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What changed in Nextdoor Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Nextdoor Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+279 added−293 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-28)

Top changes in Nextdoor Holdings, Inc.'s 2023 10-K

279 paragraphs added · 293 removed · 226 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn the third quarter of 2022, we launched Faves to allow neighbors to connect with and follow their favorite local businesses. • For Sale & Free: For Sale & Free is our truly local marketplace where neighbors buy, sell, or give away items, and offer services such as babysitting and dog walking. • Public Services: On Nextdoor, neighbors can receive critical, real-time information from trusted officials.
Biggest changeNextdoor is a high-utility platform that connects neighbors with organizations and other local resources. Neighbors can discover and interact with local businesses, leave recommendations, and follow their Faves on the platform. Neighbors can utilize a truly local marketplace, For Sale & Free, to buy, sell, or give away items, and offer services such as dog walking.
For additional information, please see the section entitled “ Risk Factors — Risks Related to Intellectual Property .” Human Capital Our Culture and Core Values Community is at the heart of Nextdoor and our growing community of employees is our lifeblood.
For additional information, please see the section entitled “ Risk Factors — Risks Related to Intellectual Property .” Human Capital Our Culture and Core Values Community is at the heart of Nextdoor and our community of employees is our lifeblood.
These laws and regulations are constantly evolving and may be interpreted, applied, created, or amended, in a manner that could harm our business. 10 Table of Contents We rely on a variety of statutory and common-law frameworks and defenses relevant to the content available on our service, including the Digital Millennium Copyright Act (the “DMCA”), the Communications Decency Act (“CDA”) and the fair-use doctrine in the United States, and the Electronic Commerce Directive in the European Union.
These laws and regulations are constantly evolving and may be interpreted, applied, created, or amended, in a manner that could harm our business. 9 Table of Contents We rely on a variety of statutory and common-law frameworks and defenses relevant to the content available on our service, including the Digital Millennium Copyright Act (the “DMCA”), the Communications Decency Act (“CDA”) and the fair-use doctrine in the United States, and the Electronic Commerce Directive in the European Union.
The content of our websites and information that we may post on or provide to online and social media channels and information that can be accessed through our websites or these online and social media channels are not incorporated by reference into this Annual Report or in any other report or document we file with the SEC, and any references to our websites or these online and social media channels are intended to be inactive textual references only. 12 Table of Contents
The content of our websites and information that we may post on or provide to online and social media channels and information that can be accessed through our websites or these online and social media channels are not incorporated by reference into this Annual Report or in any other report or document we file with the SEC, and any references to our websites or these online and social media channels are intended to be inactive textual references only. 11 Table of Contents
Competition presents an ongoing threat to the success of our business .” Government Regulation We are subject to many U.S. federal and state and foreign laws, regulations, and industry standards that involve matters central to our business, including laws and regulations that involve data privacy and data protection, intellectual property (including copyright and patent laws), content regulation, rights of publicity, advertising, marketing, health and safety, competition, protection of minors, consumer protection, taxation, anti-bribery, anti-money laundering and corruption, telecommunications, and securities.
Competition presents an ongoing threat to the success of our business .” Government Regulation We are subject to many U.S. federal and state and foreign laws, regulations, and industry standards that involve matters central to our business, including laws and regulations that involve data privacy and data protection, intellectual property (including copyright and patent laws), content regulation, rights of publicity, advertising, marketing, health and safety, competition, protection of minors, consumer protection, taxation, anti-bribery, anti-money laundering and corruption, telecommunications, AI and machine learning, and securities.
We maintain ongoing connection with our team members through weekly all hands meetings, our speaker series, and bi-annual engagement surveys. Compensation, Benefits and Perks We provide employees with competitive compensation packages that include base salaries, sales commissions for certain employees, and equity awards.
We maintain ongoing connection with our team members through regular all hands meetings, our speaker series, and bi-annual engagement surveys. Compensation, Benefits and Perks We provide employees with competitive compensation packages that include base salaries, sales commissions for certain employees, and equity awards.
Our principal executive offices are located at 420 Taylor Street, San Francisco, California 94102 and our telephone number is (415) 344-0333. Our website address is https://www.nextdoor.com. The information contained on, or that can be accessed through, our 11 Table of Contents website is not incorporated by reference into, and is not a part of, this Annual Report.
Our principal executive offices are located at 420 Taylor Street, San Francisco, California 94102 and our telephone number is (415) 344-0333. Our website address is https://www.nextdoor.com. The information contained on, or that can be accessed through, our website is not incorporated by reference into, and is not a part of, this Annual Report.
Solely for convenience, our trademarks and tradenames referred to in this Annual Report appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor, to these trademarks and tradenames.
Solely for convenience, our trademarks and tradenames referred to in this Annual Report appear without the ® and ™ symbols, but 10 Table of Contents those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor, to these trademarks and tradenames.
In support of our objectives of delivering advertiser value, reducing advertising effort, and enabling businesses to thrive on Nextdoor, our development roadmap is focused on unifying our self-service offerings, leveraging machine learning technologies to improve ad targeting, and enhancing measurement solutions to better inform our value proposition. • Cloud Infrastructure.
In support of our objectives of delivering advertiser value, reducing advertising effort, and enabling businesses to thrive on Nextdoor, our development roadmap is focused on unifying our self-service offerings, leveraging machine learning and AI technologies to improve ad targeting, and enhancing measurement solutions to better inform our value proposition.
In addition, various countries around the world have adopted and pending legislation, including the recently adopted Digital Services Act (the “DSA”) in the European Union and the Online Safety Act in Australia as well as the draft Online Safety Bill in the United Kingdom, that may impose additional obligations or liability on us associated with content uploaded by users to our platform.
In addition, various countries around the world have adopted legislation, including the Digital Services Act (the “DSA”) in the European Union, the Online Safety Act in Australia, and the Online Safety Bill in the United Kingdom, that may impose additional obligations or liability on us associated with content uploaded by users to our platform.
We live these core values through our approach to our people practices, summarized below. Employees As of December 31, 2022, we had 704 employees in the United States and in our international locations in Canada, the United Kingdom, the Netherlands, Ireland, France and Australia.
We live these core values through our approach to our people practices, summarized below. Employees As of December 31, 2023, we had 594 employees in the United States and in our international locations in Canada, the United Kingdom, the Netherlands, Ireland, France and Australia.
To establish and protect our intellectual property, proprietary rights and brand, we rely on a combination of federal, state, and common-law rights in the United States and the rights under the laws of other countries, patents, trademarks, copyrights, domain name, trade secrets, including know-how, license agreements, confidentiality procedures, non-disclosure agreements with third parties, employee disclosure, and invention assignment agreements, and other contractual rights.
To establish and protect our intellectual property, proprietary rights and brand, we rely on a combination of federal, state, and common-law rights in the United 2 Nextdoor Transparency Report, 2023. 7 Table of Contents States and the rights under the laws of other countries, patents, trademarks, copyrights, domain name, trade secrets, including know-how, license agreements, confidentiality procedures, non-disclosure agreements with third parties, employee disclosure, and invention assignment agreements, and other contractual rights.
As of December 31, 2022, we had eight issued patents and two filed patent applications in the United States. We cannot assure you that any of our patent applications will result in the issuance of a patent or whether the examination process will require us to narrow our claims.
As of December 31, 2023, we had 10 issued patents in the United States. We cannot assure you that any of our patent applications will result in the issuance of a patent or whether the examination process will require us to narrow our claims.
Our learning and development experiences focus on onboarding new hires as well as offering workshops focused on skills development and compliance training. We are committed to making Nextdoor the best place to work by engaging with, and listening to, our community of employees.
The programs include performance feedback and promotion cycles and recognition through our “Nextdoor Values Awards”. Our learning and development experiences focus on onboarding new hires as well as offering resources focused on skills development and compliance training. We are committed to making Nextdoor the best place to work by engaging with, and listening to, our community of employees.
We are therefore subject to U.S. federal, state, local, and foreign laws and regulations regarding data privacy and the collection, storage, sharing, use, processing, disclosure and protection of personal information and other data from users, employees or business partners, including the European Union’s General Data Protection Regulation (“GDPR”), the United Kingdom’s General Data Protection Regulation (“ UK GDPR”), Canada’s Personal Information Protection and Electronic Documents Act, Australia’s The Privacy Act 1988 and Australian Privacy Principles, the California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act (“CPRA”) on January 1, 2023, and the Virginia Consumer Data Protection Act, which went into effect on January 1, 2023.
We are therefore subject to U.S. federal, state, local, and foreign laws and regulations regarding data privacy and the collection, storage, sharing, use, processing, disclosure and protection of personal information and other data from users, employees or business partners, including the European Union’s General Data Protection Regulation (“GDPR”), the United Kingdom’s General Data Protection Regulation (“UK GDPR”), Canada’s Personal Information Protection and Electronic Documents Act, Australia’s The Privacy Act 1988 and Australian Privacy Principles, the California Consumer Privacy Act (“CCPA”), along with similar privacy laws enacted in other U.S. states.
However, each of these statutes is subject to uncertain or evolving judicial interpretation and regulatory and legislative amendments. For example, in the United States, laws such as the CDA, which have previously been interpreted to provide substantial protection to interactive computer service providers, may change and become less predictable or unfavorable by legislative action or juridical interpretation.
However, each of these statutes is subject to uncertain or evolving judicial interpretation and regulatory and legislative amendments. For example, in the United States, laws such as the CDA, which have previously been interpreted to provide substantial protection to interactive computer service providers, have seen recent Supreme Court challenges and there have been legislative efforts to curtail the CDA’s protections.
Our auction system selects the best ad for each available ad impression, based on the likelihood of a desired action occurring and how much that action is worth to advertisers. The likelihood of the action occurring depends on a variety of factors, such as ad relevance and creative quality.
Ad Auction Ads on the Nextdoor platform primarily compete via an auction-based system. Our auction system selects the best ad for each available ad impression based on the likelihood of a desired action occurring and how much that action is worth to advertisers.
We have active and engaged Employee Resource Groups that are aligned around dimensions of diversity, such as gender, ethnicity, religion, sexual orientation and other shared attributes, which we believe help foster a sense of community, and a diverse and inclusive workplace. 9 Table of Contents We also offer training sessions to our employees to emphasize awareness in self, bias and privilege, and inclusion.
We have active and engaged Employee Resource Groups (“ERG”) that are aligned around dimensions of diversity, such as gender, ethnicity, religion, sexual orientation and other shared attributes, which we believe help foster a sense of community, and a diverse and inclusive workplace. We have equipped our ERG leaders with tools and training to engage in courageous conversations with their communities.
Public agencies, including government entities and service providers, turn to Nextdoor directly, quickly, and easily reach neighbors in their community with hyperlocal information and alerts.
In addition, Nextdoor is where neighbors can receive critical, real-time information from trusted officials. Public agencies, including government entities and service providers, turn to Nextdoor to directly, quickly, and easily reach neighbors in their community with relevant local information and alerts.
From day one, we’ve required neighbors to sign up with their real names and addresses to ensure neighborhoods are made up of real people, nearby, and we have improved on similar verification procedures for businesses We require all new neighbors to accept our Neighbor Pledge upon joining, in order to introduce our community guidelines and provide personal accountability for interactions on the platform.
From day one, we’ve required neighbors to sign up with their real names and addresses to ensure neighborhoods are made up of real people, nearby, and we have improved on similar verification procedures for businesses.
We have always believed it is important to incorporate local context into moderation decisions, which is why we have incorporated volunteer community moderators into our moderation program, alongside Nextdoor operations staff.
These developments enable us to better analyze tone and context, and help authors rephrase posts and comments to receive a better response from their community. We have always believed it is important to incorporate local context into moderation decisions, which is why we have incorporated volunteer community moderators into our moderation program, alongside Nextdoor operations staff.
We continue to invest in our proprietary Nextdoor Ads Platform to expand and improve our advertising solutions for businesses of all sizes.
We continue to use machine-learning and proprietary technology to power our product strategy of building an engaged community. We also continue to invest in our proprietary ad platform to expand and improve our advertising solutions for businesses of all sizes.
Item 1. Business Overview At Nextdoor, our purpose is to cultivate a kinder world where everyone has a neighborhood they can rely on. Nextdoor is the neighborhood network that connects neighborhood stakeholders, including neighbors, businesses and public services, online and in real life to build stronger, more vibrant, and resilient neighborhoods.
Item 1. Business Overview At Nextdoor, our purpose is to cultivate a kinder world where everyone has a neighborhood they can rely on. Neighbors around the world turn to Nextdoor to receive trusted information, give and get help, get things done, and build real world connections with those nearby — neighbors, businesses, and public services.
Our Advertising Solutions Nextdoor offers differentiated advertising solutions in a unique local context that allows advertisers of all sizes to reach the right neighbor, at the right time, with the right message. Nextdoor helps advertisers drive measurable outcomes by creating meaningful connections with a uniquely engaged local audience.
Our Advertising Solutions Nextdoor offers advertising solutions designed to generate tangible value for businesses seeking to expand their reach and drive sales with unique local context that allows advertisers of all sizes to reach the right neighbor, at the right time, with the right message.
Further, neighbors are alerted when a new neighbor joins so they can reach out with a message of connection and belonging and establish rapport.
We require all new neighbors to accept our Neighbor Pledge upon joining, in order to introduce our Community Guidelines and provide personal accountability for interactions on the platform. Further, neighbors are alerted when a new neighbor joins so they can reach out with a message of connection and belonging and establish rapport.
While local community moderators review most types of guideline-violating content, reports of certain types of harmful content (e.g., misinformation, discrimination) are always handled by Nextdoor operations staff to ensure our standards and policies are applied consistently. Technology Our investments in technology are focused on the following areas: Core Product Development, Advertising Solutions, and Cloud Infrastructure. • Core Product Development.
Volunteer community moderators are active neighbors who have access to specialized tools and resources they can utilize as they help enforce our Community Guidelines. While local community moderators review most types of guideline-violating content, reports of certain types of harmful content (e.g., misinformation, discrimination) are handled by Nextdoor operations staff to ensure our standards and policies are applied consistently.
We set clear guidelines and use a combination of people and technology to encourage kind conversations and promote neighborhood vitality.
A Kind Platform Nextdoor is a leading innovator in creating a welcoming platform that facilitates healthy neighborhood connections and conversations. We set clear Community Guidelines and use a combination of people, including nearly 200,000 2 volunteer community moderators, and technology to encourage kind conversations and promote neighborhood vitality.
Learning, Development, and Engagement We have a dedicated Talent Management and Development team that develops and delivers company-wide people programs and learning and development experiences to help our employees grow in their careers. The programs include performance feedback and promotion cycles and recognition through our “Nextdoor Values Awards”.
Moreover, we distribute a bi-annual employment engagement survey to measure our employees’ satisfaction at Nextdoor, including employees’ perspectives on our current state of workplace inclusivity. Learning, Development, and Engagement We have a dedicated Talent Management and Development team that develops and delivers company-wide people programs and learning and development experiences to help our employees grow in their careers.
Our strengths are real people, hyperlocal proximity, trusted information, local perspective and instant distribution, each of which reinforce each other to create a strong competitive moat. For additional information, see the section entitled “ Risk Factors — Our business is highly competitive.
For our customers key strengths also include real people, as well as a high-intent audience with an action mindset and the ability to target neighborhoods everywhere in the countries we serve. Each of these elements reinforce each other to create a strong competitive moat. For additional information, see the section entitled “ Risk Factors — Our business is highly competitive.
Further, we focus our global recruitment efforts on ensuring that teams and hiring managers have the opportunity to consider qualified people from historically excluded groups for open roles. Moreover, we distribute a bi-annual employment engagement survey to measure our employees’ satisfaction at Nextdoor, including employees’ perspectives on our current state of workplace inclusivity.
This approach is designed to foster space discussions on cultural topics that support the well-being of our employees. 8 Table of Contents We focus our global recruitment efforts on ensuring that teams and hiring managers have the opportunity to consider qualified people from historically excluded groups for open roles.
