Nextdoor (US:KIND)2025-05-07 20:07Special Note Regarding Forward-Looking Statements This section cautions that the report contains forward-looking statements subject to risks and uncertainties - This section cautions that the report contains forward-looking statements regarding future events, operating results, and financial performance. These statements are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially810 - Key areas covered by forward-looking statements include: anticipated growth in users, engagement, and monetization; development of new products and platform enhancements, including the NEXT initiative; the impact of the macroeconomic and political climate; international expansion efforts; ability to achieve and maintain profitability; and financial performance and ability to raise future financing8 Risk Factor Summary This section summarizes principal risks including limited operating history, reliance on advertising, and financial volatility - This section provides a high-level summary of the principal risks and uncertainties facing the company, including a limited operating history, substantial reliance on advertising revenue, intense competition, dependence on third-party infrastructure, a history of net losses, and potential volatility in stock price and concentrated voting power1617 Part I - Financial Information Financial Statements (Unaudited) This section presents unaudited condensed consolidated financial statements, reporting a net loss of $22.0 million on $54.2 million revenue for Q1 2025 Condensed Consolidated Balance Sheets The balance sheet shows total assets decreased from $514.0 million to $495.0 million, with stockholders' equity declining to $436.1 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current Assets | | | | Cash and cash equivalents | $57,338 | $45,550 | | Marketable securities | $360,547 | $381,429 | | Total current assets | $451,796 | $466,692 | | Total Assets | $494,962 | $513,953 | | Total Liabilities | $58,893 | $60,465 | | Total Stockholders' Equity | $436,069 | $453,488 | Condensed Consolidated Statements of Operations Revenue increased 2% to $54.2 million, with net loss improving to $22.0 million due to decreased costs and expenses Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $54,176 | $53,146 | | Total costs and expenses | $81,189 | $87,895 | | Loss from operations | $(27,013) | $(34,749) | | Net loss | $(21,952) | $(28,261) | | Net loss per share, basic and diluted | $(0.06) | $(0.07) | Condensed Consolidated Statements of Cash Flows Operating cash flow turned positive at $0.4 million, contributing to a $9.1 million increase in cash and equivalents Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $368 | $(13,627) | | Net cash provided by investing activities | $21,551 | $35,890 | | Net cash used in financing activities | $(12,845) | $(12,893) | | Net increase in cash, cash equivalents, and restricted cash | $9,077 | $9,437 | Notes to Condensed Consolidated Financial Statements These notes detail accounting policies, share repurchases, stock-based compensation, legal proceedings, and segment information, with most revenue from the U.S - The company's Share Repurchase Program was increased by $150.0 million and its expiration was extended to March 31, 2026, with 4.7 million shares repurchased for $9.1 million in Q1 20256365 - Stock-based compensation expense for Q1 2025 was $17.1 million, a decrease from $19.5 million in Q1 202471 - The company is involved in several legal proceedings, including a securities class action, a shareholder derivative complaint, and a class action related to its SPAC merger, with the potential loss from these matters currently inestimable525355 Revenue by Geography (in thousands) | Region | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | United States | $51,901 | $49,899 | | International | $2,275 | $3,247 | | Total | $54,176 | $53,146 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, highlighting a 2% revenue increase, 6% WAU growth, and improved Adjusted EBITDA loss Key Business Metrics Key metrics show 6% WAU growth to 46.1 million but a 4% decline in ARPU, with a future transition to Platform WAU reporting Key Business Metrics Comparison | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Weekly Active Users (WAU) | 46.1 million | 43.4 million | +6% | | Platform WAU | 22.5 million | 21.4 million | +5% | | Average Revenue per WAU (ARPU) | $1.18 | $1.22 | -4% | - Starting with the Q2 2025 report, the company will stop reporting WAU and will instead report Platform WAU, also ceasing to provide a geographic breakout for its key metrics to align with its focus on existing markets, primarily the U.S8288 Results of Operations Revenue grew 2%, while total costs decreased 8% due to reduced sales and marketing, leading to a smaller operating loss - Revenue increased by $1.0 million (2%) primarily due to a 5% increase in Platform WAUs, which outpaced the increase in advertiser spending107 - Sales and marketing expenses decreased by $7.8 million (26%), mainly from a $4.2 million