Neighborhood social network Nextdoor (NYSE: KIND) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 1.9% year on year to $54.18 million. Its non-GAAP loss of $0.06 per share was in line with analysts’ consensus estimates.

Is now the time to buy KIND? Find out in our full research report (it’s free).

StockStory’s Take

Nextdoor’s first quarter was shaped primarily by its ongoing transformation initiative, NEXT, which management described as a fundamental redesign of the platform to enhance user engagement and deliver more timely, hyper-local content. CEO Nirav Tolia emphasized that the company’s most significant progress during the quarter was product-related, with the transition to NEXT prioritized over near-term growth metrics. He highlighted that, “any short-term trade-offs we have made and continue to make are intentional and aligned with our plan to maximize long-term value.” The company also reported steady user growth and improved adjusted EBITDA margins, attributing these gains to disciplined expense management and improved marketing efficiency.

Looking ahead, Nextdoor’s leadership is focused on launching the NEXT platform to all U.S. users by late July, with expectations that deeper engagement and new features will set the stage for improved monetization. Management is targeting three core pillars with this product overhaul: local news, real-time alerts, and AI-driven recommendations. Tolia noted, “We expect that by the end of July, we will have released NEXT to everyone in the U.S.,” adding that initial feedback from advertisers has been encouraging. CFO Matt Anderson acknowledged that while large advertiser spending remains a headwind, he expects upcoming ad platform enhancements and the rollout of programmatic ad buying to support a return to revenue growth in the second half of the year.

Key Insights from Management’s Remarks

Management linked first quarter performance to disciplined cost controls, a focus on user experience upgrades, and the initial phase of the NEXT product transformation, while highlighting near-term trade-offs for longer-term value.

• NEXT product transition: The company dedicated significant resources to the development and upcoming launch of its NEXT platform, which aims to deliver more relevant local content, real-time alerts, and enhanced recommendations. Management sees this as a foundational change expected to drive future engagement and monetization.
• User metric realignment: Nextdoor will shift its primary user metric from total weekly active users (WAU) to platform WAU, which counts only users engaging directly with the app or website. This move is designed to better reflect the quality of engagement and align with where monetization occurs, excluding passive email-only users.
• Ad platform enhancements: The Nextdoor Ads platform now serves all large U.S. advertisers directly and has seen improvements in click-through rates and cost efficiency. Management attributed this to the adoption of new performance features and AI-powered campaign tools, which help advertisers better reach relevant audiences.
• Self-serve revenue growth: Self-serve advertising continued to expand, accounting for over 60% of total revenue in the first quarter. This reflects a shift towards more accessible, automated advertising solutions that can attract a broader range of advertisers beyond large brands.
• Expense discipline and cash flow: The company reported ongoing year-over-year improvements in adjusted EBITDA margins and generated positive operating cash flow, citing improved team productivity, more efficient marketing, and lower hosting costs as contributing factors.

Drivers of Future Performance

Nextdoor’s forward outlook centers on the full launch of NEXT, expansion of ad surfaces, and the shift to programmatic advertising, balanced against near-term advertiser spending headwinds.

• NEXT rollout and engagement: Management believes that the success of NEXT, which introduces new features like curated local news, real-time alerts, and AI-driven recommendations, will be crucial to driving higher user engagement and ultimately increasing monetization opportunities. The rollout is expected to be completed by late July, with initial results to be shared in the next quarter.
• Programmatic ad adoption: Plans to enable programmatic ad buying later this year are intended to unlock new demand from advertisers, particularly as some large brands shift budgets toward programmatic channels. Management expects this to help offset weakness in direct large advertiser sales and support a return to revenue growth.
• Expense management and platform WAU focus: The company will continue to prioritize disciplined spending while monitoring the transition to the new platform WAU metric. This focus aims to capture more engaged, monetizable users and align external reporting with the areas generating the most value for both users and advertisers.

Catalysts in Upcoming Quarters

In the upcoming quarters, the StockStory team will closely track (1) the uptake and user response to the full NEXT platform launch, (2) progress on enabling programmatic ad buying and its effect on advertiser demand, and (3) the transition from traditional WAU to platform WAU as a core metric for engagement and monetization. Additionally, the pace and quality of AI-driven feature adoption will serve as a key indicator of Nextdoor’s evolving value proposition.

Nextdoor currently trades at a forward price-to-gross profit ratio of 3×. At this valuation, is it a buy or sell post earnings? Find out in our full research report (it’s free).

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