Nextdoor (KIND) is approaching its two-year anniversary since going public in November 2021. Nextdoor CEO Sarah Friar sits down with Yahoo Finance Executive Editor Brian Sozzi Sozzi at the Goldman Sachs Communacopia & Technology Conference to discuss how the app is utilizing AI and new emergency services features to keep communities better connected.

"There have been 18 billion-dollar disasters in the U.S. alone in the last 12 months, and that's caused about $175 billion worth of damage," Friar says on Nextdoor's crisis hub feature. "In an emergency, it's really neighbors who save neighbors. It's not emergency services. They usually get overloaded."

Friar also comments on Nextdoor's outlook, path to profitability, and ways communities can contain costs of living for neighbors.

Click here for more of Yahoo Finance's coverage from the Goldman Sachs Communacopia tech conference.

This post was written by Luke Carberry Mogan.

Video Transcript

BRIAN SOZZI: We're the Goldman Sachs tech conference here in San Francisco.

Right out of the gate, Nextdoor CEO Sarah Friar good to finally meet you in person, Sarah.

It's been, what, 10 interviews and I've never met you before.

SARAH FRIAR: It's great to see you in real life.

BRIAN SOZZI: Actually, yes, yes.

So this conference very focused on AI and this AI moment.

How should investors be thinking about this AI moment?

Given you've spent many years in tech, what does it mean to them, and what do you think it will mean?

SARAH FRIAR: Yeah, I mean, I think we're all talking about it, but it's also because it's happening.

It's not a new thing.

ChatGPT unleashed generative AI and really brought it in, I think, to the cultural domain.

But of course, we've all been investing in data for now decades and we're starting to see it come to fruition.

Nextdoor is no exception.

Doing some pretty cool things on the AI front with our assistant and also with vitality.

I'd be happy to share more.

BRIAN SOZZI: How will this AI moment impact a business like Nextdoor?

SARAH FRIAR: Yeah, so for us, it actually starts to unleash unique data.

We are the local knowledge graph.

So I think the value of what we do starts to really shine forth.

We're the only platform where you're finding out what's going on around you locally in real-time.

So with that data, we can do things like, on the platform, help a neighbor compose a post in a way that is more engaging.

So the assistant or the AI actually does that for you.

When we're thinking about areas like moderation, we often stop you in your tracks and say, hey, neighbor, would you like to rewrite that?

Now we even offer you a suggestion of how to rewrite it in a way that's more constructive.

So those are just two ways we're using AI ourselves, but it also starts to unleash what local data could mean broadly for models throughout the world.

BRIAN SOZZI: It sounds like the Nextdoor platform is going to be fundamentally changed by AI.

Is that fair?

SARAH FRIAR: That is fair to say, yes.

Anyone who has big, unique data or data that's naturally tagged, I think they start to become a really interesting, unique asset.

BRIAN SOZZI: I'm not lost.

Of course, we're at this Goldman Sachs conference.

A lot of investors here, analysts, bankers, you name it.

But is this year an investment year for Nextdoor?

Given everything you're doing on AI, do you have to tell this room maybe we don't see the margins we want but we might see them two years from now?

SARAH FRIAR: Yeah, I think what we've told the street is we've been public now for almost two years.

Not quite.

And we said, hey, we're going to raise money in the capital markets because we are a platform that has tremendous opportunity.

Everyone in the world is a neighbor.

But we need to go invest to look more like folks that we would consider competitors.

That's on two sides.

One is to continue to grow the platform.

So we've over 80 million neighbors today super engaged.

And then the other side is to build our own proprietary ad tech stack.

So we have been in investment mode.

That said, in Q2, we showed both revenue growth and margin improvement, so we want to make sure that as we grow, we are giving investors back that margin leverage so that ultimately we can become a really high-performing, profitable company.

BRIAN SOZZI: What's your outlook on the user growth front?

We've seen a lot of people go back to the office, maybe not engage with a lot of social media platforms, but how do you see it at Nextdoor?

SARAH FRIAR: Yeah, so we see growth in multiple ways.

One is WOW is how we have talked about it externally.

Our WOW grew about 13% year over year in Q2.

But importantly, as people come to the platform, they're going deeper into the platform, and that's a signal to us that we're giving them more value.

It might be, in a cost of living crisis, ways to make money, find money in your neighborhood or in your home.

It might be, in a disaster, how to save yourself, save your neighbors, help your community.

And so if they go deeper, that drives sessions to grow faster frankly than WOW.

And if sessions go faster, impressions go faster, and revenue grows faster.

So we can see growth in multiple parts of the funnel at Nextdoor.

BRIAN SOZZI: So you're gaining new data in new ways.

This has to be now an easier sell to advertisers.

You really have been focused for the past few years on getting more advertisers on your platform.

What is your outlook for the next 12 months, Sarah?

SARAH FRIAR: Yeah, that's right.

So for sure the ad market has had its own issues over the last 12 months, as you know, as we've gone through corporates really pulling back in areas of variable spend.