We are consistently focused on creating and improving products for neighbors and organizations in the countries in which we operate around the world. We use machine-learning and proprietary technology to power our product strategy of building an Active Valued Community. • Advertising Solutions.
Technology Our investments in technology are consistently focused on creating and improving products for neighbors and organizations in the countries in which we operate around the world. We have built generative AI features that personalize the distribution of content and make posts more engaging and kind through the use of Post Assistant.
As of December 31, 2022, Nextdoor was in more than 305,000 neighborhoods around the world and in 1 in 3 households in the United States, and during the fourth quarter of 2022, we reached 78 million global Verified Neighbors 1 . Nextdoor is built on the power of hyperlocal community.
By fostering these connections, both online and in the real world, Nextdoor builds stronger, more vibrant, and more resilient neighborhoods. As of December 31, 2023, Nextdoor was in more than 325,000 neighborhoods around the world and in 1 in 3 households in the United States.
Ads are given a top spot in this contextually relevant space with the opportunity to customize by neighborhood. Our ad formats, including sponsored posts, sponsored emails, and local deals, feature combinations of text (static or dynamic), images (including static, animated, or video), audio, and URL links, and can be leveraged on multiple surfaces of our platform.
We are continually improving and building upon our library of ad formats, including sponsored posts and lead generation, which feature combinations of text (static or dynamic), images (including static and animated), and URL links, and the ways in which advertisers can purchase and deliver ads across our platform.
Additionally, three other states have enacted privacy laws that go into effect later in 2023 that have similar requirements and obligations to the California and Virginia laws: the Colorado Data Privacy Act, the Connecticut Data Privacy Act, and the Utah Consumer Privacy Act. There are also a number of legislative proposals recently enacted or pending before the U.S.
There are also a number of legislative proposals recently enacted or pending before the U.S.
We partner with third party providers to support the expansion of our platform, which allows us to concentrate on developing our core products. 8 Table of Contents Intellectual Property Our intellectual property and core technological innovations are integral components of our business.
Intellectual Property Our intellectual property and core technological innovations are integral components of our business.
Our Platform Nextdoor’s product strategy fulfills our purpose by enabling neighbors and organizations to build an “ Active Valued Community ” — an engaged community of neighbors, businesses and public services that you can trust and depend on to exchange valuable information, goods, and services. Nextdoor is a high-utility platform, offering distinct functionalities and experiences for neighbors and organizations alike.
As of the end of the fourth quarter of 2023, Nextdoor had 88 million global Verified Neighbors. 1 Our Platform The Nextdoor platform enables neighbors and organizations to build an engaged community of trusted neighbors, businesses and public services that can be depended on to exchange valuable information, goods, and services.
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Neighbors and organizations, which include small and mid-sized businesses, large brands, public agencies, and nonprofits, around the world turn to Nextdoor to receive trusted information, give and get help, and build real-world connections with neighborhood stakeholders. Nextdoor began in the United States, and as of December 31, 2022, our platform was available in 11 countries.
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Neighbors use Nextdoor to engage with and stay up to date on the communities that matter to them. They can find posts, photos, and discussions in the Feed, discover nearby neighbors, Groups, businesses, events, and items through a nativized maps surface in the Discover tab, and search for specific content and organizations through our Search feature.
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Beyond the United States, Nextdoor supports neighborhoods in the United Kingdom, Canada, Australia, Netherlands, France, Spain, Italy, Germany, Sweden, and Denmark. In the United Kingdom, as of December 31, 2022, Nextdoor was in 1 in 4 households, and 1 in 3 households in London.
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Our unique local data set includes event information, safety reports, recommendations, reviews, and discussions, as well as demographic data, interests, and behaviors of local residents. This detailed data contribute to the formation of the unique local knowledge graph that Nextdoor owns.
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We intend to expand our neighbor footprint globally and to increasingly become a weekly use case for neighbors. Value for Neighbors and Organizations Value for Neighbors Neighbors come to Nextdoor to connect to the neighborhoods that matter to them so they can belong.
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Businesses on Nextdoor can use our real-time local data to devise advertising strategies and ensure their messages reach the most relevant and receptive audience in their immediate locality. Other artificial intelligence (“AI”) and machine learning (“ML”) applications allow us to improve notifications, drive positive interactions, optimize ad delivery, drive growth of comments and replies, and analyze data.
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We leverage technology to enable online and real-world connections between neighbors and organizations — both of which are a valuable part of the neighborhood ecosystem. Nextdoor ensures neighbors are connected to real people by requiring neighbors to use their real name and address, which fosters a trusted environment so they can meet and learn more about those nearby.
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Our platform enables advertisers to achieve measurable outcomes that help advertisers build brand awareness, drive consideration and engagement, and generate sales. Ads can be leveraged on multiple surfaces on and off the platform, including Feed, Search, For Sale & Free, Right Hand Rail, and email.
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Further, since the experience is based on geographical location, Nextdoor uniquely provides a way to bring online connections into the real world. Value for Organizations Nextdoor connects neighbors with each other and everything nearby, including organizations. Organizations are essential for building strong, vibrant neighborhoods and are a trusted and core member of the community.
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The likelihood of the action occurring depends on a variety of factors, such as ad relevance and creative quality. Measurement & Targeting 1 Verified Neighbors are individuals who have joined Nextdoor and completed the verification process for their account. 6 Table of Contents Delivering and demonstrating value for our advertisers is a key focus for Nextdoor.
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Businesses of all sizes and types come to Nextdoor to build their reputation and reach their customers in meaningful ways and to encourage action through hyperlocal targeting and personalization of advertising at scale. Public agencies come to Nextdoor to deliver critical information to neighbors with hyperlocal distribution.
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We offer a variety of measurement solutions, including a Conversion API, that are mapped to advertisers’ goals and objectives and validate Nextdoor’s performance. Nextdoor offers both brand safety controls as well as brand safety measurement via independent third-party partners. Utilizing our neighborhood graph, advertisers can effectively target and reach multiple high value audiences, such as homeowners, parents, and recent movers.
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Businesses and public agencies also leverage Nextdoor to find out what is important to the neighbors in the local community and to communicate with them directly. This includes keeping neighbors apprised about everything from local events, such as restaurant launches and street fairs, to empowering businesses to build their reputation in their local communities.
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Nextdoor’s neighborhood graph is built off high quality signals shared directly by our neighbors and partners. These signals are integrated using proprietary machine learning models that undergo continuous refinement and optimization to ensure scalability and accuracy. Go-to-Market Approach Nextdoor offers diverse marketing solutions for advertisers depending on size and goals.
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Nextdoor helps public agencies create meaningful connections with the neighborhoods they serve by enabling them to provide timely updates, and alerts and tips to stay safe and protected during times of crisis, such as power outages, storms, or wildfires.
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Our go-to-market approach combines the utilization of our self-service ads platform and support of a dedicated global sales force for managed campaigns. Our sales team is strategically positioned to attract and retain advertisers across all products, and provides support through all stages of the marketing cycle, including campaign planning, optimization, and performance analytics.
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How neighbors discover what's happening nearby • Newsfeed: The Newsfeed is where neighbors find constantly updated posts, discussions, photos, and links from other neighbors and organizations.
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In 2023, we gave neighbors the ability to use generative AI to help write posts that are more likely to drive positive community engagement, and integrated AI into the Kindness Remainder to suggest more constructive revisions for comments that may violate the Community Guidelines.
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Neighbors can respond by commenting or adding a reaction (e.g., like, thank, and wow), and can set their feed preferences (e.g., rank by top posts, recent activity, recent posts, or popular everywhere). • Discover : The Discover tab and improved navigation bar, both launched in the second quarter of 2022, complement the Newsfeed and allow neighbors to find nearby Groups, neighbors, businesses and Events nearby, leveraging a nativized maps surface designed to promote on-platform to off-platform interaction. 1 Verified Neighbors are individuals who have joined Nextdoor and completed the verification process for their account. 6 Table of Contents • Notifications : In-app and Email Notifications inform neighbors about news, items, and activities they are interested in.
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Our strengths include a strong value proposition based on real people, real conversations and real achievements; Built-in community: creating instant access for new neighbors and businesses joining the neighborhood; and, Our unique ability to connect neighbors to what matters to them.
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Notifications include everything from trending posts to direct messages about items for sale to alerts by local public agencies. Notifications keep neighbors updated and drive increased engagement on Nextdoor. • Search: Search gives neighbors the ability to find specific content and organizations (including large brands, small businesses, public agencies, and nonprofits) related to their neighborhood.
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These efforts could expose us to lawsuits in which we could incur significant costs and could seriously harm our business.
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Nextdoor’s search combines an understanding of search terms with filtering capabilities to get neighbors the results they are looking for. How neighbors connect with organizations and find local resources • Businesses: Neighbors use Nextdoor to discover spots most-loved by locals, leave recommendations, find exclusive deals and promotions, and interact with businesses.
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How neighbors connect with other neighbors • Posts, Comments, and Reactions: Through posts, comments, and reactions neighbors can reach out to the neighborhood to get and give information that is locally relevant, trusted, and in real time.
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Whether it is for a local plumber or a family friendly pizza place, neighbors know best. • Connections: Connections are how neighbors can find and keep up with other neighbors they know and care about.
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When neighbors connect with each other, they will see each other’s posts, comments, and reactions highlighted in their feeds and have the ability to @mention them in posts and comments.
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The Neighbors You May Know feature recommends neighbors to connect with based on proximity, Connections in common, on-platform interactions, and personal contacts. • Groups: Neighbors can create Groups to connect with those nearby with a common interest. • Messaging: Neighbors can contact other neighbors and organizations through direct messaging (e.g., neighbors messaging businesses, coordinating a time to pick up a desk, to borrow a printer, or get more information about a tutor).
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Advertisers come to Nextdoor to connect to neighborhoods everywhere, delivering hyperlocal advertising at scale.
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Advertisers can engage with their customers in multiple surfaces on our platform, including: • Newsfeed: Advertisers can run ads in the Newsfeed to build awareness, to become part of the consideration set for a consumer’s purchase, and to create a direct response to an explicit call to action (e.g., visit our newly opened store).
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Ads are featured prominently where neighbors first look for what is happening on Nextdoor.
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Ads can also be customized (e.g., with neighborhood name and store location) to make them even more relevant. • In-App Digest and Email Digest: Advertisers can also use ads in the In-App Digest and Email Digest to create awareness among neighbors who turn to their summary of top posts.
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Ads are highly visible, and neighborhood names and store locations can be customized by neighborhood. • For Sale & Free: Advertisers can leverage ads in For Sale & Free to drive action such as shop now. Our local marketplace is where neighbors with high intent to buy will go.
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We are 7 Table of Contents continually improving and building upon our library of ad formats and the ways in which advertisers can purchase and deliver ads across our platform. Ad Auction Ads on the Nextdoor platform primarily compete via an auction-based system. Our ad auction allows us to serve ads to neighbors when and where it matters most.
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Measurement Delivering and demonstrating value for our advertisers is a key objective for Nextdoor. We offer a variety of measurement solutions that are mapped to advertisers’ goals and objectives, and validate Nextdoor’s performance. A Kind Platform Nextdoor is a leading innovator in creating a welcoming platform that facilitates healthy neighborhood connections and conversations.
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Volunteer community moderators are active neighbors who have access to specialized tools, resources and training — including an online course designed to help recognize and address bias in online discourse — that they can utilize to promote compliance with our community guidelines.
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We continually invest in the foundational architecture that supports all of our products and services. We built our infrastructure to be cloud-native, applying well-tested design patterns with distributed systems that are linearly scalable and highly flexible.
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There have been various federal and state legislative efforts to restrict the scope of the protections available to online platforms under the CDA, in particular with regards to Section 230 of the CDA, and current protections from liability for third-party content in the United States could decrease or change. Moreover in February 2023, the U.S.
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Supreme Court heard two cases concerning the scope of the CDA protection; rulings in those cases are expected later in 2023 and could narrow the judicial interpretation of the statute, exposing us to additional lawsuits and potential judgments that could seriously harm our business.
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We could incur significant costs investigating and defending such claims and, if we are found liable, significant damages.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

115 edited+29 added−30 removed343 unchanged
Biggest changeOur operating results in any given quarter can be influenced by numerous factors, many of which are unpredictable or are outside of our control, including, but not limited to: • our ability to generate revenues from our platform; • our ability to acquire, retain, and grow our neighbors and neighbor engagement on our platform; • ability to attract and retain advertisers; • ability to recognize revenue or collect payments from advertisers in a particular period; • fluctuations in spending by our advertisers due to macroeconomic conditions, seasonality, episodic regional or global events, including the ongoing COVID-19 pandemic, or other factors; • changes in domestic and global business and macroeconomic conditions, including potential recession, the continued rise of inflation and interest rates, impacts of the ongoing COVID-19 pandemic, and the war in Ukraine; • fluctuations in internet usage generally; • the number, prominence, size, format, quality and relevancy of advertisements shown to neighbors; • the success of technologies designed to block the display of advertisements; 26 Table of Contents • changes to third-party policies or applications that limit our ability to deliver, target, or measure the effectiveness of advertising, including changes by mobile operating system and browser providers such as Apple and Google; • the pricing of our advertisements; • the timing, cost of and mix of new and existing sales and marketing and promotional efforts; • the availability of our platform and app on mobile devices and other third-party platforms; • changes to our platform or the development and introduction of new products or services by our competitors; • changes in advertising industry association rules and standards that limit our ability to deliver, target or measure the effectiveness of advertising, such as the Network Advertising Initiative, and Interactive Advertising Bureau; • neighbor behavior or platform changes that may reduce traffic to features of the platform that we monetize; • system failures, disruptions, breaches of security or privacy, whether on our platform or on those of third parties, and the costs associated with any such breaches and remediation; • negative publicity associated with our platform, including as a result of content on our platform, security breaches and neighbor privacy concerns that may result in advertisers reducing or eliminating their spend with us; • health epidemics, such as the ongoing COVID-19 pandemic, influenza, and other highly communicable diseases or viruses; • the timing of incurring additional expenses, such as increases in sales and marketing or research and development, including as a result of the ongoing COVID-19 pandemic; • adverse litigation judgments, settlements, or other litigation-related costs; • changes in the legislative or regulatory environment, including with respect to privacy and cybersecurity, or actions by governments or regulators, including fines, orders, or consent decrees; and • changes in U.S. generally accepted accounting principles.
Biggest changeOur operating results in any given quarter can be influenced by numerous factors, many of which are unpredictable or are outside of our control, including, but not limited to: • our ability to generate revenues from our platform; • our ability to acquire, retain, and grow our neighbors and neighbor engagement on our platform; • ability to attract and retain advertisers; • ability to recognize revenue or collect payments from advertisers in a particular period; • fluctuations in spending by our advertisers due to macroeconomic conditions, seasonality, episodic regional or global events, or other factors; • changes in domestic and global business and macroeconomic conditions, including actual or perceived instability in the global banking system, potential recession, uncertainty with respect to the federal budget and debt ceiling and a potential temporary federal government shutdown related thereto, local and national elections, the continued rise of inflation, changing interest rates, and the war in Ukraine and the Israel-Hamas war; • fluctuations in internet usage generally; • the number, prominence, size, format, quality and relevancy of advertisements shown to neighbors; • the success of technologies designed to block the display of advertisements; • changes to third-party policies or applications that limit our ability to deliver, target, or measure the effectiveness of advertising, including changes by mobile operating system and browser providers such as Apple and Google; • the pricing of our advertisements; • the timing, cost of and mix of new and existing sales and marketing and promotional efforts; 26 Table of Contents • the availability of our platform and app on mobile devices and other third-party platforms; • changes to our platform or the development and introduction of new products or services by our competitors; • changes in advertising industry association rules and standards that limit our ability to deliver, target or measure the effectiveness of advertising, such as the Network Advertising Initiative, and Interactive Advertising Bureau; • neighbor behavior or platform changes that may reduce traffic to features of the platform that we monetize; • system failures, disruptions, breaches of security or privacy, whether on our platform or on those of third parties, and the costs associated with any such breaches and remediation; • negative publicity associated with our platform, including as a result of content on our platform, security breaches and neighbor privacy concerns that may result in advertisers reducing or eliminating their spend with us; • health epidemics, such as the COVID-19 pandemic, influenza, and other highly communicable diseases or viruses; • the timing of incurring additional expenses, such as increases in sales and marketing or research and development; • adverse litigation judgments, settlements, or other litigation-related costs; • changes in the legislative or regulatory environment, including with respect to privacy and cybersecurity, or actions by governments or regulators, including fines, orders, or consent decrees; and • changes in U.S. generally accepted accounting principles.