reduction in personnel costs and a $3.4 million cut in brand and performance marketing110 - Research and development expenses increased by $2.2 million (7%), primarily due to a $2.0 million increase in personnel-related costs from higher headcount109 - Interest income decreased by $1.9 million (27%) due to lower invested balances and lower interest rates113 Liquidity and Capital Resources The company maintains $417.9 million in liquidity despite an $886.0 million accumulated deficit, with $88.2 million remaining for share repurchases - The company held $417.9 million in cash, cash equivalents, and marketable securities as of March 31, 2025118 - The company has a history of losses, with an accumulated deficit of $886.0 million as of March 31, 2025, and expects to continue incurring losses for the foreseeable future117 - The Board of Directors authorized an additional $150.0 million for the Share Repurchase Program and extended its expiration to March 31, 2026, with $88.2 million available for future repurchases as of quarter-end120 Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposures are primarily interest rate and foreign currency fluctuations, deemed immaterial due to short-term investments and USD-denominated revenue - The company is exposed to interest rate risk on its $417.8 million portfolio of cash, cash equivalents, and marketable securities, but believes the risk is not material due to the short-term nature of the investments135 - Foreign currency risk is currently not significant as the majority of revenue is denominated in U.S. Dollars, though operating expenses in foreign currencies are subject to exchange rate fluctuations136 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - Management concluded that disclosure controls and procedures were effective as of March 31, 2025137 - No changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal controls were identified during the quarter138 Part II - Other Information Legal Proceedings The company is involved in various legal proceedings, with detailed discussions referenced in Note 6 of the financial statements - The company is involved in various legal proceedings, and for detailed information, the report refers to Note 6, which describes ongoing securities class action, shareholder derivative, and SPAC-related class action lawsuits1415253 Risk Factors This section outlines numerous risks, including reliance on advertising, intense competition, technology dependence, financial losses, and evolving legal and regulatory environments - Business & Industry Risks: The company has a limited operating history at its current scale, generates substantially all revenue from advertising, and faces intense competition from larger companies like Meta and Alphabet143147159 - Security & Technology Risks: The business depends on third-party providers like AWS and Google Ad Manager, and is vulnerable to security breaches, data loss, and the development of ad-blocking technologies that could harm revenue197199206 - Legal & Regulatory Risks: The company is subject to complex and evolving laws regarding data privacy (CCPA, GDPR), content liability (CDA, DSA), and artificial intelligence, which could increase costs and legal exposure243249251 - Financial & Ownership Risks: The company has a history of net losses and may not achieve profitability, while the dual-class stock structure concentrates voting power with management and early stockholders, limiting the influence of Class A shareholders227293 Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities This section reports no unregistered equity sales and details the repurchase of 4.72 million Class A common shares during Q1 2025 Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | 1,284,360 | $2.38 | | February 2025 | 0 | $— | | March 2025 | 3,436,055 | $1.75 | | Total | 4,720,415 | — | - The Board of Directors authorized an increase of $150.0 million to the Share Repurchase Program and extended its expiration date to March 31, 2026, with $88.2 million remaining available for future repurchases313 Defaults Upon Senior Securities The company reports that this item is not applicable - Not applicable314 Mine Safety Disclosures The company reports that this item is not applicable - Not applicable315 Other Information The company discloses that no Section 16 officers adopted or terminated Rule 10b5-1 trading plans during Q1 2025 - During the three months ended March 31, 2025, none of the company's Section 16 officers adopted or terminated any Rule 10b5-1 trading plans317 Exhibits This section lists exhibits filed with the 10-Q, including SOX certifications and Inline XBRL data files - The exhibits filed with this report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, and interactive data files (Inline XBRL)319 Signatures The report was signed on May 7, 2025, by the Chief Executive Officer and Chief Financial Officer - The report was signed on May 7, 2025, by Nirav Tolia, Chief Executive Officer and President, and Matt Anderson, Chief Financial Officer and Treasurer324