Nextdoor
Holdings is trying to set the stage for a turnaround, as the locally focused social networking company pushes to return to strong growth. Whether it works will take time to know, though the company’s earnings report on Tuesday offers some reason for hope.
Shares of NextDoor were up nearly 8% in late trading on Tuesday after the company reported earnings and a better-than-expected outlook.
Nextdoor last week announced that co-founder Nirav Tolia is returning as CEO, President and Chairperson, replacing Sarah Friar, who will step down in the second quarter.
At the time, Nextdoor also announced a $150 million increase to its share repurchase program, boosting the total available amount to $173 million, which represents about 22% of the company’s roughly $800 million market value. The company ended December with $531 million in cash.
In November, Nextdoor had announced a 25% staff reduction in response to a more difficult advertising market.
In an interview with Barron’s, neither Friar nor Tolia would comment on speculation that the company could be a potential acquisition target for a larger social networking player.
“We have something unique,” Friar said. “We’re different from other social media networks. We’re doing something that is inherently harder, but we’re seeing more and more advertisers find out about us.” She added that the buyback “signals that we can do better as a stand-alone.”
Tolia declined to say what he might do to boost the company’s outlook. “We have just had a very productive quarter,” he said. “At this stage, it is important for me to listen and learn.”
For the December quarter, revenue was $55.6 million, up 4% from a year earlier and consistent with the company’s recent preannouncement.
Adjusted Ebitda, or earnings before interest, taxes, depreciation and amortization, was a loss of $14 million, narrower than the company’s guidance range, which called for a loss of between $19 million and $21 million. Weekly average users were 41.8 million, up 5% from a year ago and up 3% from the prior quarter.
For the full year 2023, the company posted revenue of $218.3 million, up 3%, with an adjusted Ebitda loss of $74.1 million.
For the March quarter, Nextdoor is projecting revenue of between $50 million and $51 million, with an adjusted Ebitda loss of $20 million; that’s ahead of the Wall Street consensus, which called for sales of $47.6 million.
For 2024, the company sees sales growth exceeding the 2023 rate, with a 10 percentage point improvement in adjusted Ebitda margin.
Friar succeeded Tolia as CEO more than five years ago. Tolia, who has remained on the Nextdoor board, has been an early-stage investor during his time away from the CEO role.
Asked what she might do next, Friar said that initially she’ll take a break, while adding “it is a really exciting time for technology.”
Write to Eric J. Savitz at eric.savitz@barrons.com
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