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Nextdoor Beats Q2 Expectations, but Faces Demand Challenges Ahead
7 Aug
Summary
- Nextdoor reported 2.8% year-on-year revenue growth in Q2 2025
- Analysts expect 2.8% revenue growth over the next 12 months, a slight deceleration
- Nextdoor's free cash flow margin averaged negative 13% over the last two years
In the second quarter of 2025, Nextdoor (NYSE:KIND), the neighborhood social network, reported revenue that exceeded Wall Street's expectations. The company's sales were up 2.8% year-on-year, reaching $65.09 million.
While this quarterly performance was a positive sign, the long-term outlook for Nextdoor appears more challenging. Over the past three years, the company has grown its sales at a sluggish 4.8% compounded annual growth rate, which is below the industry standard for the consumer internet sector.
Looking ahead, sell-side analysts expect Nextdoor's revenue to grow 2.8% over the next 12 months, a slight deceleration compared to the last three years. This projection suggests that the company's products and services may face some demand challenges in the near future.
Furthermore, Nextdoor's demanding reinvestments have drained its resources over the last two years, putting the company in a difficult position and limiting its ability to return capital to investors. Its free cash flow margin averaged a concerning negative 13%, meaning it spent $12.98 for every $100 in revenue.
Despite these challenges, Nextdoor's margin has expanded by 20.4 percentage points over the last few years, which is an encouraging sign. However, this improvement is overshadowed by the company's glaring cash burn, which remains a significant concern for investors.