In Australia, we are also subject to, among other laws, Australia’s “Privacy Act 1988” (“Privacy Act”) and Australian Privacy Principles (“APPs”), which require us to, among other things: (a) establish a governance framework for managing privacy and data protection; (b) give individuals the option of not identifying themselves or using a pseudonym (unless certain exceptions apply); (c) destroy or de-identify unsolicited personal information that was not obtained for a purpose reasonably necessary or directly related to our business activities; and (d) not transfer or disclose personal information to a party outside of Australia unless consent is obtained, the destination country has substantially similar privacy protections to Australia, or the overseas recipient contractually agrees to comply with the APPs.
In Australia, we are also subject to, among other laws, Australia’s “Privacy Act 1988” and Australian Privacy Principles (“APPs”), which require us to, among other things: (a) establish a governance framework for managing privacy and data protection; (b) give individuals the option of not identifying themselves or using a pseudonym (unless certain exceptions apply); (c) destroy or de-identify unsolicited personal information that was not obtained for a purpose reasonably necessary or directly related to our business activities; and (d) not transfer or disclose personal information to a party outside of Australia unless consent is obtained, the destination country has substantially similar privacy protections to Australia, or the overseas recipient contractually agrees to comply with the APPs.
Account verification is a critical feature of our platform because it demonstrates that neighbors actually live in the neighborhood they desire to join. Any failure, interruption, or loss of access to such third parties or their software or the USPS could result in the inability of neighbors to join our platform.
Account verification is a critical feature of our platform because it demonstrates that neighbors actually live in the neighborhood they desire to join. Any failure, interruption, or loss of access to such third parties or their software could result in the inability of neighbors to join our platform.
Furthermore, any quarterly or annual fluctuations in our operating results may, in turn, cause the price of our Class A common stock to fluctuate substantially. In addition, we believe that our rapid growth may understate the potential seasonality of our business.
Furthermore, any quarterly or annual fluctuations in our operating results may, in turn, cause the price of our Class A common stock to fluctuate substantially. In addition, we believe that our rapid historical growth may understate the potential seasonality of our business.
We did not observe any directly attributable negative impact on our business, operating results or financial condition, including our revenue, revenue growth rates, and operating income (loss), related to the introduction of IDFA during the year ended December 31, 2022, though we may be impacted by such changes, or other changes to third-party policies or applications in the future, and as a result, our business, operating results and financial condition, including our revenue, revenue growth rates, and operating income (loss), could, in the future, be adversely impacted by any such changes.
We did not observe any directly attributable negative impact on our business, operating results or financial condition, including our revenue, revenue growth rates, and operating income (loss), related to the introduction of IDFA during the year ended December 31, 2023, though we may be impacted by such changes, or other changes to third-party policies or applications in the future, and as a result, our business, operating results and financial condition, including our revenue, revenue growth rates, and operating income (loss), could, in the future, be adversely impacted by any such changes.
Under the 2017 Tax Cuts and Jobs Act (the “Tax Act”), as modified by the Coronavirus Aid, Relief, and Economic Security Act, unused U.S. federal NOLs generated in tax years beginning after December 31, 2017, will not expire and may be carried forward indefinitely, but the deductibility of such federal NOLs in taxable years beginning after December 31, 2020, is limited to 80% of current year taxable income.
Under the 2017 Tax Cuts and Jobs Act, as modified by the Coronavirus Aid, Relief, and Economic Security Act, unused U.S. federal NOLs generated in tax years beginning after December 31, 2017, will not expire and may be carried forward indefinitely, but the deductibility of such federal NOLs in taxable years beginning after December 31, 2020, is limited to 80% of current year taxable income.
We believe that our ability to compete depends upon many factors both within and beyond our control, including: • the popularity, usefulness, ease of use, performance, and reliability of our platform compared to our competitors’ products; • the size and composition of our neighbor base; • the engagement of neighbors with our platform and competing products; • first- and third-party data available to us relative to our competitors; • our ability to attract and retain advertisers who use our free or paid advertisements services; • the timing and market acceptance of developments and enhancements to our platform or our competitors’ products; • our safety and security efforts and our ability to protect neighbor data and to provide neighbors with control over their data; • our ability to distribute our platform to new and existing neighbors; • our ability to effectively monetize our platform; • the successful implementation of platform changes, such as the migration to our proprietary ad server; • the frequency, size, format, quality, and relative prominence of the advertisements displayed by us or our competitors; • customer service and support efforts; • marketing and selling efforts, including our ability to measure the effectiveness of our advertisements and to provide advertisers with a compelling return on their investments; • our ability to establish and maintain publisher interest in integrating their content with our platform; • changes mandated by legislation, regulatory authorities, or litigation, some of which may have a disproportionate effect on us; • acquisitions or consolidation within our industry, which may result in more formidable competitors; • our ability to attract, retain, and motivate talented employees, particularly software engineers, designers, and managers; • our ability to cost-effectively manage and grow our operations; and 17 Table of Contents • our reputation and brand strength relative to those of our competitors.
We believe that our ability to compete depends upon many factors both within and beyond our control, including: • the popularity, usefulness, ease of use, performance, and reliability of our platform compared to our competitors’ products; • the size and composition of our neighbor base; • the engagement of neighbors with our platform and competing products; • first- and third-party data available to us relative to our competitors; • our ability to attract and retain advertisers who use our free or paid advertisements services; • the timing and market acceptance of developments and enhancements to our platform or our competitors’ products; • our safety and security efforts and our ability to protect neighbor data and to provide neighbors with control over their data; • our ability to distribute our platform to new and existing neighbors; • our ability to effectively monetize our platform; • the successful implementation of platform changes, such as the migration to our proprietary ad server and introduction of AI technologies into our platform; • the frequency, size, format, quality, and relative prominence of the advertisements displayed by us or our competitors; • customer service and support efforts; • marketing and selling efforts, including our ability to measure the effectiveness of our advertisements and to provide advertisers with a compelling return on their investments; • our ability to establish and maintain publisher interest in integrating their content with our platform; 16 Table of Contents • changes mandated by legislation, regulatory authorities, or litigation, some of which may have a disproportionate effect on us; • acquisitions or consolidation within our industry, which may result in more formidable competitors; • our ability to attract, retain, and motivate talented employees, particularly software engineers, designers, and managers; • our ability to cost-effectively manage and grow our operations; and • our reputation and brand strength relative to those of our competitors.
This risk may increase as we develop and increase the use of certain features, such as video, for which identifying such content and obtaining appropriate consents is challenging. Additionally, some controversial content may not be banned on the Nextdoor platform and, even if it is not featured in advertisements to neighbors, it may still appear in the newsfeed or elsewhere.
This risk may increase as we develop and increase the use of certain features, such as video, for which identifying such content and obtaining appropriate consents is challenging. Additionally, some controversial content may not be banned on the Nextdoor platform and, even if it is not featured in advertisements to neighbors, it may still appear in the Feed or elsewhere.
In the event that content shown on the Nextdoor platform is subject to censorship, access to the platform is restricted, in whole or in part, in one or more countries, or other restrictions are 30 Table of Contents imposed on the platform, or our competitors are able to successfully penetrate new geographic markets or capture a greater share of existing geographic markets that we cannot access or where we face other restrictions, our ability to retain or increase our neighbor base, neighbor engagement, or the level of advertising by advertisers may be adversely affected, we may not be able to maintain or grow our revenue as anticipated, and our financial results could be adversely affected.
In the event that content shown on the Nextdoor platform is subject to censorship, access to the platform is restricted, in whole or in part, in one or more countries, or other restrictions are imposed on the platform, or our competitors are able to successfully penetrate new geographic markets or capture a greater share of existing geographic markets that we cannot access or where we face other restrictions, our ability to retain or increase our neighbor base, neighbor engagement, or the level of advertising by advertisers may be adversely affected, we may not be able to maintain or grow our revenue as anticipated, and our financial results could be adversely affected.
On May 31, 2022, our Board of Directors authorized and approved the Share Repurchase Program pursuant to which we may repurchase up to $100.0 million in aggregate of shares of our Class A common stock, with the authorization to expire on June 30, 2024, or such shorter period if $100.0 million in aggregate of shares of our Class A common stock have been repurchased.
On May 31, 2022, our Board of Directors authorized and approved a share repurchase program (the “Share Repurchase Program”) pursuant to which we may repurchase up to $100.0 million in aggregate of shares of our Class A common stock, with the authorization to expire on June 30, 2024, or such shorter period if $100.0 million in aggregate of shares of our Class A common stock have been repurchased.
In the E.U. and the U.K., informed consent is required for the placement of certain cookies or similar technologies on a user’s device and for direct electronic marketing and (under the UK GDPR and the GDPR) valid consent is tightly defined, including, a prohibition on pre-checked consents and, in the context of cookies, a requirement to obtain separate consents for each type of cookie or similar technology.
In the EU and the U.K., informed consent is required for the placement of certain cookies or similar technologies on a user’s device and for direct electronic marketing and (under the UK GDPR and the GDPR) valid consent is tightly defined, including, a prohibition on pre-checked consents and, in the context of cookies, a requirement to obtain separate consents for each type of cookie or similar technology.
Errors, bugs, vulnerabilities, design defects, or technical limitations within the software and hardware on which we rely have in the past led to, and may in the future lead to, outcomes including a negative experience for neighbors and advertisers who use our platform, compromised ability of our platform to perform in a manner consistent with our terms, contracts, or policies, delayed product introductions or enhancements, targeting, measurement, or billing errors, compromised ability to protect the data of neighbors and/or our intellectual property or other data, or 25 Table of Contents reductions in our ability to provide some or all of our services.
Errors, bugs, vulnerabilities, design defects, or technical limitations within the software and hardware on which we rely have in the past led to, and may in the future lead to, outcomes including a negative experience for neighbors and advertisers who use our platform, compromised ability of our platform to perform in a manner consistent with our terms, contracts, or policies, delayed product introductions or enhancements, targeting, measurement, or billing errors, compromised ability to protect the data of neighbors and/or our intellectual property or other data, or reductions in our ability to provide some or all of our services.
We are subject to many U.S. federal and state and foreign laws, regulations and industry standards that involve matters central to our business, including laws and regulations that involve data privacy, data security, intellectual property (including copyright and patent laws), content, rights of publicity, advertising, marketing, competition, protection of minors, consumer protection, taxation, and telecommunications.
We are subject to many U.S. federal and state and foreign laws, regulations and industry standards that involve matters central to our business, including laws and regulations that involve data privacy, data security, intellectual property (including copyright and patent laws), content, rights of publicity, advertising, marketing, competition, protection of minors, age verification, consumer protection, taxation, and telecommunications.
Moreover, Google has announced that it intends to limit access by mobile applications to advertising identifiers on Android devices, likely by the end of 2024. As a result, advertisers may find our products less appealing and may seek alternative platforms on which to run their advertising campaigns.
Moreover, Google recently announced that it intends to limit access by mobile applications to advertising identifiers on Android devices, likely by the end of 2024. As a result, advertisers may find our products less appealing and may seek alternative platforms on which to run their advertising campaigns.
We have encountered, and will continue to encounter, risks and difficulties frequently experienced by growing companies in rapidly evolving industries, including challenges in accurate financial planning and forecasting, increasing competition and expenses as we continue to grow our business, and our ability to achieve market acceptance of our platform and attract, engage and retain users, who we call “neighbors” (which includes individuals) and organizations (which includes businesses and public agencies, including paying customers such as advertisers).
We have encountered, and will continue to encounter, risks and difficulties frequently experienced by growing companies in rapidly evolving industries, including challenges in accurate financial planning and forecasting, increasing competition and expenses as we effectively scale our business, and our ability to achieve market acceptance of our platform and attract, engage and retain users, who we call “neighbors” (which includes individuals) and organizations (which includes businesses and public agencies, including paying customers such as advertisers).
In addition, the substantial majority of our employees are based in our headquarters located in San Francisco, California. If there is a catastrophic failure involving our systems or major disruptive event affecting our headquarters or the San Francisco area in general, we may be unable to operate our platform.
In addition, the substantial amount of our employees are based in our headquarters located in San Francisco, California. If there is a catastrophic failure involving our systems or major disruptive event affecting our headquarters or the San Francisco area in general, we may be unable to operate our platform.
Unfavorable publicity regarding us, for example regarding our privacy or cybersecurity practices, terms of service, advertising policies, platform changes, platform quality, litigation or regulatory activity, the actions of our advertisers, the use of our platform for illicit or objectionable ends, the substance or enforcement of our community standards, the actions of our neighbors, the quality and integrity of content shared on our platform, or the actions of other companies that provide similar services to us, has in the past, and could in the future, adversely affect our reputation.
Unfavorable publicity regarding us, for example regarding our privacy or cybersecurity practices, terms of service, advertising policies, platform changes, platform quality, litigation or regulatory activity, the actions of our advertisers, the use of our platform for illicit or objectionable ends, the substance or enforcement of our community standards, the actions of our neighbors, the quality and integrity of content shared on our platform, or the actions of other companies that provide similar services to us, has in the past, and 19 Table of Contents could in the future, adversely affect our reputation.
We rely on third parties to verify our neighbors’ accounts through several methods, including but not limited to email, SMS text message, phone calls, geolocation and mailed invitations. For example, we utilize email providers, mobile data networks, geolocation providers and the USPS to verify neighbors’ accounts.
We rely on third parties to verify our neighbors’ accounts through several methods, including but not limited to email, SMS text message, phone calls, geolocation and mailed invitations. For example, we utilize email providers, mobile data networks, and geolocation providers to verify neighbors’ accounts.
Our decisions may not result in the long-term benefits that we expect, in which case our neighbor engagement, business, operating results, and financial condition could be harmed. 22 Table of Contents Risks Related to Security and Technology We are dependent on third-party software and service providers, including the GAM platform, for management and delivery of advertisements on the Nextdoor platform.
Our decisions may not result in the long-term benefits that we expect, in which case our neighbor engagement, business, operating results, and financial condition could be harmed. Risks Related to Security and Technology We are dependent on third-party software and service providers, including the GAM platform, for management and delivery of advertisements on the Nextdoor platform.
Any failure or interruption experienced by such third parties, including the USPS, could result in the inability of neighbors to join our platform, resulting in harm to our reputation and an adverse impact to our business, operating results, and financial condition.
Any failure or interruption experienced by such third parties could result in the inability of neighbors to join our platform, resulting in harm to our reputation and an adverse impact to our business, operating results, and financial condition.
Provisions in our Certificate of Incorporation and our Amended and Restated Bylaws (the “Bylaws”), including anti-takeover provisions, may have the effect of delaying or preventing a merger, acquisition or other change of control of the company that our stockholders may consider favorable.
Provisions in our Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) and our Amended and Restated Bylaws (the “Bylaws”), including anti-takeover provisions, may have the effect of delaying or preventing a merger, acquisition or other change of control of the company that our stockholders may consider favorable.
Stockholders who hold shares of our Class B common stock, including certain of our executive officers, employees, and directors and their affiliates, together hold a substantial majority of the voting power of our outstanding capital stock as of December 31, 2022.
Stockholders who hold shares of our Class B common stock, including certain of our executive officers, employees, and directors and their affiliates, together hold a substantial majority of the voting power of our outstanding capital stock as of December 31, 2023.
While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal 41 Table of Contents Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.
While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.
