusted EBITDA breakeven in 2026. This is expected to reduce annual GAAP operating expenses by approximately $30 million.
Improved productivity: Revenue per employee increased by 58% over the last two years, with nearly 30 percentage points of adjusted EBITDA margin improvement during the same period.
Leadership changes: Craig Lisowski was appointed President of Products, and Matt Anderson will step down as CFO effective September 1, 2025. A search for a new CFO is underway.
Focus on long-term platform health: The company is making strategic trade-offs, such as reducing notifications and testing new designs, to ensure a quality user experience and long-term platform health.
Workforce Reduction: The company announced a restructuring plan that includes a reduction in workforce to reset cost structure and accelerate the path to adjusted EBITDA breakeven in 2026. This could impact employee morale and operational efficiency in the short term.
Ad Impression Growth: Changes related to the new Nextdoor, including updated UX and experimentation, are expected to limit ad impression growth in the coming quarter, potentially affecting short-term revenue.
Large Advertiser Sales: Large advertiser sales improved quarter-over-quarter but remain down year-over-year, indicating challenges in retaining or growing revenue from major advertisers.
Integration with Demand-Side Platforms: While progress has been made with supply-side platform integration, demand-side platform integration is still in progress, which could delay broader advertiser reach and revenue growth.
Restructuring Costs: The restructuring plan involves onetime severance and related costs of approximately $5 million, which will impact short-term financials.
Revenue Growth: Revenue growth remains modest, with Q2 revenue up only 3% year-over-year, reflecting challenges in achieving significant top-line growth.
User Engagement: Platform WAU grew only 1% year-over-year, indicating slow user acquisition and engagement growth, which could impact long-term revenue potential.
Revenue Growth: Q3 2025 revenue is expected to be approximately $66 million. Full year 2025 revenue is expected to show modest year-over-year growth.
Adjusted EBITDA: The company expects an adjusted EBITDA loss of approximately $5 million in Q3 2025, excluding onetime restructuring-related expenses. Quarterly adjusted EBITDA breakeven is anticipated in Q4 2025, with full year adjusted EBITDA breakeven expected in fiscal year 2026.
Restructuring Plan: The restructuring plan is expected to reduce annual GAAP operating expenses by approximately $30 million. A portion of these savings will be reinvested in strategic initiatives, including product development. Onetime severance and related costs of approximately $5 million are expected, primarily in Q3 2025.
Product Development and Monetization: The company plans to scale AI-assisted targeting, introduce new ad formats, and finalize partnerships with demand-side platforms to enhance monetization. Financial benefits from the new Nextdoor platform are expected to materialize over time as awareness and adoption grow.
Self-Serve Channel: The self-serve channel, which grew 27% year-over-year in Q2 2025, is expected to continue driving scalable revenue growth and advertiser diversity.
Share Repurchase: In Q2, we repurchased 3.7 million shares. As we look forward, targeted investment in product remains our top capital allocation priority.
The earnings call reveals strong financial performance with revenue growth and improved EBITDA margins. Despite reduced ad load, self-serve revenue grew significantly, indicating effective monetization strategies. The company’s strong liquidity position and strategic restructuring efforts are positive indicators. Q&A insights highlight management's focus on enhancing user engagement and programmatic capabilities, which are promising for long-term growth. Although there are concerns about reduced user acquisition and ad load, the overall sentiment remains positive due to financial strength and strategic initiatives.
The earnings call presents a mixed picture. Financial performance shows modest revenue growth and improved EBITDA margins, but challenges remain with large advertiser sales and user engagement. The Q&A section highlights management's optimism and progress in platform development, yet lacks specific timelines or metrics. The share repurchase is positive, but restructuring costs and ongoing losses are concerns. Overall, the sentiment is balanced, leading to a neutral prediction.
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