Nextdoor, the locally focused social network, is making significant workforce reductions as it adapts to a more difficult advertising landscape. CEO Sarah Friar shared in an interview that nearly 200 positions will be affected across the company.
Despite hopes for a sustained recovery in the ad market during the second half of the year, Friar acknowledged that it did not materialize in the third quarter. Additionally, she mentioned that a pickup in the fourth quarter is not anticipated either. Specifically, Nextdoor has observed weakness in the financial services and home services vertical markets.
“We felt compelled to make necessary adjustments to the business,” stated Friar, acknowledging that it had been a challenging day for the company.
Shares of Nextdoor (ticker: KIND) were down 1.7% to $1.79 in late trading.
The restructuring program implemented by Nextdoor is expected to yield cost savings of approximately $60 million annually. Friar believes this program will position Nextdoor to achieve cash flow break-even by the end of 2025.
In the third quarter, Nextdoor reported revenue of $56 million, representing a 4% increase compared to the previous year but slightly below Wall Street’s consensus estimate of $56.3 million. Adjusted Ebitda, or earnings before interest, taxes, depreciation, and amortization, resulted in a loss of $20 million, wider than the $18 million loss from the year-ago period. The net loss amounted to $38 million, compared to $35 million in the previous year. Weekly active users increased by 6%, totaling 40.4 million users for the quarter.
Moving into the fourth quarter, Nextdoor forecasts revenue between $50 million and $52 million. This projection reflects a 4% decline from the same period last year and falls below the consensus estimate of $61.2 million. Additionally, the company anticipates an adjusted Ebitda loss ranging from $19 million to $21 million for the quarter, not considering the impact of expenses related to the cost-reduction plan.
Furthermore, Nextdoor announced that CFO Mike Doyle will be stepping down from his position, effective immediately. He will be succeeded by Matt Anderson, the current head of finance and strategy at the company.
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