Our reliance on third parties makes us vulnerable to any service interruptions, whether as a result of a cyber-attack, security breach, weather or other events, or delays in their operations. Additionally, alternative email providers, mobile data networks, geolocation providers or postal providers may be more costly to use than our current providers, including the USPS.
Our reliance on third parties makes us vulnerable to any service interruptions, whether as a result of a cyber-attack, security breach, weather or other events, or delays in their operations. Additionally, alternative email providers, mobile data networks, geolocation providers or postal providers may be more costly to use than our current providers.
These licenses may subject us to certain unfavorable conditions, including requirements that we offer our products that incorporate the open source software for no cost, that we make publicly available the source code for any modifications or derivative work we create based upon, incorporating 37 Table of Contents or using the open source software, or that we license such modifications or derivative works under the terms of the particular open source license.
These licenses may subject us to certain unfavorable conditions, including requirements that we offer our products that incorporate the open source software for no cost, that we make publicly available the source code for any modifications or derivative work we create based upon, incorporating or using the open source software, or that we license such modifications or derivative works under the terms of the particular open source license.
We have recorded a full valuation allowance related to our U.S. federal and state NOL carryforwards and other net deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets. Our NOL carryforwards may expire unutilized or underutilized, which could prevent us from offsetting future taxable income.
We have recorded a full valuation allowance related to our U.S. federal and state NOL carryforwards and other net deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets. Our NOL carryforwards may expire 28 Table of Contents unutilized or underutilized, which could prevent us from offsetting future taxable income.
Though we recently completed a Section 382 study that supports that our use of NOLs will not be subject to limitation, it is possible that the limitation could still apply. 28 Table of Contents We may experience ownership change(s) in the future as a result of subsequent shifts in our stock ownership, some of which may be outside our control.
Though we recently completed a Section 382 study that supports that our use of NOLs will not be subject to limitation, it is possible that the limitation could still apply. We may experience ownership change(s) in the future as a result of subsequent shifts in our stock ownership, some of which may be outside our control.
The publication of our privacy policies and other documentation that provide commitments about data privacy and security can subject us to potential actions if they are found to be deceptive, unfair, or otherwise misrepresent our actual practices, which could materially and adversely affect our business, operating results, and financial condition.
The publication of our privacy policies and other documentation that provide commitments about data privacy 31 Table of Contents and security can subject us to potential actions if they are found to be deceptive, unfair, or otherwise misrepresent our actual practices, which could materially and adversely affect our business, operating results, and financial condition.
We could incur significant costs investigating and defending such claims and, if we are found liable, significant damages. The Digital Services Act (the “DSA”), signed into law in the European Union on October 19, 2022, is a package of legislation intended to update the liability and safety rules for digital platforms, products, and services.
We could incur significant costs investigating and defending such claims and, if we are found liable, significant damages. The DSA, signed into law in the European Union on October 19, 2022, is a package of legislation intended to update the liability and safety rules for digital platforms, products, and services.
In addition, our business may be subject to interruptions, delays, or failures resulting from earthquakes, fires, floods, adverse weather conditions, other natural disasters, power loss, terrorism, pandemics, geopolitical conflict (including the current war in Ukraine), other physical security threats, cyber-attacks, or other catastrophic events.
In addition, our business may be subject to interruptions, delays, or failures resulting from earthquakes, fires, floods, adverse weather conditions, other natural disasters, power loss, terrorism, pandemics, geopolitical conflict (including the current war in Ukraine and the Israel-Hamas war), other physical security threats, cyber-attacks, or other catastrophic events.
Any disruption in the third parties, including the USPS, could harm our neighbor growth, which in turn could make us a less attractive advertising platform and harm our reputation, and could harm our business, operating results, and financial condition.
Any disruption in the third parties could harm our neighbor growth, which in turn could make us a less attractive advertising platform and harm our reputation, and could harm our business, operating results, and financial condition.
Many of these competitors’ economies of scale allow them to have access to larger volumes of data and platforms that are used on a more frequent basis than the Nextdoor platform, which may enable 16 Table of Contents them to better understand their member base and develop and deliver more targeted advertising.
Many of these competitors’ economies of scale allow them to have access to larger volumes of data and platforms that are used on a more frequent basis than the Nextdoor platform, which may enable them to better understand their member base and develop and deliver more targeted advertising.
If we are unable to protect our proprietary rights (including aspects of our software and platform protected other than by patent rights), we will find 36 Table of Contents ourselves at a competitive disadvantage to others who need not incur the additional expense, time and effort required to create our platform.
If we are unable to protect our proprietary rights (including aspects of our software and platform protected other than by patent rights), we will find ourselves at a competitive disadvantage to others who need not incur the additional expense, time and effort required to create our platform.
If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and seriously harm our business. The dual class structure of our common stock may adversely affect the trading market for our Class A common stock.
If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and seriously harm our business. 38 Table of Contents The dual class structure of our common stock may adversely affect the trading market for our Class A common stock.
Any new products or services or platform enhancements that we introduce, including by way of acquisitions, may not achieve any significant degree of market acceptance from current or potential neighbors, which would adversely affect our business, operating results, and financial condition.
Any new products or services or platform enhancements that we introduce, including by way of acquisitions, may not achieve any significant degree of market acceptance from current or potential neighbors, which would 18 Table of Contents adversely affect our business, operating results, and financial condition.
We anticipate that our operating expenses and capital expenditures will increase in the foreseeable future as we continue to invest in acquiring additional neighbors, increasing engagement on our platform, increasing monetization on our platform, expanding our platform and operations internationally, hiring additional team members, developing and enhancing our platform, marketing and sales, and enhancing our infrastructure.
We anticipate that our operating expenses and capital expenditures will increase in the foreseeable future as we continue to invest in acquiring additional neighbors, increasing engagement on our platform, increasing monetization on our platform, expanding our platform and operations internationally, attracting and retaining team members, developing and enhancing our platform, marketing and sales, and enhancing our infrastructure.
Although we have implemented systems and processes that are designed to protect our data and our neighbors’ data, prevent data loss, disable undesirable accounts and activities on our platform and prevent or detect security breaches, and maintain an information security policy, such measures cannot provide absolute security, and despite measures that we have or will in the future put in place, we may be unable to anticipate or prevent unauthorized access to such data.
Although we have implemented systems and processes that are designed to protect our data and our neighbors’ data, prevent data loss, disable 23 Table of Contents undesirable accounts and activities on our platform and prevent or detect security breaches, and maintain an information security policy, such measures cannot provide absolute security, and despite measures that we have or will in the future put in place, we may be unable to anticipate or prevent unauthorized access to such data.
If the protection of our proprietary rights is inadequate to prevent unauthorized use or appropriation by third parties, the value of our brands and other intangible assets may be diminished and competitors may be able to more effectively mimic the Nextdoor platform and methods of operations.
If the protection of our 35 Table of Contents proprietary rights is inadequate to prevent unauthorized use or appropriation by third parties, the value of our brands and other intangible assets may be diminished and competitors may be able to more effectively mimic the Nextdoor platform and methods of operations.
Factors that could cause fluctuations in the trading price of our Class A common stock include the following: • actual or anticipated fluctuations in our user growth, retention, engagement, revenue, or other operating results; • developments involving our competitors; 38 Table of Contents • variations between our actual operating results and the expectations of securities analysts, investors, and the financial community; • actual or anticipated fluctuations in our quarterly or annual operating results; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information, or our failure to meet expectations based on this information; • publication of research reports by securities analysts about us, our competitors or our industry; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • additional shares of our Class A common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales, or if existing stockholders subject to a lock-up sell shares into the market when applicable “lock-up” periods end; • additions and departures of key personnel; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of our Class A common stock available for public sale; • announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • announcements by us or estimates by third parties of actual or anticipated changes in the size of our user base or the level of user engagement; • changes in operating performance and stock market valuations of technology companies in our industry, including our partners and competitors; • the impact of interest rate increases on the overall stock market and the market for technology company stocks; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • other events or factors, including those resulting from effects of the ongoing COVID-19 pandemic, the war in Ukraine, recessions, rising inflation, interest rates, local and national elections, international currency fluctuations, corruption, political instability and acts of war or terrorism.
Factors that could cause fluctuations in the trading price of our Class A common stock include the following: • actual or anticipated fluctuations in our user growth, retention, engagement, revenue, or other operating results; • developments involving our competitors; • variations between our actual operating results and the expectations of securities analysts, investors, and the financial community; • actual or anticipated fluctuations in our quarterly or annual operating results; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information, or our failure to meet expectations based on this information; • publication of research reports by securities analysts about us, our competitors or our industry; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • additional shares of our Class A common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales, or if existing stockholders subject to a lock-up sell shares into the market when applicable “lock-up” periods end; • additions and departures of key personnel; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of our Class A common stock available for public sale; • announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • announcements by us or estimates by third parties of actual or anticipated changes in the size of our user base or the level of user engagement; • changes in operating performance and stock market valuations of technology companies in our industry, including our partners and competitors; • the impact of interest rate increases on the overall stock market and the market for technology company stocks; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • other events or factors, including those resulting from recessions, rising inflation, changing interest rates, local and national elections, actual or perceived instability in the global banking system, international currency fluctuations, corruption, political instability and acts of war or terrorism, such as the war in Ukraine and the Israel-Hamas war.
We are subject to many U.S. federal and state and foreign laws and regulations that involve matters central to our business, including laws and regulations that involve data privacy and protection, intellectual property (including copyright and patent laws), content regulation, rights of publicity, advertising, marketing, health and safety, competition, protection of minors, consumer protection, taxation, anti-bribery, anti-money laundering and corruption, economic or other trade prohibitions or sanctions or securities law compliance.
We are subject to many U.S. federal and state and foreign laws and regulations that involve matters central to our business, including laws and regulations that involve data privacy and protection, intellectual property (including copyright and patent laws), content regulation, the use of AI, rights of publicity, advertising, marketing, health and safety, competition, protection of minors, age verification, consumer protection, taxation, anti-bribery, anti-money laundering and corruption, economic or other trade prohibitions or sanctions or securities law compliance.
Any financial or other difficulties these providers face may adversely affect our business, and we exercise little control over these providers, which increases our reliance on and vulnerability to problems with the services they provide.
Any financial or other difficulties these providers face may adversely affect our business, and we exercise little control over these providers, which increases our reliance on and vulnerability to problems with the services they provide and increases in the costs of these services.
Companies in the internet, technology and media industries own large numbers of patents, copyrights, trademarks and trade secrets 33 Table of Contents and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights.
Companies in the internet, technology and media industries own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights.
In addition, as our international operations and sales to advertisers continue to grow, we will be subject to a variety of risks inherent in doing business internationally, including: • political, social and economic instability, including as a result of acts of war or terrorism, including the war in Ukraine; • risks related to the legal and regulatory environment in foreign jurisdictions, including with respect to privacy and data protection, and unexpected changes in laws, regulatory requirements, and enforcement; • potential damage to our brand and reputation due to compliance with local laws, including potential censorship and requirements to provide neighbor information to local authorities; 20 Table of Contents • enhanced difficulty in reviewing content on the Nextdoor platform and enforcing community standards across different languages and countries; • fluctuations in currency exchange rates; • foreign exchange controls and tax and other regulations and orders that might prevent us from repatriating cash earned in countries outside the United States or otherwise limit our ability to move cash freely, and impede our ability to invest such cash efficiently; • compliance with multiple U.S. and international tax jurisdictions and management of tax impact of global operations; • potentially higher levels of credit risk and payment fraud; • difficulties integrating any foreign acquisitions; • burdens of complying with a variety of foreign laws, including laws related to taxation, content removal, data localization, data transfer, consents, payments, and regulatory oversight; • reduced protection for intellectual property rights in some countries; • different regulations and practices with respect to employee/employer relationships, existence of workers’ councils and labor unions, increase in labor costs due to high wage inflation in certain international jurisdictions, and other challenges caused by distance, language and cultural differences, making it harder to do business in certain international jurisdictions; and • difficulties in staffing and managing global operations and the increased travel, infrastructure, and legal compliance costs associated with multiple international locations.
In addition, as our international operations and sales to advertisers continue to grow, we will be subject to a variety of risks inherent in doing business internationally, including: • political, social and economic instability, including as a result of acts of war or terrorism, including the war in Ukraine and the Israel-Hamas war; • risks related to the legal and regulatory environment in foreign jurisdictions, including with respect to privacy and data protection, and unexpected changes in laws, regulatory requirements, and enforcement; • potential damage to our brand and reputation due to compliance with local laws, including potential censorship and requirements to provide neighbor information to local authorities; • enhanced difficulty in reviewing content on the Nextdoor platform and enforcing community standards across different languages and countries; • fluctuations in currency exchange rates; • foreign exchange controls and tax and other regulations and orders that might prevent us from repatriating cash earned in countries outside the United States or otherwise limit our ability to move cash freely, and impede our ability to invest such cash efficiently; • compliance with multiple U.S. and international tax jurisdictions and management of tax impact of global operations; • potentially higher levels of credit risk and payment fraud; • difficulties integrating any foreign acquisitions; • burdens of complying with a variety of foreign laws, including laws related to taxation, content removal, data localization, data transfer, consents, payments, and regulatory oversight; • reduced protection for intellectual property rights in some countries; • different regulations and practices with respect to employee/employer relationships, existence of workers’ councils and labor unions, increase in labor costs due to high wage inflation in certain international jurisdictions, and other challenges caused by distance, language and cultural differences, making it harder to do business in certain international jurisdictions; and • difficulties in staffing and managing global operations and the increased travel, infrastructure, and legal compliance costs associated with multiple international locations. 20 Table of Contents In addition, we must manage the potential conflicts between locally accepted business practices in any given jurisdiction and our obligations to comply with laws and regulations, including anti-money laundering laws, anti-corruption laws or regulations applicable to us, such as the U.S.
There have been various federal and state legislative efforts to restrict the scope of the protections available to online platforms under the CDA, in particular with regards to Section 230 of the CDA, and current protections from liability for third-party content in the United States could decrease or change. Moreover in February 2023, the U.S.
There have been various federal and state legislative efforts to restrict the scope of the protections available to online platforms under the CDA, in particular with regards to Section 230 of the CDA, and current protections from liability for third-party content in the United States could decrease or change. Although the U.S.
The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results with the SEC. We are also required to ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis.
The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our 33 Table of Contents business and operating results with the SEC. We are also required to ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis.
If we introduce or acquire new products and services or evolve our platform in a way that subjects us to additional competition or as existing competitors introduce new products and services or evolve their platforms, we may fail to engage or retain neighbors or attract new neighbors, which could harm our business, operating results, and financial condition.
If we introduce or acquire new products and services or evolve our platform in a way that subjects us to additional competition or as existing competitors introduce new products 15 Table of Contents and services or evolve their platforms, we may fail to engage or retain neighbors or attract new neighbors, which could harm our business, operating results, and financial condition.
As of December 31, 2022, the Nextdoor platform was accessible in 11 countries (including the United States) and had over 305,000 neighborhoods. We plan to enter new international markets and expand in existing markets where we have limited or no experience in marketing, selling, advertising and deploying our platform or selling advertising.
As of December 31, 2023, the Nextdoor platform was accessible in 11 countries (including the United States) and had over 325,000 neighborhoods. We plan to enter new international markets and expand in existing markets where we have limited or no experience in marketing, selling, advertising and deploying our platform or selling advertising.
We generate substantially all of our revenue from advertising, and ad-blocking technologies may prevent the 23 Table of Contents display of certain advertisements appearing on our platform, which could harm our business, operating results, and financial condition.
We generate substantially all of our revenue from advertising, and ad-blocking technologies may prevent the display of certain advertisements appearing on our platform, which could harm our business, operating results, and financial condition.
In order to maintain and improve the effectiveness of our internal controls and procedures, 35 Table of Contents we have expended, and anticipate that we will continue to expend, significant resources, including accounting related costs and significant management oversight.
In order to maintain and improve the effectiveness of our internal controls and procedures, we have expended, and anticipate that we will continue to expend, significant resources, including accounting related costs and significant management oversight.
