Nextdoor (NXDR) reached breakeven earnings per share in the third quarter, beating the consensus estimate of a $0.01 loss by 100.0% and improving 100.0% from a year ago. Revenue of $78.77 million rose 14.3% and topped the $77.4 million consensus by 1.8%, while also clearing the company's own $76-78 million guidance. Adjusted EBITDA of $10.3 million came in well above the $6.5-8 million guide. The headline is clean, and the user story is the strongest it has been in the company's reporting history. The central tension is that faster audience growth is not yet translating into faster revenue growth, because each new user is monetizing at a lower rate.
The quality of the bottom-line improvement deserves a closer look. GAAP net loss narrowed to $659,000 from $12.9 million a year ago, taking the net margin to roughly -1% from -19%. The trend is genuine: net margin has moved from -19% in Q1 to -3% in Q2 to -1% now. Stock-based compensation fell to $14.3 million, or 18% of revenue, from 24% a year earlier. The prior-year quarter also carried a $4.7 million restructuring charge. Still, Nextdoor posted a $4.2 million operating loss, and $3.8 million of interest income on its $382 million cash pile closed most of the gap. Operations have improved dramatically from a $17.2 million operating loss a year ago, but the breakeven print depends in part on the balance sheet. Cash generation is real: operating cash flow reached $28 million through nine months, a $31 million year-over-year improvement.
The operating trends on the call were mostly impressive. Platform weekly active users reached 24.5 million, up 7% sequentially and 14% year over year, compared with only 5% growth in Q2. Weekly contributors rose 12% sequentially and 27% year over year, and management said the gains were organic, with no material paid acquisition. Self-serve revenue growth accelerated for a third straight quarter, to 35% from 32% and 28%, and now makes up about 69% of revenue versus 59% a year ago. The weakness sits beneath those numbers. ARPU growth slowed to just 1% from 13% in Q4 of fiscal 2025, as reactivated dormant users monetize below the base. The CFO declined to rule out flat ARPU in 2027. Revenue growth held at 14% versus 15% in Q2, so a sharply accelerating user base produced steady, not accelerating, sales.
Guidance reinforces that mixed picture. Fourth-quarter revenue guidance of $78-80 million implies roughly 14-16% growth. Adjusted EBITDA guidance of $10-11 million compares with $8 million a year ago. Full-year revenue guidance of $293-295 million implies about 14% growth, extending a pattern of upgrades from "continued growth" to roughly 10% to low teens. However, full-year adjusted EBITDA margin was held at about 10% despite the Q3 beat, with management citing expense timing that pushes some costs into Q4. Platform WAU is guided flat sequentially for Q4 because of seasonality, which would end a three-quarter run of gains. No 2027 outlook was offered.
The catalyst list is aimed squarely at the monetization gap. It includes Ask AI integrated into search for all U.S. users and the relaunched Faves Awards, which drew about 5 million votes for 750,000 businesses. Management also announced the Neighborhood Intelligence ad-targeting platform, pitched as roughly 12 times finer than zip-code targeting. Other items include video sold through field sales, up 37%, and new dynamic product, multi-location, and app-install ad formats. Management expects little Q4 contribution from the new ad products, however. On the risk side, AI agents that find and book local service providers pose a credible disintermediation threat. Buybacks also slowed to $7 million from $29 million in Q1.
Investors were not leaning in ahead of the report. Earnings Whispers sentiment slipped from 0.18 to slightly negative at -0.02, a meaningful cooling to roughly neutral. Shares are down 3.2% since the open following the August report. At $2.44, the stock sits 18.6% above its 200-day moving average but about 10.6% below its October 13 high of $2.73. It is 14.6% above its September 9 low, leaving it in the middle of its inter-earnings range. The trend readings are mixed, with momentum positive while AVWAP remains negative.
The bottom line is that Nextdoor delivered the quarter turnaround believers wanted: accelerating users, near-breakeven GAAP results, rising cash flow, and another lift to revenue expectations. Bears still have legitimate ammunition in collapsing ARPU growth, a flat Q4 user outlook, and an unchanged margin target. The next leg of the story depends less on adding neighbors and more on whether the new ad tools can make them pay.