Q4 2019 Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Pen Trust fourth quarter earnings Conference call. At this time, all participants are in listen only mode. After this.
Speakers presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone if required any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker today, Jane Penner head of Investor Relations. Thank you. Please go ahead.
Ed.
Thank you Sheryl good afternoon, everyone and thank you for joining US welcome to Pin Trust earnings conference call for the fourth quarter and full year ended 29 team.
Joining me today on the call or been Silberman, our president and CEO and Todd Morgan filled our chief Financial Officer.
Now.
I'll cover the Safe Harbor.
The statements that we make today regarding our business performance and operations and guidance for full year Twentytwenty, maybe considered forward looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially.
For more information please refer to the risk factors discussed in our most.
Recent form 10-Q, or 10-K filed with the FCC and available on the Investor Relations section of our website.
During this call we will present, both GAAP and non-GAAP financial measures a reconciliation of GAAP to non-GAAP measures is included in today's earnings press release and letter to shareholders, which.
Our distributed and available to the public through our Investor Relations website, located at Investor Dot Pentrust Inc. dotcom.
Now I'll turn the call over to Ben.
Hello, everyone. Thanks for joining the call.
After the merger closed we released our lead a shareholder letter we're going to share some highlights today introduce.
Turning to new year, we're also going to look forward and talked about our strategic priorities for 2020.
Let me just start by saying how proud I am with the progress you've made in 2019 truly wasn't milestone year for the company.
In April we went public giving us new resources to invest back into our business. We continue to attract creative in talented employees, who are working hard to.
Every day on behalf of our printers, and we continue to improve the patient experience for both our users and our advertisers.
Much of that progress was reflected in a strong close to 29 team.
In Q4 revenue grew 46% year over year.
Help fuel annual revenue growth of 51%.
We know 335.
Million monthly active users a 26% here you will increase and we had our first profitable year as a public company in a non-GAAP basis.
So we're happy with how we closed 2019, and we want to keep this momentum going in 2020.
Are we going to do that.
Our mission is to bring everyone. The inspiration to create a likely love in our strategic plan this year.
He has created in service for that mission I want to talk briefly about our four strategic priorities for 2020.
First ensuring that interest is the home to inspiring content.
Second scaling our ads business with a focus on attracting more mid size in international advertisers.
Third helping people see the value of interest for more and more used.
Cases in their lives and force speaking countries more shoppable. So it's easier for people to take the inspiration they see and make it part of the reality.
Let's start with ensuring that interest as the home to inspiring hunter.
In total payments received roughly 240 billion pins to over 5 billion boards each one of those boards.
That's a person's projects passions and plans into our first job is to show printers inspiring ideas at the right time.
This means recommending idea to the right person and into the heart of our mission is a company.
Delivering on this promise of inspiring content in personalized recommendations as evergreen and we're focusing on 2020.
Three distinct ways.
First as relevance we will continue to enhance the core machine learning algorithms that drive our search and recommendation engines, we needed big strides on this in 2019 will continue to invest heavily this year.
Second we want to create an environment that is positive and inspirational.
We've seen on the Internet that.
We have environments such as happened on their own they have to be engineered that way and that's why we plan to continue to invest in keeping unsafe constant off our platform like our efforts Trulia tiebacks information as well as to drive better outcomes with new features like the once we launch last year offering activities people can do better feeling stressed anxious are depressed.
Third.
We want to innovate on creative formats.
We know the internet is evolving towards richer more expressive types of content and has the priority for us too.
In 2019, we made progress and introducing printers to more video organic video views increased to six sex. We've also invested may our including a new feature called try on that helps.
Virtually try and make up before buying it.
This is an area, where we're just getting started so stay tuned for more updates throughout the year.
Our second strategic priority in 2020 is scaling our ads business.
We've always said the great add to improve the user experience on Petrus people come to plan big and small moments and relevant ads.
Important part and making those moments happen.
For example, Q4 as football season, a lot of people create boards to plan gain watching RTL getting parties and it's actually helpful. If you see natural food company like Franks Red Hot sauce with gameday recipes for dips in wings.
In ads are relevant and useful it's a win win enters get inspired and.
Advertisers like Frank see Great results in fact, the company saw three X increasing the percentage of people saving their ads this season.
The key here is making sure ads are relevant to our penders interest projects and plans and when you do that at scale.
To serve ads that are relevant to the incredibly diverse range of ideas being explored up interest we need to increase the.
Number of ads in our system.
By bringing more advertisers and building tools to meet their needs.
Last year, we focused on making pentrust acceptable to small advertisers by building a suite of mobile tools basic analytics and reporting and those are now available in all 28 of our AD markets.
This year, we plan to focus on improving to experience.
Earnings for mid size in international advertisers.
That means building more robust desktop self service tools for so sophisticated advertisers can succeed with less account sales support.
More creative tools that they can create and spawning content and scalable measurement. So they know the value they're getting from interest.
It also means navigating the evolving.
Being regulatory landscape run issues like targeting and measurement. So we can continue to deliver value even as the environment changes around around us.
We're still the beginning this roadmap, but hardwork is essential to fulfilling the promise of interest hundreds of millions of people planning deciding acting on commercial content, which means driving measurable conversions for advertisers.
And in turn powers our business forward.
Our third priority is helping painters get more value by expanding the use cases.
