Good afternoon all. My name is Carla, and I will be your conference operator today. At this time, I would like to welcome everyone at Nextdoor's Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Thank you. You may now begin the conference.

Thank you, operator. Good afternoon, everyone, and welcome to Nextdoor's Second Quarter 2025 Earnings Conference Call and Webcast. I'm John T. Williams, Nextdoor's Head of Investor Relations. With me today are Nirav Tolia, our Chief Executive Officer; and Matt Anderson, our Chief Financial Officer. As a reminder, 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 Q2 2025 Nextdoor investor update released today. One reminder, Nextdoor stock now trades under the ticker symbol NXDR. Please make a note of that if you haven't already. And now I'll turn it over to Nirav.

Good afternoon, everyone. I'm Nirav Tolia, Co-Founder and CEO of Nextdoor. As you know, we are in the early stages of a company- wide transformation. Since I returned to CEO over a year ago, we've made intentional changes to how we work, where we focus and how we are structured. Everything we do is anchored in a deliberate shift towards 3 priorities: product excellence, operational discipline and a recommitment to the power and potential of local community, all supporting our ambition to be the essential neighborhood network. Our conviction is strong, and it's reinforced by early signals that we're on the right path. One encouraging example, our Net Promoter Score has improved more over the past 6 months than in any previous period. While NPS isn't a financial metric, we believe it is a meaningful signal of user sentiment and a strong leading indicator of long- term business health. We are building with focus, urgency and an unshakable resolve to creating something better for neighbors, for advertisers and for all of the communities we serve. And we're still very early in our journey. The launch of the new Nextdoor was a refounding moment. We completely rebuilt our core product to enable a more structured, real-time and useful experience. That work is now live and is reflected in the 3 foundational pillars of the new Nextdoor. The first is local news. Curated high-quality content for more than 3,500 trusted publishers now reaches 77% of U.S. cities. Local news already accounts for roughly 5% of our overall feed content and continues to grow. By blending verified reporting with neighbor posts, we're delivering a more complete and accurate view of what's happening where you live. Next is real-time alerts. Delivered through partnerships with Samdesk, the Weather Company and many others, alerts range from…

Thanks, Nirav, for those kind words. It has been my privilege to serve as CFO of Nextdoor through multiple phases of growth and transformation. I'm proud of the financial and operational discipline we've introduced and I'm an enthusiastic supporter of the transformation that is underway. Now let's discuss our Q2 results and financial outlook. As Nirav noted, our self-serve channel is key to our monetization strategy because it enables scalable growth. In Q2, self-serve revenue grew 27% year-over-year and accounted for nearly 60% of our total revenue. We are beginning to see flywheel effects from this channel, bringing in net new advertiser spending, improving advertiser diversity and retention and unlocking operating leverage through a leaner sales force. Now turning to our Q2 results. As a reminder, we have transitioned to Platform WAU as our primary user metric. Platform WAU includes users who engage directly on the Nextdoor app or website, where we believe the new Nextdoor delivers value. Q2 Platform WAU of $21.8 million grew 1% year-over-year, reflecting steady user acquisition and continuous experimentation ahead of our launch of the new Nextdoor. Now on to monetization. Q2 revenue of $65 million was up 3% year-over-year. As noted earlier, our self- serve channel has become a key contributor to growth and continues to drive active customer growth in the third quarter. Large advertiser sales improved quarter-over-quarter but continued to be down year-over-year. Last quarter, we noted the importance of integrating with programmatic partners, including supply-side platforms, which help us sell our ad inventory programmatically and demand-side platforms, which enable advertisers to target and buy our inventory in real time. We have now completed our supply-side platform integration. We are also on track to enable advertisers to scalably purchase inventory through their preferred demand-side platforms before year-end. These integrations broaden demand, including…

[Operator Instructions] The first question comes from Jason Kreyer with Craig-Hallum.