As a result, our business, operating results and financial condition would be adversely affected. Risks Related to Ownership of Our Class A Common Stock The price of our Class A common stock has been and may continue to be volatile.
As a result, our business, operating results and financial condition would be adversely affected. 37 Table of Contents Risks Related to Ownership of Our Class A Common Stock The price of our Class A common stock has been and may continue to be volatile.
Advertisers will not continue to do business with us, or they will reduce the prices they are willing to pay to advertise with us, if we do not deliver advertisements in an effective manner, or if advertisers do not believe that their investment in advertising with us will generate a competitive return relative 13 Table of Contents to alternatives.
Advertisers will not continue to do business with us, or they will reduce the prices they are willing to pay to advertise with us, if we do not deliver advertisements in an effective manner, or if advertisers do not believe that their investment in advertising with us will generate a competitive return relative to alternatives.
Market opportunity estimates, whether obtained from third-party sources or developed internally, are subject to 27 Table of Contents significant uncertainty and are based on assumptions that may not prove to be accurate. In particular, our estimates regarding our market penetration in new and existing markets are difficult to predict.
Market opportunity estimates, whether obtained from third-party sources or developed internally, are subject to significant uncertainty and are based on assumptions that may not prove to be accurate. In particular, our estimates regarding our market penetration in new and existing markets are difficult to predict.
Our ability to develop and 14 Table of Contents offer products that accurately measure the effectiveness of a campaign on our platform is critical to our ability to attract new advertisers and retain, and increase spend from, our existing advertisers.
Our ability to develop and offer products that accurately measure the effectiveness of a campaign on our platform is critical to our ability to attract new advertisers and retain, and increase spend from our existing advertisers.
Other states have also passed comparable legislation, with unique compliance requirements relevant to our business. For example, Virginia, Colorado, Connecticut, and Utah have all passed data privacy laws that go into effect at various times in 2023, which may impose obligations similar to or more stringent than those we may face under other data protection laws.
Other states have also passed comparable legislation, with unique compliance requirements relevant to our business. For example, Virginia, Colorado, Connecticut, and Utah have all passed data privacy laws that went into effect in 2023, which may impose obligations similar to or more stringent than those we may face under other data protection laws.
Our previous and future acquisitions may not achieve our goals, and we may not realize benefits from acquisitions we make in the future. If we fail to successfully integrate acquisitions, or the personnel or technologies associated with those acquisitions, our business, operating results, and financial condition could be 21 Table of Contents harmed.
Our previous and future acquisitions may not achieve our goals, and we may not realize benefits from acquisitions we make in the future. If we fail to successfully integrate acquisitions, or the personnel or technologies associated with those acquisitions, our business, operating results, and financial condition could be harmed.
It is possible that government authorities could take action that impairs our ability to sell advertising, collect, process, use, store, disclose or transfer data including in countries where access to our consumer-facing platform may be blocked or restricted.
It is possible that government authorities could take action that impairs our ability to sell advertising, collect, process, use, store, disclose or transfer data including in countries 30 Table of Contents where access to our consumer-facing platform may be blocked or restricted.
Our ability to attract and retain advertisers, and ultimately generate revenue, may be adversely affected by a number of factors, including but not limited to: • decreases in neighbor or advertiser engagement on the platform; • slower than anticipated growth in, or lack of growth or decreases in, the number of neighbors on the platform; • the impact of macroeconomic conditions, whether in the advertising industry in general, among specific types of advertisers or within particular geographies, including but not limited to labor shortages, supply chain disruptions, a potential recession, inflation and rising interest rates; • platform changes (such as the migration to our proprietary ad server) or inventory management decisions that change the size, format, frequency, or relative prominence of advertisements displayed on the platform; • competitors offering more attractive pricing for advertisements that we are unable or unwilling to match; • a decrease in the quantity or quality of advertisements shown to neighbors; • changes to laws, third-party policies or applications that limit our ability to deliver, target, or measure the effectiveness of advertising, including changes by mobile operating system and browser providers such as Apple and Google; • changes to demographics of our neighbors that make us less attractive to advertisers; • an increase in neighbors who exercise opt-out rights under privacy laws to restrict the advertisements they receive; • neighbors that upload content or take other actions that are deemed to be hostile, inappropriate, illicit, objectionable, illegal, or otherwise not consistent with the brand of our advertisers; • adverse government actions or legislative, regulatory, or other legal developments; • neighbor behavior or changes to the platform that may affect, among other things, the safety and security of other neighbors or the cultivation of a positive and inclusive online community; • adverse media reports or other negative publicity involving us; • implementing or enforcing policies, such as advertising policies, community guidelines, and other terms or service that are perceived negatively by advertisers; • our ability to develop and improve our products for advertisers; • limitations in, or reductions to, the availability, accuracy, utility, and security of analytics and measurement solutions offered by us or third parties that are intended to demonstrate the value of our advertisements to advertisers; and • changes to our data privacy practices that affect the type or manner of advertising that we are able to provide, including as a result of changes to laws, regulations or regulatory actions, such as the GDPR, European Directive 2002/58/EC (the “ePrivacy Directive”), UK General Data Protection Regulation (“UK GDPR”), UK Data Protection Act 2018, the CCPA, Nevada’s Online Privacy Law (“Nevada Privacy Law”), the CDPA, the VCPDA, the CPRA, and other U.S. state privacy laws, or changes to third-party policies.
Our ability to attract and retain advertisers, and ultimately generate revenue, may be adversely affected by a number of factors, including but not limited to: • decreases in neighbor or advertiser engagement on the platform; • slower than anticipated growth in, or lack of growth or decreases in, the number of neighbors active on the platform; • the impact of macroeconomic conditions, whether in the advertising industry in general, among specific types of advertisers or within particular geographies, including but not limited to health epidemics or pandemics, actual or perceived instability in the global banking system, labor shortages, supply chain disruptions, a potential recession, uncertainty with respect to the federal budget or debt ceiling and a potential temporary federal government shutdown related thereto, inflation and changing interest rates; • platform changes (such as the migration to our proprietary ad server) or inventory management decisions that change the size, format, frequency, or relative prominence of advertisements displayed on the platform; • competitors offering more attractive pricing for advertisements that we are unable or unwilling to match; • a decrease in the quantity or quality of advertisements shown to neighbors; • changes to laws, third-party policies or applications that limit our ability to deliver, target, or measure the effectiveness of advertising, including changes by mobile operating system and browser providers such as Apple and Google; • changes to demographics of our neighbors that make us less attractive to advertisers; • an increase in neighbors who exercise opt-out rights under privacy laws to restrict the advertisements they receive; • neighbors that upload content or take other actions that are deemed to be hostile, inappropriate, illicit, objectionable, illegal, or otherwise not consistent with the brand of our advertisers; • adverse government actions or legislative, regulatory, or other legal developments; • neighbor behavior or changes to the platform that may affect, among other things, the safety and security of other neighbors or the cultivation of a positive and inclusive online community; • adverse media reports or other negative publicity involving us; • implementing or enforcing policies, such as advertising policies, community guidelines, and other terms or service that are perceived negatively by advertisers; • our ability to develop and improve our products for advertisers; • limitations in, or reductions to, the availability, accuracy, utility, and security of analytics and measurement solutions offered by us or third parties that are intended to demonstrate the value of our advertisements to advertisers; and • changes to our data privacy practices that affect the type or manner of advertising that we are able to provide, including as a result of changes to laws, regulations or regulatory actions, such as the GDPR, European Directive 2002/58/EC (the “ePrivacy Directive”), the UK GDPR, the UK Data Protection Act 2018, the CCPA, Nevada’s Online Privacy Law, the CDPA, the VCPDA, the CPRA, and other U.S. state privacy laws, or changes to third-party policies.
We might be required to seek a license for the intellectual property, which may not be available on reasonable terms or at all. Even if a license were available, we could be required to pay significant royalties, which would increase our operating expenses.
We might be required to seek a license for the intellectual property, which may not be available on reasonable terms or at all. Even if a license were available, we could be required to pay significant royalties, 36 Table of Contents which would increase our operating expenses.
We plan to continue to make acquisitions, which could harm our financial condition or operating results and may adversely affect the price of our Class A common stock. As part of our business strategy, we have made, and intend to make acquisitions to add specialized employees and complementary companies, products or technologies, data, and enter new geographic regions.
We may make acquisitions, which could harm our financial condition or operating results and may adversely affect the price of our Class A common stock. As part of our business strategy, we have made, and may in the future make acquisitions to add specialized employees and complementary companies, products or technologies, data, and enter new geographic regions.
As we move into new geographies, we will need to attract and recruit skilled personnel in those areas. Further, labor is subject to external factors that are beyond our control, including our industry’s highly competitive market for skilled workers and leaders, cost inflation, the ongoing COVID-19 pandemic, and workforce participation rates.
As we move into new geographies, we will need to attract and recruit skilled personnel in those areas. Further, labor is subject to external factors that are beyond our control, including our industry’s highly competitive market for skilled workers and leaders, cost inflation, and workforce participation rates.
In addition, if our existing neighbors decrease the frequency or duration of their engagement or the growth rate of our neighbor base slows or reverses, we may be required to incur significantly higher marketing expenses than we currently anticipate in order to acquire new neighbors or retain current neighbors. 15 Table of Contents There are many factors that could negatively impact our ability to grow, retain and engage current and prospective neighbors, including but not limited to: • neighbors increasing their engagement with competitors’ platforms, products or services instead of, or more frequently than, our platform; • changes in the amount of time neighbors spend across all applications and platforms, including our platform; • failing to introduce platform enhancements that neighbors find engaging or if we introduce new features, terms, policies or procedures, or make changes to our platform, that are not favorably received by current or prospective neighbors; • technical or other problems frustrating the neighbor experience, such as problems that prevent us from delivering our service in a fast and reliable manner; • neighbors having difficulty installing, updating or otherwise accessing the Nextdoor platform on mobile devices through the app or web browsers; • neighbor behavior on the Nextdoor platform changing, including a decrease in the quality and frequency of content shares on the platform; • decreases in neighbor or advertiser sentiment due to questions about the quality or usefulness of our platform, concerns about the nature of content made available on the platform, concerns related to privacy, safety, security, well-being or other factors; • changes mandated by legislation, government and regulatory authorities, or litigation that adversely impact our platform or neighbors; • third parties preventing their content from being displayed on the Nextdoor platform; • changes we may make to how we promote different features on our platform; • initiatives designed to attract and retain neighbors and engagement are unsuccessful or discontinued, whether as a result of actions by us, third parties, or otherwise; • we, or other partners and companies in the industry are the subject of adverse media reports or other negative publicity; • we are unable to combat spam, harassment, cyberbullying or other hostile, inappropriate, abusive or offensive content or usage on our platform; or • we cannot preserve and enhance our brand and reputation as a trusted neighborhood networking community.
There are many factors that could negatively impact our ability to grow, retain and engage current and prospective neighbors, including but not limited to: • neighbors increasing their engagement with competitors’ platforms, products or services instead of, or more frequently than, our platform; • changes in the amount of time neighbors spend across all applications and platforms, including our platform; • failing to introduce platform enhancements that neighbors find engaging or if we introduce new features, terms, policies or procedures, or make changes to our platform, that are not favorably received by current or prospective neighbors; • technical or other problems frustrating the neighbor experience, such as problems that prevent us from delivering our service in a fast and reliable manner; • neighbors having difficulty installing, updating or otherwise accessing the Nextdoor platform on mobile devices through the app or web browsers; • neighbor behavior on the Nextdoor platform changing, including a decrease in the quality and frequency of content shares on the platform; • decreases in neighbor or advertiser sentiment due to questions about the quality or usefulness of our platform, concerns about the nature of content made available on the platform, concerns related to privacy, safety, security, well-being or other factors; • changes mandated by legislation, government and regulatory authorities, or litigation that adversely impact our platform or neighbors; • third parties preventing their content from being displayed on the Nextdoor platform; • changes we may make to how we promote different features on our platform; • initiatives designed to attract and retain neighbors and engagement are unsuccessful or discontinued, whether as a result of actions by us, third parties, or otherwise; • we, or other partners and companies in the industry are the subject of adverse media reports or other negative publicity; • we are unable to combat spam, harassment, cyberbullying or other hostile, inappropriate, abusive or offensive content or usage on our platform; or • we cannot preserve and enhance our brand and reputation as a trusted neighborhood networking community.
Further, in May 2022, Apple introduced changes for the Apple mail client available on its operating systems, including iOS 15, iPadOS 15, and macOS 12, which have impacted, and are expected to continue to impact our ability to track individual users and devices, and measure the effectiveness of our advertisements.
Further, in May 2022, Apple introduced changes for the Apple mail client available on its operating systems, which have impacted, and are expected to continue to impact our ability to track individual users and devices, and measure the effectiveness of our advertisements.
In addition, advertisers may view some of the features on our platform as experimental and unproven.
In 12 Table of Contents addition, advertisers may view some of the features on our platform as experimental and unproven.
We must continue to engage and retain existing neighbors on our platform as well as attract, engage and retain new neighbors. The number of neighbors on the Nextdoor platform may not continue to grow at the current growth rate, if at all, and it may even decline.
We must continue to engage and retain existing neighbors on our platform as well as attract, engage and retain new neighbors. The number of neighbors on the Nextdoor platform may not continue to grow at historical growth rates or at all, and it may even decline.
The DSA could negatively impact the scope of the limited immunity provided by the E-Commerce Directive, limit targeted advertising, and require us to expend resources to try to comply with the new regulations or incur liability. The DSA also includes significant penalties for non-compliance.
The DSA, which started to apply to our business in February 2024, could negatively impact the scope of the limited immunity provided by the E-Commerce Directive, limit targeted advertising, and require us to expend resources to try to comply with the new regulations or incur liability. The DSA also includes significant penalties for non-compliance.
We also must manage our obligations to comply with laws and regulations related to export controls, sanctions, and embargoes, including regulations established by the U.S. Office of Foreign Assets Control.
Foreign Corrupt Practices Act, and the U.K. Bribery Act 2010. We also must manage our obligations to comply with laws and regulations related to export controls, sanctions, and embargoes, including regulations established by the U.S. Office of Foreign Assets Control.
As of December 31, 2022, we had gross U.S. federal net operating loss (“NOL”) carryforwards of approximately $382.1 million and gross state NOL carryforwards of approximately $234.8 million, which if not utilized, will begin to expire for federal and state income tax purposes beginning in 2028.
As of December 31, 2023, we had gross U.S. federal net operating loss (“NOL”) carryforwards of approximately $413.6 million and gross state NOL carryforwards of approximately $280.8 million, which if not utilized, will begin to expire for federal and state income tax purposes beginning in 2028.
Social and ethical issues may result in reputational harm and liability. Positions we may take (or choose not to take) on social and ethical issues may be unpopular with some of our employees, neighbors, or with our advertisers or potential advertisers, which may in the future impact our ability to attract or retain employees, neighbors or advertisers.
Positions we may take (or choose not to take) on social and ethical issues may be unpopular with some of our employees, neighbors, or with our advertisers or potential advertisers, which may in the future impact our ability to attract or retain employees, neighbors or 25 Table of Contents advertisers.
We rely on third parties, including email providers, mobile data networks, geolocation providers, and the United States Postal Service (“USPS”) to complete the verification process for our neighbors’ accounts.
We rely on third parties, including email providers, mobile data networks, and geolocation providers to complete the verification process for our neighbors’ accounts.
We might not be successful in complying with these obligations and the significant commitment of resources required for complying with them could have a material adverse effect on our business, financial condition, results of operations and cash flows.
These changes, and the additional involvement of accountants and legal advisors, will require a significant commitment of additional resources. We might not be successful in complying with these obligations and the significant commitment of resources required for complying with them could have a material adverse effect on our business, financial condition, results of operations and cash flows.
For example, in 2021, Apple introduced changes for the Apple mail client available on its operating systems, including iOS 15, iPadOS 15, and macOS 12, which have limited, and are expected to continue to limit, our ability to track individual users and devices, and measure user engagement with our emails containing monetizable content for users that use the Apple email client.
