Neighborhood social network Nextdoor (NYSE:KIND) reported better-than-expected results in the first quarter of 2024, with revenue up 6.8% year over year to $53.15 million. Revenue expectations for the next quarter were also optimistic, at $58 million at the midpoint, 2.8% above analyst estimates. It posted a GAAP loss of $0.07 per share, an improvement from the loss of $0.09 per share in the same quarter last year.
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Nextdoor (KIND) Highlights Q1 CY2024:
- Gain: $53.15 million vs. analyst estimates of $50.81 million (4.6% better)
- Adjusted EBITDA: ($14.0) million loss vs. analyst estimates of ($19.6) million loss (beat)
- EPS: -$0.07 vs. analyst estimates of -$0.09 (22.2% better)
- Revenue guidance for the second quarter of 2024 is in the mid $58 million, above analyst estimates of $56.4 million (adjusted EBITDA guidance for the period also a little further down)
- Gross margin (GAAP): 81.2%, compared to 80.1% in the same quarter last year
- Free cash flow was -$13.65 million, compared to -$14.94 million in the previous quarter
- Weekly active users: 43.4 million, an increase of 1 million year on year
- Market capitalization: $866 million
Social NetworkingCompanies need to meet their customers where they are, which is what social networking has come to mean over the past decade. In 2020, users spent more than 2.5 hours per day on social networks, a figure that has increased every year since the start of measurement. As a result, companies continue to shift their advertising and marketing dollars online.
Revenue Growth Nextdoor’s revenue growth over the past three years has been strong, averaging 21.3% per year. This quarter, Nextdoor exceeded analyst expectations but reported mediocre revenue growth of 6.8% year over year.
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Guidance for next quarter indicates that Nextdoor expects revenue to grow 2% year-over-year to $58 million, a slowdown from the 4.3% year-over-year increase seen in the comparable quarter last year was recorded. Ahead of the earnings results, analysts expected revenue to grow 7.4% over the next twelve months.
Usage Growth As a social network, Nextdoor generates revenue growth by growing its user base and charging advertisers more for the ads each user sees.
Over the past two years, Nextdoor’s monthly active users, a key performance measure for the company, have grown 8.6% annually to 43.4 million. This is significant growth for a consumer internet company.
In the first quarter, Nextdoor added 1 million monthly active users, translating to 2.4% year-over-year growth.
Revenue per user Average revenue per user (ARPU) is a crucial metric to track for consumer internet companies like Nextdoor because it measures how much the company makes from the ads shown to its users. ARPU can also be an indication of how valuable advertisers find Nextdoor’s audience and ad targeting capabilities.
Nextdoor’s ARPU has fallen to an average of 7.3% over the past two years. While the company’s user base has continued to grow, it has lost its pricing power and will need to make improvements soon. This quarter, ARPU grew 3.9% year over year to $1.22 per user.
Key Takeaways from Nextdoor’s First Quarter Results It was good to see that Nextdoor’s strong revenue guidance for the next quarter exceeded analyst expectations. The adjusted EBITDA guidance for the next quarter was also progressive. Turning to the reported quarter itself, we were also excited about revenue and adjusted EBITDA exceeded Wall Street expectations. On the other hand, sales growth unfortunately slowed down. Zooming out, we think this was still a strong quarter. The stock is up 8.2% after reporting and is currently trading at $2.44 per share.
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