(Bloomberg) -- Nextdoor Holdings Inc. reported second-quarter revenue that beat analysts’ estimates and projected stronger-than-expected sales growth, pointing to improvements in the company’s advertising technology as a key driver of sales.
Chief Executive Officer Nirav Tolia also announced plans for a “complete transformation” of Nextdoor’s core social network to increase usage and turn the neighborhood-focused platform into a service that people are drawn toward daily, not just for key life moments.
In a letter to shareholders Wednesday, Tolia announced this product overhaul, which the company is calling NEXT. Nextdoor aims to better leverage local information to draw users to the service more often, rather than just in irregular, urgent cases such as seeking a babysitter, dealing with a storm or reporting local crime.
“In those cases Nextdoor becomes an absolute lifeline,” Tolia said in an interview. “Those moments are not daily moments. What are we going to do to transform our product into something you want to use every single day? What that ultimately comes down to is useful information.”
Revenue increased 11% to $63.3 million in the period ended June 30, the company said Wednesday in a statement. Analysts, on average, estimated $58.3 million, according to data compiled by Bloomberg. The platform has 45 million weekly active users, 8% more than a year earlier.
Nextdoor expects sales of $62 million in the third quarter, topping analyst’s estimates of $59.4 million.
The shares were little changed in extended trading after closing at $2.51 in New York. The stock has jumped 33% this year.
Tolia said almost 50% of the quarterly revenue was driven by sales from the company’s “self-serve” advertising system, which allows marketers to buy and manage ads directly without a sales rep. Self-serve ads made up just 39% of revenue in the year earlier. Artificial intelligence tools that mitigate harmful conversations on the app also offered a boost.
“We are seeing greater self-serve adoption,” Tolia said. “That is the holy grail of all technology companies, you want your customers to come on and adopt the advertising platform without having you to speak with them.”
Tolia declined to share specifics on the new product plan, but said the company expects to see resulting gains in mid-2025. That product transformation is in line with Nextdoor’s leadership overhaul that started in February with the reintroduction of Tolia as CEO. Tolia co-founded the company in 2010, but stepped down as CEO in 2018. Nextdoor has also overhauled its board in the past few months, adding three new directors, including former Yahoo Chief Executive Marissa Mayer.
“I want to highlight the challenge of this company, which is continuing to execute on this plan while simultaneously transforming the product,” Tolia said. “It’s not a trivial thing to reinvent a product if that’s your only focus, it’s certainly not trivial to reinvent your product while at the same time outperforming what people on the Street believe that you’re going to do.”
The company lost $6 million in the quarter under adjusted earnings before interest, taxes, depreciation and amortization, lower than the $12.7 million loss projected by analysts.
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