For example, in 2021, Apple introduced changes for the Apple mail client available on its operating systems, 27 Table of Contents which have limited, and are expected to continue to limit, our ability to track individual users and devices, and measure user engagement with our emails containing monetizable content for users that use the Apple email client.
As a public company, we have and will continue to, among other things: • prepare and distribute periodic public reports and other stockholder communications in compliance with our obligations under the federal securities laws; • create or expand the roles and duties of our Board of Directors and committees of the Board of Directors; • institute more comprehensive financial reporting and disclosure compliance functions; and • establish new and enhance existing internal policies, including those relating to disclosure controls and procedures. 34 Table of Contents These changes, and the additional involvement of accountants and legal advisors, will require a significant commitment of additional resources.
As a public company, we have and will continue to, among other things: • prepare and distribute periodic public reports and other stockholder communications in compliance with our obligations under the federal securities laws; • create or expand the roles and duties of our Board of Directors and committees of the Board of Directors; • institute more comprehensive financial reporting and disclosure compliance functions; and • establish new and enhance existing internal policies, including those relating to disclosure controls and procedures.
We have experienced significant net losses each year since we began operations in 2007, including net losses of $(137.9) million, $(95.3) million and $(75.2) million for the years ended December 31, 2022, 2021 and 2020, respectively. We have an accumulated deficit of $618.3 million as of December 31, 2022.
We have experienced significant net losses each year since we began operations in 2007, including net losses of $147.8 million, $137.9 million and $95.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. We have an accumulated deficit of $766.0 million as of December 31, 2023.
A substantial portion of our network infrastructure is provided by third parties, including AWS. Any disruption or failure in the services we receive from these providers could impact the availability of our platform and could adversely impact our business, operating results and financial condition.
A substantial portion of our network infrastructure is provided by third parties, including AWS. We also rely on third parties for other technology related services, including certain AI functions. Any disruption or failure in the services we receive from these providers could impact the availability of our platform and could adversely impact our business, operating results and financial condition.
The obligations associated with operating as a public company require significant resources and management attention and have, and will continue to, cause us to incur additional expenses, which will adversely affect our profitability.
Our business, operating results, and financial condition could be harmed as a result. The obligations associated with operating as a public company require significant resources and management attention and have, and will continue to, cause us to incur additional expenses, which will adversely affect our profitability.
The IRA includes a 15% corporate alternative minimum tax for companies with modified GAAP net income in excess of $1 billion, a 1% excise tax on certain stock repurchases, and numerous environmental and green 29 Table of Contents energy tax credits. Currently, we are not subject to the corporate alternative minimum tax.
The IRA includes a 15% corporate alternative minimum tax for companies with modified GAAP net income in excess of $1 billion, a 1% excise tax on certain stock repurchases, and numerous environmental and green energy tax credits.
Any significant disruption, limitation or loss of our access to or other interference with our use of AWS, including as a result of termination by AWS of its agreement with us, would negatively impact our business, operating results, and financial condition.
Our ability to monitor our third-party technology providers’ cybersecurity practices is limited. Any significant disruption, limitation or loss of our access to or other interference with our use of AWS, including as a result of termination by AWS of its agreement with us, would negatively impact our business, operating results, and financial condition.
We have filed a registration statement related to the offer and sale from time to time by the selling securityholders named in the prospectus that forms a part of the registration statement of up to 206,159,498 shares of our Class A common stock, which registration statement has been declared effective by the SEC.
As of December 31, 2023, we had 186,415,075 shares of our Class A common stock outstanding. 39 Table of Contents We have filed a registration statement related to the offer and sale from time to time by the selling securityholders named in the prospectus that forms a part of the registration statement of up to 206,159,498 shares of our Class A common stock, which registration statement has been declared effective by the SEC.
We are currently evaluating the impacts of the excise tax on our Share Repurchase Program, however we do not currently expect the new law to have a material impact on our results of operations. We cannot guarantee that our Share Repurchase Program will be fully consummated or that it will enhance long-term stockholder value.
Currently, we are not subject to the corporate alternative minimum tax and we do not expect the new law to have a material impact on our results of operations. 29 Table of Contents We cannot guarantee that our Share Repurchase Program will be fully consummated or that it will enhance long-term stockholder value.
The trend towards working from home and using private residential networks to access the Internet, which has arisen in response to the ongoing COVID-19 pandemic and other global economic and labor market conditions, may further exacerbate risks associated with cyberattacks and data security breaches, because we cannot guarantee these private work environments and electronic connections to our work environment have the same robust security measures deployed in our physical offices.
The trend towards working from home and using private residential networks to access the Internet may further exacerbate risks associated with cyberattacks and data security breaches, because we cannot guarantee these private work environments and electronic connections to our work environment have the same robust security measures deployed in our physical offices.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We are headquartered in San Francisco, California. As of December 31, 2022, we maintained offices in various locations in the United States and internationally, including approximately 115,770 square feet for our corporate headquarters. All of our facilities are leased.
Biggest changeItem 2. Properties We are headquartered in San Francisco, California. As of December 31, 2023, we maintained offices in various locations in the United States and internationally, including approximately 115,770 square feet for our corporate headquarters. All of our facilities are leased.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of December 31, 2022, we had $22.8 million available for future share repurchases under the Share Repurchase Program.
Biggest changeWe did not repurchase or retire any shares of Class A common stock during the year ended December 31, 2023. As of December 31, 2023, we had $22.8 million available for future share repurchases under the Share Repurchase Program.
Securities Authorized for Issuance Under Equity Compensation Plans The information required by this item will be included in our Proxy Statement (the “Proxy Statement”) for the 2023 Annual Meeting of Stockholders, to be filed with the SEC within 120 days of the year ended December 31, 2022, and is incorporated herein by reference. Sales of Unregistered Securities None.
Securities Authorized for Issuance Under Equity Compensation Plans The information required by this item will be included in our Proxy Statement (the “Proxy Statement”) for the 2024 Annual Meeting of Stockholders, to be filed with the SEC within 120 days of the year ended December 31, 2023, and is incorporated herein by reference. Sales of Unregistered Securities None.
An investment of $100 and reinvestment of all dividends is assumed to have been made in our Class A common stock and in each index on November 8, 2021, the date our Class A common stock began trading on the New York Stock Exchange, and its relative performance is tracked through December 31, 2022.
An investment of $100 and reinvestment of all dividends is assumed to have been made in our Class A common stock and in each index on November 8, 2021, the date our Class A common stock began trading on the New York Stock Exchange, and its relative performance is tracked through December 31, 2023.
The number of holders of record presented here also does not include stockholders whose shares may be held in trust by other entities. Dividend Policy We have never declared nor paid any cash dividends on our capital stock.
The number of holders of record presented here also does not include stockholders whose shares may be held in trust by other entities. Dividend Policy We have never declared nor paid any cash dividends on our capital stock and do not expect to pay any dividends on our capital stock in the foreseeable future.
Our Class B common stock is not listed or traded on any stock exchange. Holders of Record As of February 24, 2023, there were 82 stockholders of record of our Class A common stock and 412 stockholders of record of our Class B common stock.
Our Class B common stock is not listed or traded on any stock exchange. Holders of Record As of February 23, 2024, there were 72 stockholders of record of our Class A common stock and 318 stockholders of record of our Class B common stock.
Removed
We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not expect to pay any dividends on our capital stock in the foreseeable future.
Added
On February 21, 2024, the Company’s Board of Directors authorized and approved an increase of $150.0 million to the Share Repurchase Program and extended the expiration date to March 31, 2026.
Removed
We did not repurchase or retire any shares of Class A common stock during the fourth quarter of 2022. During the year ended December 31, 2022, we repurchased and retired 23,251,703 shares of Class A common stock at an average purchase price of $3.32 per share for an aggregate repurchase price of $77.2 million.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear Ended December 31, (in thousands) 2022 2021 2020 Revenue $ 212,765 $ 192,197 $ 123,284 Costs and expenses (1) : Cost of revenue 38,981 28,813 21,586 Research and development 127,073 97,096 69,231 Sales and marketing 123,182 106,430 80,325 General and administrative 67,733 54,664 28,793 Total costs and expenses 356,969 287,003 199,935 Loss from operations (144,204) (94,806) (76,651) Interest income 9,304 177 727 Other income (expense), net (1,343) (539) 817 Loss before income taxes (136,243) (95,168) (75,107) Provision for income taxes 1,673 157 127 Net loss $ (137,916) $ (95,325) $ (75,234) __________________ (1) Includes stock-based compensation expense as follows: Year Ended December 31, (in thousands) 2022 2021 2020 Cost of revenue $ 2,627 $ 1,466 $ 905 Research and development 35,567 20,690 10,235 Sales and marketing 10,160 6,388 3,403 General and administrative 16,066 18,970 8,065 Total $ 64,420 $ 47,514 $ 22,608 51 Table of Contents The following table sets forth the components of our consolidated statements of operations as a percentage of revenue for each of the periods presented: Year Ended December 31, (as a percentage of total revenue) 2022 2021 2020 Revenue 100 % 100 % 100 % Costs and expenses: Cost of revenue 18 15 18 Research and development 60 51 56 Sales and marketing 58 55 65 General and administrative 32 28 23 Total costs and expenses 168 149 162 Loss from operations (68) (49) (62) Interest income 4 — 1 Other income (expense), net (1) — 1 Loss before income taxes (64) (50) (61) Provision for income taxes 1 — — Net loss (65) % (50) % (61) % Note: Certain figures may not sum due to rounding.
Biggest changeYear Ended December 31, (in thousands) 2023 2022 2021 Revenue $ 218,309 $ 212,765 $ 192,197 Costs and expenses (1) : Cost of revenue 41,613 38,981 28,813 Research and development 149,998 127,073 97,096 Sales and marketing 122,925 123,182 106,430 General and administrative 76,057 67,733 54,664 Total costs and expenses 390,593 356,969 287,003 Loss from operations (172,284) (144,204) (94,806) Interest income 25,780 9,304 177 Other income (expense), net (505) (1,343) (539) Loss before income taxes (147,009) (136,243) (95,168) Provision for income taxes 756 1,673 157 Net loss $ (147,765) $ (137,916) $ (95,325) __________________ (1) Includes stock-based compensation expense as follows: Year Ended December 31, (in thousands) 2023 2022 2021 Cost of revenue $ 3,201 $ 2,627 $ 1,466 Research and development 43,619 35,567 20,690 Sales and marketing 12,548 10,160 6,388 General and administrative 23,657 16,066 18,970 Total $ 83,025 $ 64,420 $ 47,514 51 Table of Contents The following table sets forth the components of our consolidated statements of operations as a percentage of revenue for each of the periods presented: Year Ended December 31, (as a percentage of total revenue) 2023 2022 2021 Revenue 100 % 100 % 100 % Costs and expenses: Cost of revenue 19 18 15 Research and development 69 60 51 Sales and marketing 56 58 55 General and administrative 35 32 28 Total costs and expenses 179 168 149 Loss from operations (79) (68) (49) Interest income 12 4 — Other income (expense), net — (1) — Loss before income taxes (67) (64) (50) Provision for income taxes — 1 — Net loss (68) % (65) % (50) % Note: Certain figures may not sum due to rounding.
Investing activities Cash used in investing activities for the year ended December 31, 2022 was $342.4 million, which consisted of purchases of marketable securities of $711.9 million, a loan to Opportunity Finance Network of $5.0 million, and purchases of property and equipment of $3.2 million.
Cash used in investing activities for the year ended December 31, 2022 was $342.4 million, which consisted of purchases of marketable securities of $711.9 million, a loan to Opportunity Finance Network of $5.0 million, and purchases of property and equipment of $3.2 million.
In addition, allocated overhead costs, such as facilities, information technology, and depreciation are included in research and development expenses. 49 Table of Contents Sales and Marketing Sales and marketing expenses consist of personnel-related and other costs which include salaries, commissions, benefits, and stock-based compensation for employees engaged in sales and marketing activities as well as other costs including third-party consulting, public relations, allocated overhead costs, and amortization of acquired intangible assets.
In addition, allocated overhead costs, such as facilities, information technology, and depreciation are included in research and development expenses. 49 Table of Contents Sales and Marketing Sales and marketing expenses consist of personnel-related and other costs which include salaries, commissions, benefits, restructuring costs, and stock-based compensation for employees engaged in sales and marketing activities as well as other costs including third-party consulting, public relations, allocated overhead costs, and amortization of acquired intangible assets.
If our near-term investments do not lead to increased international WAUs and ARPU and expected revenue growth over time, we may not achieve or, if achieved, maintain profitability and our growth rates may slow or decline. Seasonality. Industry advertising spend tends to be strongest in the fourth quarter, and we observe a similar pattern in our historical revenue.
If our near-term investments do not lead to increased international WAUs and ARPU and expected revenue growth over time, we may not achieve or, if achieved, maintain profitability and our growth rates may slow or decline. Seasonality. Industry advertising spend tends to be strongest in the fourth quarter, and we typically observe a similar pattern in our historical revenue.
General and Administrative General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits, and stock-based compensation for certain executives, finance, legal, information technology, human resources, and other administrative employees. In addition, general and administrative expenses include fees and costs for professional services, including consulting, third-party legal and accounting services, and allocated overhead costs.
General and Administrative General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits, restructuring costs, and stock-based compensation for certain executives, finance, legal, information technology, human resources, and other administrative employees. In addition, general and administrative expenses include fees and costs for professional services, including consulting, third-party legal and accounting services, and allocated overhead costs.
Our ability to support our requirements and plans for cash, including working capital and capital expenditure requirements, will depend on many factors, including the rate of our revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings and features, the continuing market adoption of our platform, the number of shares repurchased under our share repurchase program (the “Share Repurchase Program”), and our ability to obtain equity or debt financing.
Our ability to support our requirements and plans for cash, including working capital and capital expenditure requirements, will depend on many factors, including the rate of our revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings and features, the continuing market adoption of our platform, the number of shares repurchased under our Share Repurchase Program, and our ability to obtain equity or debt financing.
Research and Development Research and development expenses consist primarily of personnel-related costs, including salaries, benefits, and stock-based compensation for our employees engaged in research and development, as well as costs for consultants, contractors and third-party software.
Research and Development Research and development expenses consist primarily of personnel-related costs, including salaries, benefits, restructuring costs, and stock-based compensation for our employees engaged in research and development, as well as costs for consultants, contractors and third-party software.
Interest Income Interest income consists of interest earned on our cash, cash equivalents, and marketable securities. Other Income (Expense), Net Other income (expense), net consists primarily of unrealized gains and losses from the re-measurement of monetary assets and liabilities denominated in non-functional currencies, and foreign currency transaction gains and losses.
Interest Income Interest income consists of interest earned on our cash, cash equivalents, and marketable securities. Other Income (Expense), Net Other income (expense), net consists primarily of unrealized gains and losses from the re-measurement of monetary assets and liabilities denominated in non-functional currencies, and gains and losses on marketable securities and foreign currency transactions.
Key Business Metrics In addition to the measures presented in our consolidated financial statements, we use the following key business metrics to evaluate our business, measure our performance, develop financial forecasts, and make strategic decisions: 45 Table of Contents Weekly Active Users (WAUs) We define a Weekly Active User (“WAU”) as a Nextdoor user who opens our application, logs on to our website, or engages with an email with monetizable content at least once during a defined 7-day period. 2 We calculate average WAUs for a particular period by calculating the count of unique users, on a rolling basis for the past seven days, for each day of that period, and dividing that sum by the number of days in that period.
Key Business Metrics In addition to the measures presented in our consolidated financial statements, we use the following key business metrics to evaluate our business, measure our performance, develop financial forecasts, and make strategic decisions: Weekly Active Users (WAUs) We define a Weekly Active User (“WAU”) as a Nextdoor user who opens our application, logs on to our website, or engages with an email with monetizable content at least once during a defined 7-day period. 1 We calculate average WAUs for a particular period by calculating the count of unique users, on a rolling basis for the past seven days, for each day of that period, and dividing that sum by the number of days in that period.
