Nextdoor Holdings (NXDR) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01We have a limited operating history at the current scale of our business and are still scaling up our monetization efforts, which makes it difficult to evaluate our current business and future prospects, and there is no assurance we will be able to scale our business for future growth
2. 02Adverse global economic and financial conditions could harm our business and financial condition
3. 03We currently generate substantially all of our revenue from advertising. If advertisers reduce or eliminate their spending with us, our business, operating results, and financial condition would be adversely impacted
4. 04Our ability to attract and retain advertisers depends on our ability to collect and use data and develop products to enable us to effectively deliver and accurately measure advertisements on the Nextdoor platform
5. 05If we fail to add new neighbors or retain current neighbors, or if current neighbors engage less with the Nextdoor platform, our business, operating results, and financial condition would be adversely impacted
6. 06Our business is highly competitive. Competition presents an ongoing threat to the success of our business
7. 07If we are not able to compete effectively, our neighbor base and level of neighbor engagement may decrease, we may become less attractive to advertisers and our business, operating results, and financial condition may be adversely affected
8. 08If we fail to scale our business effectively, our business, operating results, and financial condition would be adversely affected
9. 09If we or our industry generally are unable to provide a high-quality and secure customer experience in the various locales in which we operate, our brand could suffer reputational damage and our business results could be harmed
10. 10If we do not successfully anticipate market needs and develop products and services and platform enhancements that meet those needs, or if those products, services, and platform enhancements do not gain market acceptance, our business, operating results, and financial condition will be adversely impacted
11. 11We may not be successful in our AI initiatives, which could adversely affect our business, reputation, or financial results
12. 12If our efforts to build strong brand identity and reputation are not successful, we may not be able to attract or retain neighbors, and our business, operating results, and financial condition will be adversely affected
13. 13Additionally, advertisements or actions of our advertisers may affect our brand and reputation if neighbors do not think the advertisements help them accomplish their objectives, view the advertisements as intrusive or misleading or have poor experiences with our advertisers
14. 14Unfavorable media coverage negatively affects our business from time to time
15. 15Our product and investment decisions may conflict with the short-term financial results and may not produce the long-term benefits that we expect
16. 16We may expand our international operations where we have limited operating experience and may be subject to increased business, regulatory, and economic risks that could seriously harm our business, operating results, and financial condition
17. 17If we need additional capital in the future, it may not be available on favorable terms, if at all
18. 18We may make acquisitions, which could harm our financial condition or operating results and may adversely affect the price of our Class A common stock

Risks Related to Security and Technology

1. 19Because we rely on third-party technology providers in our business, we rely on the cybersecurity practices and policies adopted by these third parties. Our ability to monitor our third-party technology providers’ cybersecurity practices is limited
2. 20Technologies have been developed that can block the display of advertisements on the Nextdoor platform, which could adversely impact our business, operating results, and financial condition
3. 21Security breaches, including improper access to or disclosure of our data or our neighbors’ data, or other hacking and phishing attacks on our or third-party systems, could harm our reputation and adversely affect our business
4. 22Security incidents may cause interruptions to our platform, degrade the neighbor experience, cause neighbors or advertisers to lose confidence and trust in our platform, impair our internal systems, or result in financial harm to our company
5. 23Our platform and internal systems rely on software and hardware that is highly technical, and any errors, bugs, or vulnerabilities in these systems, or failures to address or mitigate technical limitations in our systems, could adversely affect our business
6. 24Social and ethical issues may result in reputational harm and liability

Risks Related to Financial and Accounting Matters

1. 25Our operating results may fluctuate significantly, which makes our future results difficult to predict
2. 26Certain of our market opportunities and key metric estimates could prove to be inaccurate, and any real or perceived inaccuracies may harm our reputation and negatively affect our business
3. 27significant 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
4. 28We have a history of net losses and may experience net losses in the future and we cannot assure you that we will achieve or sustain profitability. If we cannot achieve and sustain profitability, our business, financial condition, and operating results will be adversely affected
5. 29Our ability to use our U.S. federal and state net operating losses to offset future taxable income may be subject to certain limitations which could subject our business to higher tax liability
6. 30Our financial results may be adversely affected by changes in accounting principles generally accepted in the United States and our financial estimates may be different from our financial results
7. 31If currency exchange rates fluctuate substantially in the future, our operating results, which are reported in U.S. dollars, could be adversely affected
8. 32We may have greater than anticipated tax liabilities, which could harm our business, revenue and financial results
9. 33We cannot guarantee that our Share Repurchase Program will be fully consummated or that it will enhance long-term stockholder value. Share repurchases could also increase the volatility of the trading price of our stock and diminish our cash reserves

Risks Related to Legal and Regulatory Matters

1. 34We may be liable as a result of content or information that is published or made available on our platform
2. 35Actions by governments that restrict access to the Nextdoor platform in their countries, or that otherwise impair our ability to sell advertising in their countries, could substantially harm our business, operating results, and financial condition
3. 36Our business is subject to complex and evolving U.S. and foreign laws, regulations, and industry standards, many of which are subject to change and uncertain interpretations, which uncertainty could harm our business, operating results, and financial condition
4. 37compliance with new or evolving regulations. As a result, we may incur additional liability, and our business, operating results, and financial condition could be harmed
5. 38We could be involved in legal disputes that are expensive and time consuming, and, if resolved adversely, could harm our business, operating results, and financial condition
6. 39The 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
7. 40Failure to maintain effective systems of internal controls and disclosure controls could have a material adverse effect on our business, operating results, and financial condition

Risks Related to Intellectual Property

1. 41Failure to obtain, maintain, protect or enforce our intellectual property and proprietary rights could enable others to copy or use aspects of our platform without compensating us, which could harm our brand, business, and results of operations
2. 42Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and proprietary information
3. 43Third parties may claim that our platform infringes their intellectual property rights and this may create liability for us or otherwise adversely affect our business, operating results, and financial condition
4. 44the price of our common stock. We expect the number of such claims to increase as the functionality of our platform overlaps with that of other products and services, and as the volume of issued software patents and patent applications continues to increase
5. 45Our use of “open source” software could subject us to possible litigation or could prevent us from offering products that include open source software or require us to obtain licenses on unfavorable terms
6. 46We license technology from third parties for the development of our products, and our inability to maintain those licenses could harm our business

Risks Related to Ownership of Our Class A Common Stock

1. 47The price of our Class A common stock has been and may continue to be volatile
2. 48The dual class structure of our common stock may adversely affect the trading market for our Class A common stock
3. 49The dual class structure of our common stock has the effect of concentrating voting power with our management and other existing stockholders, which will limit your ability to influence the outcome of important transactions, including a change in control
4. 50We do not intend to pay cash dividends for the foreseeable future
5. 51If analysts do not publish research about our business or if they publish inaccurate or unfavorable research, our stock price and trading volume could decline
6. 52We may be subject to securities litigation, which is expensive and could divert management attention
7. 53Future resales of our Class A common stock may cause the market price of our securities to drop significantly, even if our business is doing well
8. 54Provisions in our charter documents and under Delaware law, including anti-takeover provisions, could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may limit attempts by our stockholders to replace or remove our current management
9. 55Our Certificate of Incorporation contains exclusive forum provisions for certain claims, which may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees
10. 56Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder