Nextdoor Holdings, Inc. ((KIND)) has held its Q4 earnings call. Read on for the main highlights of the call.
Nextdoor Holdings, Inc. recently held its earnings call, revealing a strong financial performance in Q4 2024. The company reported its first-ever positive adjusted EBITDA and operating cash flow, alongside significant revenue and user growth. Despite these achievements, Nextdoor acknowledged potential short-term challenges in revenue growth and ad impressions due to strategic shifts towards launching their new initiative, NEXT. The long-term outlook remains optimistic as the company focuses on enhancing user experience.
Positive Adjusted EBITDA and Operating Cash Flow
Nextdoor marked a significant milestone in Q4 2024 by achieving positive adjusted EBITDA and operating cash flow for the first time. The adjusted EBITDA reached $3 million, while operating cash flow was $11 million, highlighting the company’s improved financial health and operational efficiency.
Revenue Growth
The company experienced a 17% year-over-year increase in revenue, totaling $65 million in Q4. This growth was primarily driven by self-serve advertisers and improved revenue retention, showcasing Nextdoor’s ability to attract and retain advertisers effectively.
User Growth
Nextdoor’s weekly active users grew by 10% year-over-year, reaching 45.9 million. The company saw significant growth among users aged 18 to 34, indicating a successful expansion into younger demographics.
Strategic Product Development with NEXT
The launch of NEXT is on schedule for mid-2025, aiming to provide richer local content, timely alerts, and community-powered recommendations. This strategic development is expected to enhance user engagement and satisfaction.
Strong Balance Sheet
Nextdoor ended the year with a robust balance sheet, holding $427 million in cash, cash equivalents, and marketable securities, and no debt. This financial stability positions the company well for future investments and growth initiatives.
Short-term Impact on Revenue Growth
The company anticipates flat revenue growth in the first half of 2025 due to a reduction in ad impression supply and a shift in large advertisers’ budgets towards programmatic ad buying. This strategic shift is expected to impact short-term financial performance.
Temporary Decline in Ad Impressions
Ad impressions are projected to decline temporarily as the company conducts strategic testing and transitions to the NEXT initiative. This is a calculated move to prioritize long-term growth over immediate gains.
Shift in Large Advertisers’ Spending
Nextdoor has observed reduced spending among large advertisers, partly attributed to a shift towards programmatic ad buying. This trend reflects a broader industry movement and impacts Nextdoor’s short-term revenue.
Forward-looking Guidance
Looking ahead, Nextdoor provided guidance for fiscal year 2025, forecasting a 10% increase in weekly active users and a 17% rise in revenue for Q4 2024. For Q1 2025, the company expects revenue of approximately $53 million and an adjusted EBITDA loss of $13 million. These projections are influenced by strategic decisions to focus on long-term growth, including the rollout of NEXT by mid-2025, which may temporarily affect ad impressions and user engagement metrics.
In conclusion, Nextdoor’s earnings call highlighted a strong financial performance in Q4 2024, with positive adjusted EBITDA and significant user growth. While the company faces short-term challenges due to strategic shifts, its long-term outlook remains promising as it focuses on enhancing user experience and maintaining a strong financial position. Investors and stakeholders can remain optimistic about Nextdoor’s future prospects as it continues to evolve and adapt to market dynamics.