Good to see some nice progress here. Just wanted to ask about ad volumes. So I'm wondering if there's any way that you could quantify kind of the changes that you made to ad loads earlier this year? And then as we go from here forward, what does that strategy look like for turning back on the ad loads? I know you said not to expect a lot of that in Q3, but kind of what duration or do we get back to the ad load that we were at before?

Okay. This is Nirav here, Jason. Thank you for the question. Appreciate it. And there's probably more of the same in regards to the continued experimentation that may actually affect how we're designing user interfaces and where we're placing ads. I think what we're probably a little bit more excited about in the second half of the year is experimenting with new ad formats and new surfaces that we've launched with the new Nextdoor. And so whether that's in the alerts area, in the Faves area or within search, that's probably where we would focus a little bit more. In the core feed, the way for us to actually drive more ad inventory is to drive more usage. And in that core feed, because we now have the introduction of third-party content, because we're starting to bring alerts in, I think we're still in a mode where from a long-term standpoint, it makes a lot more sense for us to continue optimizing the user experience first versus ad load.

Yes. This is Matt here. The one other thing I want to add that is something that's been real an area of progress for us over the last couple of quarters is we've also seen meaningful improvements in -- for that ad inventory, how it's being targeted, how AI is coming in to affect the ad serving, how it's delivering better click-through rates, lower cost for advertisers. And so that means even as we put that focus on experimentation and user experience, we are unambiguously delivering more value to our advertisers. And what we're really excited for is to have the ability to scale that further. But until then, the focus is on a really, really compelling user experience.

So maybe a follow-up, just sticking with that. Obviously, you've rebuilt this platform for the consumer, not necessarily for advertisers. But I'm just curious, to what degree did you bring in marketers throughout this process to maybe get feedback to help identify these new ad formats. And curious, as this has been in market for just a few weeks, have you gotten any feedback from these advertisers on what their thoughts are on the new platform you've rolled out?

That's a great question. So for the first part of your question, I spoke with quite a number of CMOs about the new Nextdoor. So it was certainly a focus on a great user experience. But what I heard over and over again from the CMOs is that they also wanted the better user experience first, and that would make this a more attractive platform for them as advertisers. So I think in this case, focusing on user experience doesn't make the advertisers feel like they're suffering. In fact, it's actually what they're looking for as well. It's actually a win-win. We did actually take them through all of the elements of changes or at least the first part of changes as we launched the new Nextdoor. They were very excited. We told them that we would fast follow the launch with the new ad formats, and that's the period that we're in right now. So we would expect to work a lot more closely with them really now versus leading up to the launch and immediately after the launch. We will absolutely be leaning on the advertisers to help us define the new ad format. That's something that is not really a consumer value proposition as much as it is really ensuring that the advertisers have the opportunity to reach the users who are more pleased by a better user experience in the right way.

Well, congrats on getting to this point.

And the next question comes from Jamesmichael Sherman-Lewis with Citigroup. Jamesmichael Charles Sherman-Lewis Two questions, if I may. First, I understood we're early days still in compiling learnings from Next, but would love some color on the evolving use cases you see for the Nextdoor app and which surfaces users are spending the most time on? And then, Matt, in context of the continued pressure among large advertisers spending into 3Q, hoping you can shed some insight into the budget conversations you're having with these advertisers and how the new supply side integrations can bolster your revenue from large customers.

Great. Thanks for the question, Jamesmichael. So on your first piece, yes, it's early, and we will have a lot more to share at the next earnings call. But I think the most important thing is what we started my remarks with, which is we've seen NPS grow more significantly over the last 6 months than in any period in the past. And so clearly, that is a leading indicator that users are appreciating the changes that we've made. In regards to what surfaces they're using, I also put this in my early remarks, we've now got 5% of overall newsfeed content in the form of local news. And I think almost half of our users or just over half of our users are engaging with that news content. So for a relatively small percentage of our total content, it's actually appealing to a very large percentage of our overall audience. The alert surface is being seen as incredibly useful, which makes us feel good because our focus here is really to make Nextdoor indispensable to make it a utility that you lean on. The challenge with the alert surface is that we are not going to send out alerts unless there are actually alerts happening in your neighborhood. And so if you haven't had any of those things I mentioned, inclement weather, a fire, some traffic delays, a power outage, well, then you wouldn't have received an alert and you wouldn't have interacted with that surface yet. So alerts is one of those features that will take more time because it's not something that you flip a switch and everyone starts using. It's something that's driven organically by actual real-time events that are occurring. What we're seeing though is when those events occur, there are really big responses from…