While we have the ability to serve ads in all emails with monetizable content, we currently only do so on a portion of the total. 46 Table of Contents Average Revenue per Weekly Active User (ARPU) We generate revenue primarily from advertising. We measure monetization of our platform through our ARPU metric.
While we have the ability to serve ads in all emails with monetizable content, we currently only do so on a portion of the total. 46 Table of Contents Quarterly Average Weekly Active Users (in millions) Average Revenue per Weekly Active User (ARPU) We generate revenue primarily from advertising. We measure monetization of our platform through our ARPU metric.
We intend to continue to invest in technology that we believe will enhance user and customer experiences. We also intend to continue to invest heavily in our advertising products, including our proprietary Nextdoor Ads Platform and first-party and third-party ad measurement tools, as well as our sales team.
We intend to continue to invest in technology that we believe will enhance user and customer experiences. We also intend to continue to invest in our advertising products, including our proprietary ad platform and first-party and third-party ad measurement tools, as well as our sales team.
Discussions regarding our financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 are presented below.
Discussions regarding our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 are presented below.
The increase was primarily due to the periodic re-measurement of monetary assets and liabilities denominated in non-functional currencies.
The decrease was primarily due to the periodic re-measurement of monetary assets and liabilities denominated in non-functional currencies.
For purposes of calculating ARPU, revenue by user geography is apportioned to each region based on a determination of the location of the account where the revenue-generating activities occur.
For purposes of calculating ARPU, revenue by user geography is apportioned to each region based on a determination of the location of the account where the revenue-generating 47 Table of Contents activities occur.
The majority of our revenue is generated in the United States. Cost of Revenue Cost of revenue consists primarily of expenses associated with the delivery of our revenue generating activities, including the third-party cost of hosting our platform and allocated personnel-related costs, which include salaries, benefits, and stock-based compensation for employees engaged in development of our revenue generating products.
Cost of Revenue Cost of revenue consists primarily of expenses associated with the delivery of our revenue generating activities, including the third-party cost of hosting our platform and allocated personnel-related costs, which include salaries, benefits, and stock-based compensation for employees engaged in development of our revenue generating products.
Discussions regarding our financial condition and results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020 are located in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 15, 2022.
Discussions regarding our financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 are located in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 28, 2023.
We currently have no debt outstanding. We have generated losses from our operations, as reflected in our accumulated deficit of $618.3 million as of December 31, 2022. We incurred operating losses and cash outflows from operations by supporting the growth of our business. We expect these losses and operating cash outflows to continue for the foreseeable future.
We currently have no debt outstanding. We have generated losses from our operations, as reflected in our accumulated deficit of $766.0 million as of December 31, 2023. We incurred operating losses and cash outflows from operations by supporting the growth of our business. We expect these losses and operating cash outflows to continue for the foreseeable future.
We expect that our international expansion will require significant investment. Although our investments in international expansion may adversely affect our operating results in the near term, we believe that they will contribute to our long-term growth.
Although our investments in international expansion may adversely affect our operating results in the near term, we believe that they will contribute to our long-term growth.
We also expect to incur significant research and development, sales and marketing, and general and administrative expenses over the next several years in connection with the continued development and expansion of our business. As of December 31, 2022, we had $583.3 million in cash, cash equivalents, and marketable securities.
We also expect to incur significant research and development, sales and marketing, and general and administrative expenses over the next several years in connection with the continued development and strategic expansion of our business. As of December 31, 2023, we had $531.1 million in cash, cash equivalents, and marketable securities.
We record deferred revenue when we collect cash from customers in advance of revenue recognition. Leases At the inception of our contracts we determine if the contract is or contains a lease.
In certain advertising arrangements we require payment upfront from our customers. We record deferred revenue when we collect cash from customers in advance of revenue recognition. Leases At the inception of our contracts we determine if the contract is or contains a lease.
The net cash inflows from changes in operating assets and liabilities were primarily due to a $7.7 million increase in accrued expenses and other current liabilities, a $6.9 million decrease in operating lease right-of-use assets due 54 Table of Contents to normal amortization, and a $4.1 million decrease in prepaid expenses and other current assets.
The net cash inflows from changes in operating assets and liabilities were primarily due to a $5.3 million increase in accrued expenses and other liabilities, a $4.7 million 54 Table of Contents decrease in operating lease right-of-use assets due to normal amortization, a $3.5 million decrease in accounts receivable, and a $3.4 million decrease in prepaid expenses and other assets.
Over time, we believe that international WAUs can grow rapidly. We also believe that we can increase the monetization of users in international markets and that we can increase long-term ARPU for international WAUs from current levels. While we expect to grow ARPU for international WAUs, we still expect this to be lower than ARPU for U.S. WAUs.
We also believe that we can increase the monetization of users in international markets and that we can increase long-term ARPU for international WAUs from current levels. While we expect to grow ARPU for international WAUs, we still expect this to be lower than ARPU for U.S. WAUs. We expect that our international expansion will require significant investment.
The increase was primarily due to $6.3 million higher third-party hosting costs due to increased user growth and engagement, a $1.2 million increase in third-party costs associated with delivering and supporting our advertising products, and a $2.2 million increase in allocated personnel-related costs.
The increase was primarily due to a $1.3 million increase in third-party hosting costs due to rising user growth and engagement, a $0.9 million increase in allocated personnel-related costs, and a $0.4 million increase in third-party costs associated with delivering and supporting our advertising products.
The Black-Scholes option-pricing model requires the use of highly subjective assumptions. These assumptions are estimated as follows: • Fair Value of the Underlying Common Stock—Prior to the Business Combination, the Board of Directors considered numerous objective and subjective factors to determine the fair value of our common stock.
These assumptions are estimated as follows: • Fair Value of the Underlying Common Stock—Prior to the Business Combination, the Board of Directors considered numerous objective and subjective factors to determine the fair value of our common stock.
Adjusted EBITDA is not presented in accordance with GAAP and the use of this term varies from others in our industry. 55 Table of Contents The following is a reconciliation of net loss, the most comparable GAAP measure, to Adjusted EBITDA: Year Ended December 31, (in thousands) 2022 2021 2020 Net loss $ (137,916) $ (95,325) $ (75,234) Depreciation and amortization 5,656 4,172 3,058 Stock-based compensation 64,420 47,514 22,608 Interest income (9,304) (177) (727) Provision for income taxes 1,673 157 127 Adjusted EBITDA $ (75,471) $ (43,659) $ (50,168) Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with GAAP.
Adjusted EBITDA is not presented in accordance with GAAP and the use of this term varies from others in our industry. 55 Table of Contents The following is a reconciliation of net loss, the most comparable GAAP measure, to Adjusted EBITDA: Year Ended December 31, (in thousands) 2023 2022 2021 Net loss $ (147,765) $ (137,916) $ (95,325) Depreciation and amortization 5,769 5,656 4,172 Stock-based compensation 83,025 64,420 47,514 Interest income (25,780) (9,304) (177) Provision for income taxes 756 1,673 157 Restructuring charges 9,888 — — Adjusted EBITDA $ (74,107) $ (75,471) $ (43,659) Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with GAAP.
Our ARPU for the years ended December 31, 2022 and 2021 was $5.60 and $6.13, respectively, with the decrease due to stronger WAU growth relative to revenue growth. 47 Table of Contents Quarterly ARPU Factors Affecting Our Performance Macroeconomic Conditions.
Our ARPU for the years ended December 31, 2023 and 2022 was $5.25 and $5.60, respectively, with the decrease due to stronger WAU growth relative to revenue growth. Quarterly ARPU Factors Affecting Our Performance Macroeconomic Conditions.
The increase was primarily due to cumulative adjustments to intercompany pricing with our foreign subsidiaries. 53 Table of Contents Liquidity and Capital Resources Since inception, we have generated negative cash flows from operations and have primarily financed our operations from net proceeds received from the sale of equity securities, proceeds from the Business Combination, and payments received from our customers.
The decrease was primarily due to a decrease in foreign income tax expenses. 53 Table of Contents Liquidity and Capital Resources Since inception, we have generated negative cash flows from operations and have primarily financed our operations from net proceeds received from the sale of equity securities, proceeds from the Business Combination, and payments received from our customers.
Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, (in thousands) 2022 2021 2020 Net cash used in operating activities $ (60,503) $ (51,268) $ (41,604) Net cash provided by (used in) investing activities $ (342,448) $ (149,522) $ 36,792 Net cash provided by (used in) financing activities $ (64,348) $ 637,576 $ 6,367 Operating activities Cash used in operating activities during the year ended December 31, 2022 was $60.5 million which resulted from a net loss of $137.9 million, adjusted for non-cash charges of $68.0 million and net cash inflows of $9.4 million from changes in operating assets and liabilities.
Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, (in thousands) 2023 2022 2021 Net cash used in operating activities $ (59,273) $ (60,503) $ (51,268) Net cash provided by (used in) investing activities $ 66,490 $ (342,448) $ (149,522) Net cash provided by (used in) financing activities $ 8,916 $ (64,348) $ 637,576 Operating activities Cash used in operating activities during the year ended December 31, 2023 was $59.3 million which resulted from a net loss of $147.8 million, adjusted for non-cash charges of $79.9 million and net cash inflows of $8.6 million from changes in operating assets and liabilities.
The grant date fair value of stock options granted is estimated using the Black-Scholes option pricing model. Forfeitures are accounted for as they occur. Historically, our stock option awards and restricted stock permitted early exercise. The unvested portion of shares exercised is recorded as a liability on our consolidated balance sheets and reclassified into stockholders’ equity (deficit) as vesting occurs.
Forfeitures are accounted for as they occur. Historically, our stock option awards and restricted stock permitted early exercise. The unvested portion of shares exercised is recorded as a liability on our consolidated balance sheets and reclassified into stockholders’ equity (deficit) as vesting occurs. 56 Table of Contents The Black-Scholes option-pricing model requires the use of highly subjective assumptions.
Other income (expense), net Year Ended December 31, Change (in thousands, except percentages) 2022 2021 $ % Other income (expense), net $ (1,343) $ (539) $ (804) 149 % Other expense increased by $0.8 million, or 149%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Other income (expense), net Year Ended December 31, Change (in thousands, except percentages) 2023 2022 $ % Other income (expense), net $ (505) $ (1,343) $ 838 (62) % Other expense, net decreased by $0.8 million, or 62%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
We have other advertising arrangements which are typically fixed-fee arrangements and revenue is recognized on a straight-line basis over the non-cancellable contractual term of the agreement, generally beginning on the date our service is made available to the customer. Deferred Revenue In certain advertising arrangements we require payment upfront from our customers.
We typically bill advertisers on a monthly basis and our payment terms vary by customer type and location. We have other advertising arrangements which are typically fixed-fee arrangements and revenue is recognized on a straight-line basis over the non-cancellable contractual term of the agreement, generally beginning on the date our service is made available to the customer.
Key business metrics for the three months ended December 31, 2022 are as follows: • Weekly active users (“WAUs”) were 40.0 million, an increase of 11% compared to the three months ended December 31, 2021. • Average revenue per weekly active user (“ARPU”) was $1.33, a decrease of 19% compared to the three months ended December 31, 2021.
Key business metrics for the three months ended December 31, 2023 are as follows: • Weekly active users (“WAUs”) were 41.8 million, an increase of 5% compared to the three months ended December 31, 2022. • Average revenue per weekly active user (“ARPU”) was $1.33 and remained flat compared to the three months ended December 31, 2022.
The increase was primarily due to increased advertiser demand for our product offerings and increased user engagement as measured by a 21% increase in WAUs. Year-to-date ARPU decreased 9% reflecting stronger year-over-year WAU growth relative to revenue growth.
The increase was primarily due to an increase in advertiser demand for our product offerings, which we believe was driven by increased marketer spending as well as increased user engagement as measured by a 9% increase in 2023 WAUs. Full year ARPU decreased 6% reflecting stronger year-over-year WAU growth relative to revenue growth.
This was offset by proceeds from maturities of marketable securities of $56.7 million and proceeds from sales of marketable securities of $2.4 million. Financing activities Cash used in financing activities for the year ended December 31, 2022 was $64.3 million, which consisted of repurchases of common stock of $77.2 million.
Cash used in financing activities for the year ended December 31, 2022 was $64.3 million, which consisted of repurchases of common stock of $77.2 million. This was partially offset by $12.5 million of proceeds from the exercise of stock options.
Cash used in operating activities during the year ended December 31, 2021 was $51.3 million which resulted from a net loss of $95.3 million, adjusted for non-cash charges of $52.0 million and net cash outflows of $7.9 million from changes in operating assets and liabilities.
Cash used in operating activities during the year ended December 31, 2022 was $60.5 million which resulted from a net loss of $137.9 million, adjusted for non-cash charges of $68.0 million and net cash inflows of $9.4 million from changes in operating assets and liabilities.
We may face challenges increasing the size and engagement of our user base due to a number of factors including competition, challenges in acquiring and engaging users, or changes in regulations. 48 Table of Contents Growth in Monetization . Monetization trends, which are reflected in our ARPU, are a key factor that affects our revenue and financial results.
As the size and engagement of our user base grows, we believe the potential to increase our revenue grows. 48 Table of Contents We may face challenges increasing the size and engagement of our user base due to a number of factors including competition, challenges in acquiring and engaging users, or changes in regulations. Growth in Monetization .
Cost of revenue Year Ended December 31, Change (in thousands, except percentages) 2022 2021 $ % Cost of revenue $ 38,981 $ 28,813 $ 10,168 35 % Cost of revenue increased by $10.2 million, or 35%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Cost of revenue Year Ended December 31, Change (in thousands, except percentages) 2023 2022 $ % Cost of revenue $ 41,613 $ 38,981 $ 2,632 7 % Cost of revenue increased by $2.6 million, or 7%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Comparison of the Years Ended December 31, 2022 and 2021 Revenue Year Ended December 31, Change (in thousands, except percentages) 2022 2021 $ % Revenue $ 212,765 $ 192,197 $ 20,568 11 % Revenue increased by $20.6 million, or 11%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Comparison of the Years Ended December 31, 2023 and 2022 Revenue Year Ended December 31, Change (in thousands, except percentages) 2023 2022 $ % Revenue $ 218,309 $ 212,765 $ 5,544 3 % Revenue increased by $5.5 million, or 3%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The Share Repurchase Program does not obligate us to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended, or discontinued at any time.
The Share Repurchase Program does not obligate us to repurchase any dollar amount or number of shares, and the program may be extended, modified, suspended, or discontinued at any time. During the year ended December 31, 2023, we did not repurchase or retire any shares of Class A common stock.
See "Risk Factors" and "Special Note Regarding Forward-Looking Statements” for additional details. Growth in and Engagement of Users. We measure growth in, and engagement of, users by tracking WAUs. As the size and engagement of our user base grows, we believe the potential to increase our revenue grows.
See "Risk Factors" and "Special Note Regarding Forward-Looking Statements” for additional details. Growth in and Engagement of Users. We measure growth in, and engagement of, users by tracking WAUs.
Financial Results as of and for the year ended December 31, 2022 are as follows: • Revenue was $212.8 million, an increase of 11% compared to 2021. • Total costs and expenses were $357.0 million, an increase of 24% compared to 2021. • Net loss increased 45% to $(137.9) million in 2022, compared to $(95.3) million in 2021. • Adjusted EBITDA loss increased 73% to $(75.5) million in 2022, compared to $(43.7) million in 2021. • Cash, cash equivalents, and marketable securities were $583.3 million.
Financial Results as of and for the year ended December 31, 2023 are as follows: • Revenue was $218.3 million, an increase of 3% compared to 2022. • Total costs and expenses were $390.6 million, an increase of 9% compared to 2022, including $11.1 million of restructuring charges. • Net loss increased 7% to $147.8 million in 2023, compared to $137.9 million in 2022. • Adjusted EBITDA loss decreased 2% to $74.1 million in 2023, compared to $75.5 million in 2022. • Cash, cash equivalents, and marketable securities were $531.1 million.
