Nextdoor Holdings, Inc. Q1 FY2026 Earnings Call

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 2026 Earnings 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 five 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 three, and we start, as always, with our unique core asset. Nextdoor is built on a verified address-based neighborhood graph spanning 350,000 neighborhoods, and 110 million verified neighbors, roughly one in three 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-over-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 two 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 four and five 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. This is 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. Much of the work that we've done over the last two years has been on 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. 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 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 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 one very critical user need: when our neighbors come to Nextdoor, they want relevant content. 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 that hasn't visited in a long time and we don't have a good 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 heavily 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: the more content we have, the better we can be at targeting that content and making it relevant to our users. Most of our efforts are around increasing the quality of content on Nextdoor. We need to increase quantity as well, but we're taking a quality-first view.

That was great. Nirav, one follow-up maybe. You 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. That metric is we grew the number of unique contributors over this period of time. 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 user-generated content platforms, one percent of the users create the majority of the content. The same is true of Nextdoor. But if we can grow that contributor base, then we start to see lots of really positive effects. In this period, we were able to grow that contributor base which resulted in more content, more reasons for people to visit Nextdoor, more relevant content when they visit Nextdoor and all good things start to happen on the platform. One of the things that we've done over the last two years is we've gone deep to understand the core aspects of the foundation of the system, so we can fix root causes versus just deal with superficial layers. WAU in and of itself is an output metric. It's not an input metric. An input metric is how many unique contributors you have. 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 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. I'll elaborate on AI because I've never 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. I believe we're one of the few companies that can use the power of AI, which is furnishing machines and technology, and combine it with verified human content and profiles to create the best of both. The feed itself will continue to be more personalized. You don't want the same experience for every user on Nextdoor. Users who really want news should see a lot of news. Users who want neighborhood conversation should see neighborhood conversation. Historically, everyone in a neighborhood saw the same feed. That is no longer the case, and we see much better outcomes using AI to personalize feeds. Second, we will increasingly experiment with summarizing the feed using AI so that you can get the value of reading lots of threads in a concise form. We need to make sure we do it in the right way so that contributions and the ability to reply to threads continue to happen. The experiments we've run give us conviction that we can use AI to summarize and make more useful existing user-generated content. Finally, we're starting to think more deeply about services other than the feed that can be valuable on Nextdoor, whether that's your messaging inbox, groups, or the For Sale and Free surface. We're very early and exploratory, but we realize we have multiple surfaces and we can use AI across all of them. We are taking the best of AI technology — personalization and summarization — and combining it with verified human content that's proprietary and generated by people we know well. We think that's a long-term, 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. Opportunity Alerts has been a big bright spot for us. We are increasingly thinking about not just investing in the feed advertising revenue stream because that's growing and performing for advertisers. We do believe that whether it's lead generation or other services, there are non-ads, non-feed revenue opportunities inside Nextdoor. Opportunity Alerts is one of the first and it's powerful because it has strong product-market fit. Opportunity Alerts works because neighbors come to Nextdoor looking for service providers, and we can proactively connect service providers to neighbors based on expressed intent. It's good for neighbors, good for service providers, and performs well in pricing and retention. It's still early for Opportunity Alerts, but it is certainly one of the more exciting monetization vehicles 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 are resonating most with users and how that'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. One of the features 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 14 or 15 years of conversations we have between verified neighbors on our platform and uses that information to proactively answer questions either on demand or when neighbors post in the feed. Ask has given us many new ideas on how to deploy AI into the consumer experience. While AI can transform companies operationally, making workflows more efficient, we're also using AI inside the product itself. Ask is one of the first features where we combine AI with user-generated content to create a better experience for users.

Yes. It was a very good quarter on revenue growth, as you saw a 14% growth, and it was broad-based across all of our revenue channels. Our strongest growth is probably in our direct sales business with 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, and financial services. We saw a big uptake in advertiser interest in our video products, which is encouraging year-over-year. Self-serve continues to be a larger share of our ad revenue; it's increasing and showing advertisers are interested there. SMB also grew and we saw strength across the board. We saw meaningful increases in average spend per advertiser year-over-year, which is encouraging. Finally, search improved in monetization. Overall, a pretty broad-based solid quarter.

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 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. We think of our opportunity with small and local businesses as a genuine win-win-win. It's a win for local businesses because they largely lost their traditional advertising channels; there's no more Yellow Pages and the big platforms have largely left them behind, so we can fill the gap and give them a cost-effective and highly performant way to reach customers. It's a win for neighbors because neighbors genuinely want to find and support businesses they can trust that are local. Because of the way Nextdoor works, neighbors are recommending these businesses and vouching for them. Finally, it's a win for Nextdoor because this market reinforces our core mission of strengthening local communities and it's structurally efficient to operate because it tends to be in the self-service category. On the specifics, spend per advertiser is growing, which is a 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 remains an area of focus. Serving local businesses is an efficient model for us with less overhead and better unit economics as we scale, and it's a key driver of the self-service growth you've been seeing in our business. We're still early, but the signal is positive and this is an area we're 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?

I'm excited to talk about Ask because I believe it opens up many opportunities. Ask launched as an AI-assisted feature. Neighbors can ask questions and get answers generated from 14 years of verified neighbor conversations. The answers are local and from real people on our platform, not the open internet, which preserves local authenticity. As we watched how users engaged, we developed a new idea: embed Ask directly into the feed. Conversations happen in the feed every day and members aren't always online to respond. We've begun to embed Ask into those gaps, using AI to summarize and surface real answers from our corpus. The results have been encouraged: engagement's up, there are more comments, the quality of conversations goes up, and there are more organic mentions of businesses. This gives us a playbook for deploying AI in ways that feel native and differentiated to who we are. Regarding monetization, monetization is not the near-term objective for Ask; driving engagement is. When neighbors are actively asking for recommendations and getting real answers from neighbors, that creates the high-intent environment advertisers value. We will develop the commercial layer on top of that healthy foundation.

Our third and final question came from a few investors regarding our path to profitability and free cash flow: is the path primarily revenue-led, or are there structural cost reductions coming? I'll take this one. First, 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 an attractive rate. That is encouraging. But that being said, we're not standing still on costs. We will continue to leverage AI and other technology advances to optimize how we operate, and we expect that discipline to be a consistent feature of how we run the business going forward. With that, Nirav, I'm going to turn it over to you for closing remarks.

Okay. Thank you, Indrajit. I want to thank all of you for joining us today. This was a strong quarter 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. Those numbers tell a clear story. What gives me the most conviction is not just a quarter but the moment we're in. As AI makes the digital world more synthetic, the network that is real, local and human becomes more valuable. 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'll remain focused on executing with ambition and discipline. I think you've seen today that the progress is undeniable. 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.