Good afternoon. Thank you for attending today's Nextdoor Q2 2022 Earnings Call. My name is Hannah, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions-and- answers at the end. [Operator Instructions] I would now like to pass the conference over to our host, Matt Anderson with Nextdoor. Please go ahead.

Thank you, Hannah. I'm Matt Anderson, Head of Investor Relations. Good afternoon, and thank you for joining us today to review Nextdoor's second quarter 2022 financial results. With us on the call today are Sarah Friar, Chief Executive Officer; and Mike Doyle, Chief Financial Officer. 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 uncertainty. 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 the most directly comparable GAAP financial measures can be found in the Q2 2022 shareholder letter release today. With that I'd like to turn the call over to Sarah.

Thank you, Matt and hello everyone. A lot has changed in the world since our last earnings report. Macroeconomic conditions have become more uncertain. The risk of a recession has increased and neighbors and businesses are facing continued pressures from factors such as inflation and rising interest rates. We know that when times get tough, Nextdoor shows up for neighbors businesses and public agencies globally. In times of need, neighbors increasingly rely on Nextdoor for trusted information to connect with neighbors, both online and in real life, and to give and get help within their communities. We saw this throughout the pandemic and we're seeing it again now. Whether it's defined a side hustle to pay for accelerating rental costs, to use our quantified section to grab those free baby clothes, to help food raise for neighbors and need an extra big with groceries or to aggregate community members in support of a local cause. This reinforces our belief in Nextdoor's purpose to cultivate a tender world where everyone has a neighborhood to rely on. Q2 revenue growth of 19% year-over-year benefited from continued advertiser demand in areas such as home services, despite some macroeconomic driven reductions in customer budget. Advertisers of all sizes are realizing results from the Nextdoor's platform. From my own recent conversations with CMOs, I know there is a significant and enduring demand for the kind of engaged audiences and unique hyperlocal targeting that Nextdoor provides. Marketers also value the utility aspect of Nextdoor because of drive intent. Other neighbors have that buyer mindset and are typically the household decision maker. Weekly active users or WAU grew 26% year-over-year to approximately 37 million. We're seeing durable engagement trends amongst our most active users. In Q2, over 50% of weekly active users were active daily. Across all…

Thank you, Sarah, and good afternoon, everyone. As noted, WAU grew to approximately $37 million with WAU growth outside the US exceeding 50% year-over-year for the second straight quarter and growing nearly 100% in the last two years. Total revenue was $55 million, an increase of 19% year-over-year. Even through the current environment, we saw resilient demand for many of our advertisers and I'll highlight a few of the areas. One is our ability to deliver for advertisers across a range of campaign objectives. In Q2, we have campaigns ranging from H&R Block's third year of the Make Every Block Better brand campaign to file those conversion campaigns to reach new subscribers. For the on-demand streaming service silo, Nextdoor's high-intent audience was a great fit given the number of new movers and neighbors who are enthusiastic about streaming services. Although our customers' objectives are generally balanced between performance and brand awareness, we are currently seeing a slight trend towards performance-focused campaigns, which comprised over 60% of managed spend in the quarter. We believe this will serve us well as the industry navigates continued macroeconomic headwinds and advertisers find the right balance between brand and performance-focused objectives. The second area of strength was for mid-market advertisers who continue to demonstrate outsized growth on our platform. This emerging group of advertisers, a combination of self-serve and managed generally spends, more than SMBs, but less than enterprise. And a third area of resilience came from the core verticals that are holding up well including home services and recovery in verticals such as travel. We did see ongoing softness in financial services and emerging softness in retail real estate and quick-serve restaurants. This is reflected in our guidance. Overall, though we believe our efforts to increase advertiser diversity better position us in periods of…

Certainly. [Operator Instructions] The first question is from the line of Eric Sheridan with Goldman Sachs. Please proceed.

Thanks for taking the questions. Maybe two if I can. First, Sarah, I think for those who are less familiar with the business and the business model and you're still scaling into your growth. Can you give us some sense of what degree of visibility you have into advertising spend as you think about the back part of this year or into the first part of next year across some of either the verticals or some of the size of advertisers you talked about just so we better understand what the pipeline looks like from an advertising standpoint? And then one more in the weeds the variability you called out on moving SMB advertisers to your ad serving platform, can you give us a little bit of a sense of what that might translate into in terms of variability of revenue if we think out to the second half of the year? Thank you.

