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Business Operations Business Models

How Does Nextdoor Make Money (Business and Revenue Model)

The Nextdoor business model

Nextdoor logo
Here’s what you should know:
  • What is Nextdoor, and how does Nextdoor work?
  • How does Nextdoor make money?
  • Sponsored Posts (Nextdoor Ads)
  • Local Deals
  • Neighborhood Sponsorships
  • Nextdoor subsidiaries, acquisitions, and exits
  • Nextdoor profit and revenue
  • What is the Nextdoor business and revenue model?
  • Nextdoor funding, net worth, and market cap

How does Nextdoor make money and how is it free to use? Well, here is a full, in depth, breakdown of their three (3) revenue streams and the different products and services they offer, as well as the Nextdoor and revenue model, how much Nextdoor makes per year, and how Nextdoor works.

What is Nextdoor, and how does Nextdoor work?

Nextdoor is a social networking app for neighborhoods to connect and find things, such as groups and items for sales, locally.

Founded in 2008 by Nirav Tolia, Sarah Leary, Prakash Janakiraman, and David Wiesen, Nextdoor began trading on the New York Stock Exchange (NYSE) on September 8th, 2021, under the ticker symbol “KIND”.

Since that time, Nextdoor now has more than 69 million users, or “neighbors”, across more than 285,000 neighborhoods in the US, equivalent to nearly 1 in 3 US households, using the app.

So, how does Nextdoor work? To use Nextdoor, you can first download their mobile app in the Apple App Store or Google Play store; or visit their website and create an account.

When creating an account, the first thing you will be asked to do is “Join your neighborhood” by entering in your address. Once entered, you then will create, set up, and verify your account and profile.

From there, you can do things like check out local groups to join in your area, buy or sell things locally, post messages for locals to see, and more.

Some of Nextdoor’s competitors include Poshmark, EtsyOfferUpVinted, DepopFacebook Marketplace, eBay, Amazon, and other marketplace apps.

Nextdoor App in Apple App Store | Nextdoor Business Model | How Does Nextdoor Make Money | How Does Nextdoor Work
Source: Apple App Store | Nextdoor

How does Nextdoor make money?

According to page 53 of Nextdoor’s FY2021 Form 10-K, Nextdoor has more than 69 million verified users on the app. Of which, 36 million of them are weekly average users (WAU).

So how does Nextdoor make money off of all those users if the service is free?

Below is a breakdown of how much money Nextdoor makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 3 ways of how Nextdoor makes money in 2022

Nextdoor has a revenue model that makes money in three (3) ways; through sponsored posts, local deals, and neighborhood sponsorships.

Nextdoor makes all of its money through advertising. So we will go through each ad type they offer; as each is for different businesses that come with different ad costs.

The first ad type Nextdoor offers are Sponsored Posts. These types of ads are more expensive as they are tailored for regional and national brands and usually show up in the subscriber’s emails and in the newsfeed section of the app.

How much do sponsored posts on Nextdoor cost?

  • minimum ad spend of $25,000 per month (for Sponsored Posts)
Nextdoor Sponsored Posts | Nextdoor Business Model | How Does Nextdoor Make Money | How Does Nextdoor Work
Source: Nextdoor

Note: Nextdoor has ads that are tailored for both local businesses and national brands.

#2. Local Deals

Another ad type Nextdoor makes money off of is Local Deals.

Local Deals are for “advertisers offering goods and services to target specific neighborhoods and drive sales.” These types of ads are usually for local businesses offering discounts and promotions in specific neighborhoods nearby.

Nextdoor local deals cost:

  • the average cost of a Local Deal is around $75

Note: Local Deals are currently not available in the United States.

#3. Neighborhood Sponsorships

In addition to sponsored posts and local deals, Nextdoor also makes money through what they call Neighborhood Sponsorships.

Neighborhood Sponsorships are used to drive awareness and build reputation for local businesses. These types of ads are placed on the newsfeed in local ZIP codes of the advertising business.

Nextdoor Neighborhood Sponsorship ads | Nextdoor Business Model | How Does Nextdoor Make Money | How Does Nextdoor Work
Source: Nextdoor

Note: On Nextdoor, the average revenue per weekly active user was $1.65 in 2021, according to page 53 of Nextdoor’s FY2021 10-K.

Nextdoor subsidiaries, acquisitions, and exits

To date, Nextdoor Holdings, Inc. has made a total of 3 acquisitions.

Mergers and acquisitions business model
Source: Crunchbase | Nextdoor

Nextdoor profit and revenue

In 2021, Nextdoor reported $192.2 million in revenue.

Note: Nextdoor Holdings, Inc. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Nextdoor’s publicly released financial reports, including annual reports, through Nextdoor’s investor section on their website.

What is the Nextdoor business and revenue model?

Nextdoor makes money through a few revenue models that they combine within their company, they are:

  • Advertising based business model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model
  • Interest income business model
  • Mergers and acquisitions (M&A) business model

Nextdoor funding, net worth, and market cap

According to Nextdoor’s Crunchbase profile, Nextdoor has raised $717.9 million over 11 rounds and has a market cap of $1.26 billion as of July 2022.