Nextdoor (US:KIND)2022-11-09 03:13Financial Data and Key Metrics Changes - Revenue grew 2% year-over-year to $54 million, reflecting continued headwinds in advertising spend across various customers [13][24] - Adjusted EBITDA for Q3 was a loss of $18 million, representing a negative 34% margin, primarily due to near-term deleveraging as revenue growth remains unpredictable [27] - Q3 ARPU declined 12% year-over-year to $1.41, attributed to stronger WAU growth and lower monetization from SMB customers [26] Business Line Data and Key Metrics Changes - Weekly Active Users (WAU) grew by 17% year-over-year and 4% sequentially, with over 1 million net new WAU added quarter-over-quarter [8][22] - Sessions growth exceeded WAU growth, indicating increasingly frequent engagement, with a 15% sequential increase in sessions [10][46] - The majority of advertisers' spend in Q3 was on direct response campaigns, although there were strong brand partnerships as well [25] Market Data and Key Metrics Changes - Continued headwinds in advertising spend were noted, particularly in financial services and real estate, while pockets of strength were observed in mid-market advertisers [13][14] - The company expanded its third-party measurement partnerships to help advertisers understand the efficacy of their spend [15] Company Strategy and Development Direction - The company is focused on product development, enhancing community value, and helping advertisers achieve their goals amidst a challenging advertising environment [7] - Investments in machine learning and AI are expected to drive greater engagement and improve targeting for advertisers [9] - The company is evolving its sales strategy to focus on recession-resilient verticals such as healthcare and government [17][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging global economic backdrop and emphasized the importance of their platform for neighbors, businesses, and public agencies [19][20] - The company is adjusting its Q4 2022 revenue expectation to between $50 million and $52 million, indicating a cautious approach in light of current market conditions [28][30] - Management remains optimistic about long-term growth opportunities despite near-term revenue variability [20][30] Other Important Information - The company ended the quarter with $604 million in cash, cash equivalents, and marketable securities, indicating strong capital for future investments [27] - A share repurchase program was authorized, with over $77 million of Class A common stock repurchased [27][73] Q&A Session Summary Question: WAU growth and sequential changes - Management noted that WAU growth was driven by investments in machine learning and AI, improved notifications, and new features like native maps and Faves [34][35][36] Question: Drivers of session growth - Management highlighted that engaged segments are growing, with a 50% year-over-year increase in engagement, contributing to session growth [47][48] Question: Advertiser growth and macro backdrop - Management indicated that while there are headwinds in spend per advertiser, retention rates are strong, and they are focused on attracting new advertisers [68][69] Question: Stock-based compensation management - Management explained that stock-based compensation is influenced by team growth and seniority, with plans to manage headcount flat in the near term [71] Question: Oracle partnership and measurement - Management discussed the importance of third-party measurement partnerships for demonstrating ad performance, particularly for larger enterprises and mid-market advertisers [81][84]