That said, in Q2, we got back to revenue growth.

For Nextdoor, what we really sell on is, number one, we are real people at real addresses.

That location data is really unique and differentiated.

So for advertisers who have, say, an online to offline presence, like an Albertsons or a Walgreens, that's really important.

Second, we're very high intent audience.

You come to get things done on Nextdoor.

That's usually great for advertisers, including the smallest of businesses in your community.

And then finally, we have that online to offline piece.

So anyone that wants to do offline calls to action-- stores, for example-- we work really well for them.

And that's done well in terms of new logos that we've added.

BRIAN SOZZI: What's the biggest question you get from investors, and what do you think is coming at you at an event like this?

SARAH FRIAR: I think number-- where you started, number one, is what can Nextdoor do with all the data that you have?

How can you use the uniqueness of your platform?

I think the second piece is they want to understand, when will we be on that proprietary ad tech stack?

Because then we can use our data even as we drive revenue.

And then third and finally, they, of course, want to understand when we can be a profitable business, and we're driving towards that.

We're still small, relatively speaking, but we're very well capitalized, great team in place, and so we're excited to see where we can grow from here.

BRIAN SOZZI: Profits soon?

SARAH FRIAR: Not yet talking about it externally, but absolutely we intend to show margin progression as we go through 2023.

BRIAN SOZZI: We were talking off camera.

A lot of weird events been popping up.

Increasing storm activity not just in the US, really around the world.

Does Nextdoor have a role in here in helping people navigate these situations?

SARAH FRIAR: Yeah, it's-- first of all, it's incredible the shifts we're seeing.

There have been $18 billion disasters in the US alone in the last 12 months.

18.

And that's caused about $175 billion worth of damage.

So clearly something is changing.

If you're on the West Coast, we're worried about fires.

If you're on the East Coast, it's hurricanes right now.

Middle of the country, tornadoes.

That's where Nextdoor can really help because, of course, in an emergency, it's really neighbors who save neighbors.

It's not emergency services.

They usually get overloaded.

So what we've done is, for National Preparedness Month-- September-- we just launched our crisis hub.

It's a great place to go to get information.

And of course, the singular most important thing you can do is invite your neighbor onto Nextdoor as a way to be able to communicate with them in an emergency moment.

BRIAN SOZZI: A lot of households, too-- another emergency moment would be the cost of living.

SARAH FRIAR: Yeah.

BRIAN SOZZI: We talk a lot about it being a deflationary environment out there finally.

It's really not for a lot of households.

What are you seeing on the platform?

Are neighbors trying to help other neighbors in saving a few bucks?

Even a company like Walmart, which you sit on the board.

SARAH FRIAR: Yeah, absolutely.

So yes, cost of living has been very top of mind for neighbors.

There's usually three ways on Nextdoor that they can help themselves or help their community.

Number one is to find a job or find a side hustle.

So we see-- we've seen a lot of that in the summer actually with students home from university or as they go back onto college campuses also still looking for that part-time job, but that's true for anyone.

Second way is on our free sale and free part of our platform.

It's our marketplace.

Today, we see over $1 billion a month put on Nextdoor, but about 20% of everything in that area is offered for free.

So if you want to find something like a table and chairs-- someone in my neighborhood was looking for that last night-- Nextdoor is perfect for that.

And then the final area where people tend to come to make money is also just small businesses.

They're often getting going and local communities.

Nextdoor might be the first place they go to market.

They can do it for free by claiming their business page.

But again, that local economic growth is really important all the way up to, as you point out, the Walmarts of the world as well.

BRIAN SOZZI: Before we let you go, we initially started talking to you right when the COVID-19 pandemic started.

Looking back, how are you a different leader today than when that started?

SARAH FRIAR: Oh, wow.

There is certainly no playbook.

Like, no one handed me the "here's what to do in a pandemic."

I think we have shifted-- you know, I read a lot that article over and over about peacetime CEOs and wartime CEOs.

And I think the last 12 months or maybe even the last 24, kind of coming through COVID and out the other side, has felt a little bit more like wartime, frankly.

So number one is being more directive while trying to still stay very empathetic to your employee base, to your investor base, to your customer base.

I think the second thing is being incredibly transparent about why you're doing something.

To me, I've always been a leader that's tried to lead by saying, I'm going to tell you it all, warts and all, and that's how I'm going to win not just your mind with the numbers and data but also your heart.

And then I think, finally, it's looking for purpose.

Great purpose-driven companies, I think, can really endure no matter what comes at them.

And I think Nextdoor is that-- the purpose of cultivating a kinder world where everyone has a neighborhood to rely on.

I can't think of anything better that I want to get up in the morning and go after.

BRIAN SOZZI: Well said, and good to finally meet you in person.

I know it's a-- SARAH FRIAR: It's wonderful.

BRIAN SOZZI: --very busy event.

We'll let you go.

Nextdoor CEO, Sarah Friar, thanks for stopping by Yahoo Finance.

We appreciate it.

SARAH FRIAR: Thanks so much.