Our significant growth and the current macroeconomic environment have partially masked these trends in historical periods. Components of Results of Operations Revenue We generate substantially all of our revenue from the delivery of advertisements on our platform which includes the delivery of advertising impressions sold on a CPM basis and CPC basis, as well as on a fixed-fee basis.
Components of Results of Operations Revenue We generate substantially all of our revenue from the delivery of advertisements on our platform which includes the delivery of advertising impressions sold on a CPM basis and CPC basis, as well as on a fixed-fee basis. The majority of our revenue is generated in the United States.
Our actual results could differ from these estimates. The critical accounting policies requiring estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below. Revenue Recognition We generate a majority of our revenue from the delivery of advertising services.
Our actual results could differ from these estimates. The critical accounting policies requiring estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below. Refer to Note 2 to our consolidated financial statements for further information on our other significant accounting policies.
This was partially offset by the payment of deferred transaction costs of $5.4 million. Non-GAAP Financial Measure Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that represents our net loss adjusted for depreciation and amortization, stock-based compensation, net interest income, provision for income taxes, and any acquisition-related costs.
Non-GAAP Financial Measure Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that represents our net loss adjusted for depreciation and amortization, stock-based compensation, net interest income, provision for income taxes, and any restructuring charges or acquisition-related costs.
Research and development Year Ended December 31, Change (in thousands, except percentages) 2022 2021 $ % Research and development $ 127,073 $ 97,096 $ 29,977 31 % Research and development expenses increased by $30.0 million, or 31%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Research and development Year Ended December 31, Change (in thousands, except percentages) 2023 2022 $ % Research and development $ 149,998 $ 127,073 $ 22,925 18 % Research and development expenses increased by $22.9 million, or 18%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
General and administrative Year Ended December 31, Change (in thousands, except percentages) 2022 2021 $ % General and administrative $ 67,733 $ 54,664 $ 13,069 24 % General and administrative expenses increased by $13.1 million, or 24%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
General and administrative Year Ended December 31, Change (in thousands, except percentages) 2023 2022 $ % General and administrative $ 76,057 $ 67,733 $ 8,324 12 % General and administrative expenses increased by $8.3 million, or 12%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
These amounts were partially offset by a $6.6 million decrease in operating lease right-of-use assets due to normal amortization and a $2.8 million increase in accounts payable.
These amounts were partially offset by a $5.7 million decrease in operating lease liabilities due to lease payments and a $2.6 million decrease in accounts payable.
The increase was primarily due to a $20.8 million increase in personnel-related and other costs, which was driven by an increase in headcount, a $1.7 million increase in performance marketing costs to attract small and mid-sized customers, partially offset by a $5.6 million decrease in performance marketing costs for user acquisition as focus shifted to organic user acquisition channels.
The decrease was primarily due to a $14.7 million decrease in performance marketing costs for user acquisition as focus shifted to organic user acquisition channels and a $0.9 million decrease in performance marketing costs to attract local businesses, offset by a $15.3 million increase in personnel-related and other costs, inclusive of restructuring costs, which was driven by an increase in average headcount.
Provision for income taxes Year Ended December 31, Change (in thousands) 2022 2021 $ % Provision for income taxes $ 1,673 $ 157 $ 1,516 966 % Provision for income taxes increased by $1.5 million, or 966%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Provision for income taxes Year Ended December 31, Change (in thousands) 2023 2022 $ % Provision for income taxes $ 756 $ 1,673 $ (917) (55) % Provision for income taxes decreased by $0.9 million, or 55%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Performance marketing costs related to user acquisition largely consist of the distribution of mailed invitations and, to a lesser extent, digital advertising. Performance marketing costs related to small and mid-sized customer acquisition largely consists of digital advertising and, to a lesser extent, direct mail campaigns.
Performance marketing costs related to local business acquisition largely consists of digital advertising and, to a lesser extent, direct mail campaigns.
We recognize advertising revenue after satisfying our contractual performance obligation, which, for the majority of our advertising arrangements, is when an advertising impression is displayed to users. None of our arrangements contain minimum impression guarantees. We typically bill advertisers on a monthly basis and our payment terms vary by customer type and location.
Revenue Recognition We generate a majority of our revenue from the delivery of advertising services. We recognize advertising revenue after satisfying our contractual performance obligation, which, for the majority of our advertising arrangements, is when an advertising impression is displayed to users. None of our arrangements contain minimum impression guarantees.
To increase monetization, we are focused on serving more national brands by building out our salesforce, and enhancing our self-serve tools for customers of all sizes. We are also focused on increasing our user base and engagement in the United States and internationally, which will increase the opportunities for businesses to advertise on Nextdoor.
We are also focused on increasing our user base and engagement in the United States and internationally, which will increase the opportunities for businesses to advertise on Nextdoor.
The increase was primarily due to a $25.6 million increase in personnel-related costs primarily driven by an increase in headcount, a $2.5 million increase in third-party software costs, and a $1.2 million increase in allocated overhead costs reflecting an increase in headcount. 52 Table of Contents Sales and marketing Year Ended December 31, Change (in thousands, except percentages) 2022 2021 $ % Personnel-related and other $ 77,718 $ 56,950 $ 20,768 36 % Brand and performance marketing 33,628 37,534 (3,906) (10) % Neighbor services 11,836 11,946 (110) (1) % Total sales and marketing $ 123,182 $ 106,430 $ 16,752 16 % Sales and marketing expenses increased by $16.8 million, or 16%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
The increase was primarily due to a $20.2 million increase in personnel-related costs, inclusive of restructuring costs, primarily driven by an increase in average headcount, a $2.4 million increase in third-party software costs, and a $0.5 million increase in allocated overhead costs reflecting an increase in average headcount. 52 Table of Contents Sales and marketing Year Ended December 31, Change (in thousands, except percentages) 2023 2022 $ % Personnel-related and other $ 93,056 $ 77,718 $ 15,338 20 % Brand and performance marketing 18,054 33,628 (15,574) (46) % Neighbor services 11,815 11,836 (21) — % Total sales and marketing $ 122,925 $ 123,182 $ (257) — % Sales and marketing expenses decreased by $0.3 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
We believe that increased international monetization presents an important opportunity for growth, and we are working on localizing our product and expanding our operations to better serve our international user and customer base. We are still in the early stages of global expansion and will continue to evaluate expansion opportunities in our current international markets, and also in additional geographies.
We believe that increased international monetization presents an important opportunity for long-term growth, and we are working on localizing our product and expanding our operations to better serve our international user and customer base.
In September 2021, Apple released changes to the Apple email client available on its operating systems, including iOS 15 and iPadOS 15, which limit our ability to measure user engagement with emails containing monetizable content for users that use the Apple email client.
We also present WAUs by geography because we are more advanced in engagement and monetization in the United States than internationally. Beginning in September 2021, Apple introduced changes to the Apple email client available on its operating systems, which limit our ability to measure user engagement with emails containing monetizable content for users that use the Apple email client.
The incremental borrowing rate is a hypothetical rate based on the rate of interest we would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. 56 Table of Contents Stock-based compensation Stock-based compensation expense for stock-based awards is measured based on the grant date fair value of the awards and recognized in the consolidated statements of operations on a straight-line basis over the requisite service period of the awards.
The incremental borrowing rate is a hypothetical rate based on the rate of interest we would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment.
Sales and marketing expenses also include brand and performance marketing for both user and small and mid-sized customer acquisition, and neighbor services, which includes personnel-related costs for our neighbor support team, our outsourced neighbor support function, and verification costs.
Sales and marketing expenses also include brand and performance marketing for both user and local business acquisition, and neighbor services, which includes personnel-related costs for our neighbor support team, our outsourced neighbor support function, and verification costs. Performance marketing costs related to user acquisition largely consist of the distribution of mailed invitations and, to a lesser extent, digital advertising.
Interest income Year Ended December 31, Change (in thousands, except percentages) (NM = Not Meaningful) 2022 2021 $ % Interest income $ 9,304 $ 177 $ 9,127 NM Interest income increased by $9.1 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Interest income Year Ended December 31, Change (in thousands, except percentages) 2023 2022 $ % Interest income $ 25,780 $ 9,304 $ 16,476 177 % Interest income increased by $16.5 million, or 177%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase was driven by higher interest rates.
Non-cash charges primarily consisted of $47.5 million of stock-based compensation expense and $4.2 million of depreciation and amortization expense.
Non-cash charges primarily consisted of $83.0 million of stock-based compensation expense and $5.8 million of depreciation and amortization expense, partially offset by $8.6 million of accretion on investments.
The net cash outflows from changes in operating assets and liabilities were primarily due to an $8.2 million increase in accounts receivable, a $4.1 million increase in prepaid expenses and other current assets, and a $5.8 million decrease in operating lease liabilities due to lease payments.
The net cash inflows from changes in operating assets and liabilities were primarily due to a $7.7 million increase in accrued expenses and other liabilities, a $6.9 million decrease in operating lease right-of-use assets due to normal amortization, and a $3.8 million decrease in prepaid expenses and other assets.
This was partially offset by proceeds from maturities of marketable securities of $366.8 million and proceeds from sales of marketable securities of $10.8 million. Cash used in investing activities for the year ended December 31, 2021 was $149.5 million, which consisted of purchases of marketable securities of $199.8 million and the purchase of property and equipment of $8.8 million.
Investing activities Cash provided by investing activities for the year ended December 31, 2023 was $66.5 million, which consisted of proceeds from maturities of marketable securities of $504.4 million and proceeds from sales of marketable securities of $155.4 million.
Overview At Nextdoor, our purpose is to cultivate a kinder world where everyone has a neighborhood they can rely on. Nextdoor is the neighborhood network that connects neighborhood stakeholders, including neighbors, businesses and public services, online and in real life to build stronger, more vibrant, and resilient neighborhoods.
Overview At Nextdoor, our purpose is to cultivate a kinder world where everyone has a neighborhood they can rely on. Neighbors around the world turn to Nextdoor to receive trusted information, give and get help, get things done, and build real world connections with those nearby — neighbors, businesses, and public services.
The increase was primarily due to a $4.5 million increase in personnel-related costs which was driven by an increase in headcount, a $4.5 million increase in insurance expenses, a $1.6 million increase in information technology costs, and a $1.6 million increase in professional services fees primarily related to operating as a public company.
The increase was primarily due to a $10.5 million increase in personnel-related costs, inclusive of restructuring costs, which was driven by an increase in average headcount, partially offset by a $2.7 million decrease in insurance expenses.
This was partially offset by $12.5 million of proceeds from the exercise of stock options, net of repurchases. Cash provided by financing activities for the year ended December 31, 2021 was $637.6 million, which consisted of $628.5 million in proceeds from the Business Combination and $15.3 million of proceeds from the exercise of stock options, net of repurchases.
Financing activities Cash provided by financing activities for the year ended December 31, 2023 was $8.9 million, which consisted of $7.2 million of proceeds from the exercise of stock options and $2.0 million of proceeds from the issuance of common stock under the employee stock purchase plan.
As of December 31, 2022, Nextdoor was in more than 305,000 neighborhoods around the world and in 1 in 3 households in the United States, and during the fourth quarter of 2022, we reached 78 million global Verified Neighbors. Nextdoor is built on the power of hyperlocal community.
By fostering these connections, both online and in the real world, Nextdoor builds stronger, more vibrant, and more resilient neighborhoods. As of December 31, 2023, Nextdoor was in more than 325,000 neighborhoods around the world and in 1 in 3 households in the United States.
WAUs, and we expect this international growth to continue to outpace U.S. growth in the near term. Quarterly Average Weekly Active Users (in millions) 2 Emails with monetizable content are emails with a primary purpose to regularly inform users about topics that are relevant to them, and are therefore appropriate for delivering ads to users.
Our WAU for the three months ended December 31, 2023 and 2022 was 41.8 million and 40.0 million, respectively, which represents 5% growth period over period. 1 Emails with monetizable content are emails with a primary purpose to regularly inform users about topics that are relevant to them, and are therefore appropriate for delivering ads to users.
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Neighbors and organizations, which include small and mid-sized businesses, large brands, public agencies, and nonprofits, around the world turn to Nextdoor to receive trusted information, give and get help, and build real-world connections with neighborhood stakeholders.
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As of the end of the fourth quarter of 2023, Nextdoor had 88 million global Verified Neighbors.
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We also present WAUs by geography because we are more advanced in engagement and monetization in the United States than internationally.
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Restructuring In the fourth quarter of 2023, we announced a cost reduction plan (the “Cost Reduction Plan”) intended to right size the business and align the workforce and other expenses with our near term revenue expectations and long term business priorities. The Cost Reduction 45 Table of Contents Plan included a reduction of full-time employee headcount by approximately 25%.
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Our WAU for the three months ended December 31, 2022 and 2021 was 40.0 million and 35.9 million, respectively. In 2022, engagement as measured by WAUs has grown steadily as users have returned to our platform for the utility that it offers them. As illustrated below, our international WAUs have grown at a faster rate than our U.S.
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The execution of the Cost Reduction Plan was substantially complete by the end of the fourth quarter of 2023.
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The increase was primarily driven by higher interest rates and an increase in investment in marketable securities.
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The following table summarizes the restructuring charges in the consolidated statements of operations for the year ended December 31, 2023 (in thousands): Severance and Related Charges Stock-Based Compensation Expense Total Research and development $ 5,141 $ 903 $ 6,044 Sales and marketing 2,984 228 3,212 General and administrative 1,763 80 1,843 Total $ 9,888 $ 1,211 $ 11,099 Refer to Note 14 to our consolidated financial statements for further information on our restructuring charges.
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We currently anticipate that the Share Repurchase Program will extend through June 30, 2024, or such shorter period if $100.0 million in aggregate of shares of our Class A common stock have been repurchased.
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Monetization trends, which are reflected in our ARPU, are a key factor that affects our revenue and financial results. To increase monetization, we are focused on serving more national brands by efficiently scaling our salesforce, increasing ad agency relationships, and enhancing our self-serve tools for customers of all sizes.
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During the year ended December 31, 2022, we repurchased and retired 23,251,703 shares of Class A common stock at an average purchase price of $3.32 per share for an aggregate repurchase price of $77.2 million. As of December 31, 2022, we had $22.8 million available for future share repurchases under the Share Repurchase Program.
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We are still in the early stages of global expansion and will continue to evaluate expansion opportunities in our current international markets, and also in additional geographies. Over time, we believe that international WAUs can grow rapidly.
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We determine revenue recognition through the following steps: 1) Identification of the contract, or contracts, with a customer; 2) Identification of the performance obligations in the contract; 3) Determination of the transaction price; 4) Allocation of the transaction price to the performance obligations in the contract; and 5) Recognition of revenue when, or as, we satisfy a performance obligation.
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Periods of significant growth and changes in the macroeconomic environment have partially masked these trends in historical periods.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur cash and cash equivalents consist of cash in bank accounts, demand deposits, money market funds, corporate bonds, and commercial paper. 57 Table of Contents The primary objectives of our investment activities are to preserve principal and provide liquidity without significantly increasing risk. We do not enter into investments for trading or speculative purposes.
Biggest changeOur cash and cash equivalents consist of cash in bank accounts, demand deposits, money market funds, corporate bonds, and commercial paper. The primary objectives of our investment activities are to preserve principal and provide liquidity without significantly increasing risk. We do not enter into investments for trading or speculative purposes.
Our sales are typically denominated in the local currency of the country in which the sale was made. The majority of our revenue is denominated in U.S. Dollars. As such, our revenue is not currently exposed to significant foreign currency risk.
Our sales are typically denominated in the local currency of the country in which the sale was made. The majority of our revenue is denominated in U.S. Dollars. As such, our 57 Table of Contents revenue is not currently exposed to significant foreign currency risk.
Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates. Interest Rate Risk As of December 31, 2022, we had cash and cash equivalents of $55.2 million and marketable securities of $528.1 million.
Our market risk exposure is primarily the result of fluctuations in interest rates and foreign currency exchange rates. Interest Rate Risk As of December 31, 2023, we had cash and cash equivalents of $60.2 million and marketable securities of $470.9 million.

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