Yes. Jamesmichael. So a couple of points on the larger advertisers. So first, we did see a quite meaningful quarter-over-quarter improvement. The other thing is overarching all of that is the fact that one of the biggest things with these large advertisers, they are existing advertisers who are staying with us today who may be facing constraints of some kind, whether it's wanting to expand their reach to our audience, which we think -- the Nextdoor experience helps to address, whether it's through the buy that we talked about and the programmatic partners that you referenced. So those are things that will be overarching dynamics. One of the things that's also at play right now is a lot of the click optimization we've talked about in the context of self-serve. Right now, as we mentioned, Q3 is really the first period we're starting to see some of those benefits become available to larger managed advertisers. So we would expect an ongoing gradual benefit, the same way we've seen in self-serve over the last several quarters. So that's an emerging dynamic. And then as it relates to those programmatic partnerships, as I mentioned in my comments and as you noted, we've already seen some early progress from the supply-side platform integrations. And we're also very excited to be able to start to open up the demand side platforms. As I mentioned, those demand-side platforms integrations are going to be later this year. These are really in service of having multiple durable growth drivers and really start to play a bigger role in how we think about the 2026 trajectory.

[Operator Instructions] The next question comes from [ Naved Aman ] with B. Riley Securities.

This is Ryan Powell on for Naved. So first, I wanted to ask about Faves and expansion of that. I was wondering what the status is on expansion into all markets. And then I have a follow-up.

Great. So very simple answer to the Faves expansion. We're looking forward to continuing to expand it to the rest of the country through this calendar year. And so when we initially launched, it was in beta, we wanted to both launch it in a limited area and then learn from people using it in that area. That's what we're going through right now. As we create those learnings, we will begin to launch DMA by DMA until it's available for all of our users. I think another interesting thing that we have thought about as it relates to Faves is Faves is using AI to summarize and promote existing content that we've collected over the last 14 years. it doesn't only have to appear in the Faves section. So even before we officially launch Faves sections in other DMAs, you might start to see the Faves content that's been summarized by AI show up in places like the news feed.

Got it. And then in terms of publishers, I think you mentioned 35,000 on the platform now. What is the TAM there? What can that...

Right. So it's actually 3,500, not 35,000. And we think the TAM is probably 8,000 to 10,000. And so we will continue to bring those on the platform, but that's one of those numbers that we think we can achieve near ubiquity or total adoption at some point in the near future, call it, the next 6 to 18 months.

[Operator Instructions] And as we have no further questions in the queue, that does conclude the question-and-answer session of today's call. So I will hand back over to you, Nirav, for any final comments.

Thank you to everyone for joining the call today. I wanted to wrap up by mentioning our transformation is well underway, but we are just getting started. First, the new Nextdoor is live. We're very encouraged by the response so far, and we're moving quickly and with incredible focus to build a better experience for neighbors and advertisers. The second thing is, and this is really some of the big news this quarter, we've solidified our path to profitability. We made some really tough but necessary decisions to further sharpen our focus, and we will continue to operate with discipline as we move forward. Finally, I want to mention we've never had more conviction in our strategy. The building blocks are in place. We're very confident in our ability to drive long-term value creation, and we are completely committed to the power and potential of local community. Thank you for joining the call. Thank you for your interest in Nextdoor. We look forward to talking to you next time.

Thank you, everyone. This concludes today's call. Thank you, everyone, for joining. You may now disconnect. Have a great day.