Great. Thank you, Eric. So, first of all, in terms of our business model, we are ad-centric today. And as Mike always reminds me we're certainly too young in our journey to turn away from that. We're still small relative with size of the digital ad sector and the pace of growth of the digital ad sector which even in a more turbulent time. I would remind everyone is still growing in 2022. In terms of visibility what we look at are first of all is our direct sales model for enterprise and mid-market. There is an enhance ability for the turnoff budgets in intra-quarter or going into a new quarter. And so that's one of the reasons why we want to make sure that we're staying prudent as we think about guidance and changing market conditions. Our guidance right now is based on visibility that we have from our customers today and as those factor in their response to a broader macro environment. Our applied Q4 guidance based on the full year and then Q3 is a little bit wider and that's again about just making sure we're leaving a foot end that give us a little bit more flexibility. At the same time we recognize that broadly speaking for our competitors there's really three factors going on. There's macroeconomics there's platform policy and privacy changes, and then, of course, there's diversification from new competitors. The first was certainly a focus for Nextdoor. On the privacy front keep in mind that Nextdoor is a first-party proprietary-based platform where our users are in a logged-in state when they come to the platform. So, we are not dropping cookies as you go around the web to follow on and two of who they are to better target them or to kind…

Thanks so much Sarah.

Thank you.

Our next question is from the line of Eric Sheridan with Goldman Sachs. Please proceed.

I think you just had Eric.

Mark Mahaney has dropped. [Operator Instructions] The next question is from the line of Mark Mahaney. Please proceed.

Okay. I oftentimes get confused with Eric Sheridan. Maybe that’s what happened. All right, lets see, I wanted to ask, Sarah, you made a comment in the middle in your prepared comments about how you want to shift over towards now growing users. You've been pretty happy with the level of engagement that you've seen increased engagements among users. So can you riff a little bit on how do you grow WAUs W-A-Us from here? Is there a new strategy, or is it just leaning more into strategies you've had in the past? It looks like the WAU growth slowed in the decelerated in the June quarter. So just talk about what's the change here? And I mean, how do you plan to revert and getting back to WAU growth again? Thank you.

Thanks Mark. So first of all on the WAU growth, we grew 26% year-over-year to $37 million. So we're pleased with that growth. But, of course, we always know that we can do more. What we've been very focused on is how do we bring people from join and registering as a verified neighbor down in the panel to being a monthly, being a weekly, being daily. And I think we're very happy with that progression we've seen. To give you a little bit of a sense of it, first of all, 50% of our WAUs are debt. So we know that, once we get you to being weekly, you have a very high propensity to come back on a daily basis. On top of that, we are most engaged segment. So the folks who truly are more daily and have us grew 50% year-over-year. So absolutely we're really enjoying, how much people are finding utility on the platform. I talked about Global session. So that's the moment where people return. That also accelerated on a quarter-over-quarter basis 10 points. And then the final thing, I would say, just overall in while it gives us a lot of confidence is that our international WAU growth continued to be over 50% year-over-year. So the good news is our focus on bringing you down the funnel of engagement is working. That's now letting us say, let's go back to top of funnel or how do we get new neighbors, because once we get you we now are very confident that we're going to get you to be hyper engaged. So the change I don't want to call it a change in strategy, but more of a shift back to top of the funnel will be driven by first of all, some of…

Great. Thank you, Sarah.

Thank you.

[Operator Instructions] There are no additional questions waiting at this time. So I will pass the conference over to Sarah Fryer for closing remarks.

Thank you so much Hannah, and thank you everyone for your time and support. While we delivered on our revenue and EBITDA expectations and both momentum in areas like the mid-market, we know we have work to do to continue to grow Nextdoor through a challenging global macro environment. As we discussed today, we are seeing laser-focused on growing WAU and revenue and all of our product road map and go-to-market execution is focused there for the second half of 2022. So, first, we need to continue to beat that drum on the importance of local, the Nextdoor work with neighborhood building that brand awareness that I just talked to Mark about. Second, we'll need to continue to invest in our welcoming platform initiatives, where we think Nextdoor is leading edge. So that ranges from how we moderate, ensuring rail neighbors are on the platform. You saw the stats about how well we do with things like viewability, when we're -- when the third parties look at us from an advertising perspective, that's because it's rail neighbors on Nextdoor. And then, of course, how we keep conversations, constructive and productive. Third and finally, we will continue to iterate quickly on our monetization capabilities for advertisers in all sizes. So as I talked about we want to keep iterating on our Nextdoor ad platform for SMB and bolstering our ad-serving platform through better tracking and measurement. While we grow revenue, we also want to focus on leverage, getting back to year-over-year margin improvement in Q4, while still investing in the long-term opportunity of a global hyperlocal neighborhood network. With that, we'll end the call today. And of course, we're here for any follow-up from investors. Thank you so much.

That concludes today's call. Thank you for your participation. You may now disconnect your lines.