People come to interest to get inspired and plan their lives a lot of these people are highly engaged in these countries for multiple interest projects and hobbies.
For example in the shareholder letter you will see the.
Even pinner named Britt She's a fashion stylist that uses interest to show our clients different looks but she is also created boards on everything from our studio space to furniture to food.
We see the people like her who use countries from multiple use cases will stay more engaged over time and we want to deliver this experience to those succumb to contrast for one project.
Like a baby shallower home renovation.
We want to show them, how useful can be across the entire lives.
In 2019, we began to build products and features that encourage pinchers to use a church printers to use interest for multiple things such as personalized search recommendations. This year, we'll continue to build new features that help people do more than just see other pins.
We want them to easily see new reasons and use cases for interest and we're excited about that road forward.
Our fourth and final priorities, making interest where shoppable. So people can easily take the inspiration they see it make it part of their lives.
Last year, we dramatically increased our inventory in stock products by making catalog uploader self serve and by.
I think its adoption across our manage advertiser base, we're going to do more than that this year.
We're going to make it easier to discover shoppable products Super centers can move seamlessly from inspiring images to shopping surfaces, where they can buy what inspires them.
We'll be launching our verified merchant program. So painters noted buying from merchants that meet our quality guidelines.
Finally, we'll keep building on AD formats, and help merchants put their products and services in front of customers.
In 2019, we treated or a foundation foundational shopping AD products, including the standard shopping at an shop, the look ads and there's more to come in 2020.
So in closing that's a look at our four priorities for the year I'm excited about how far we've.
Come in more excited about where we're going.
Thank you for taking the time to listen in our Todd and I will open up for questions.
Your last question. Please press star one on your telephone keypad. The first question comes from Colin Sebastian Apart. Please go ahead. Your line is open.
Colin Sebastian your line is open.
Thank you I've a couple of questions first on the shop ability of the platform specifically how quickly are they're shopping related experience is helping to bridge the gap between usage in monetization, including how important are newer initiatives like.
For a fly by country assumed and they are trial.
And then obviously international still very early but can you talk about what's working in particular in other geographies and maybe what's not working as well. Thank you.
Thanks color and so the question that I heard was in how quickly are the shopping efforts accelerating.
Position the answer to that is we think that we're still in the early innings of shopping and we're building a lot of the foundational components. So we're improving the number down inventory that we have to.
Programs like the verified merchant program, we're building the shoppable surfaces, and we're improving the ml that matched inspiring images, but we don't expect that to.
On a discontinuous change in our revenue for next year.
What I will say is that we're serving retailers in a lot of different ways and shopping advertisements hub complete the suite of offerings that we've already been giving them. So we've always logged in to reach their audience. We've allowed them to build awareness through things like our video campaigns and our extending that with things like.
Shopping adds so people can really reach people throughout the full funnel on from inspiration where they're thinking of new things all the way to purchase.
Great example of that this year with flooring decor. They started before we had things like shopping ads really building, an audience and driving people to their website, but shopping as now let them target people who are later in the funnel and so you can kind of.
Seat at full funnel picture really opening up.
On the international question I would.
I would say we were delighted with the performance of our investments in international markets over the course of the year in particular in Q4.
Where revenue from those markets went from 6% to 13% of the total.
The scaling nicely and I would point to the newer markets like Canada, Germany, and France is being examples of where we've seen significant scaling and a lot of opportunity.
There are two things that I would say that we could continue to focus on over the course of the year.
One is moving from test budgets into always on.
We continue in the moment to be new indecent in those markets and that means that a lot of people are testing rather than moving to always on budgets and that's an area for us to continue to focus on through the year.
The second thing I'd say as a general comment about where we're investing which is making it easier for advertisers to be successful onto interest in that nothing.
Includes both us markets as well as international where things like automated targeting bidding and budget utilization more sophisticated measurement and analytics and creative optimization will make it easier for those mid market advertisers internationally to upon success on the platform.
In particular in international markets.
Those tools would be useful with respect to agencies, where the concentration to revenue is a little bit higher.
Thank you.
Your next question from Stephen at Q of Credit Suisse. Please go ahead. Your line is open.
Okay. Thank you very much so Ben I think on the contents section on the letter.
You are talking about consumption of video content.
What is probably a faster clip versus the overall so.
You're talking about how you're compute and I guess to commercialization needs change and become more intense and how you're I guess current AD units, especially for shopping may need to change as we move.
Away from.
Yes, so consumers consuming.
Looking at more the static image as a more to video thank you.
Yeah. So thanks for the question Stephen I heard two parts. One is how is increasing consumption or video and other new formats and impacting our cost structure and second.
It's really how we're thinking about video terms of AD.
So on the first question I think that video obviously is more expensive to serve and images.
I don't know that it necessarily changes compute in a big way.
But that said like we have to go where the market's going and where we see from our users is they love video if you think.
About use cases like I tutorial for makeup.
How to do a recipe I mean exercise routine those are just best expressed in video. It's we really want to invest heavily there because we think thats, where the future is going.
Your second question is how it applies to ads and to counterbalance the expense of serving more video we've seen great uptake.
Take from our various AD products, we've launched a lot of improvements on for advertisers. We've made it faster to upload we've improved experience on consumer side, making it faster to stream, we've offered them new analytics and new buying options things like cost per view and we've seen a lot of advertisers take great advantage.
One of the one.
Is that I thought was really inspiring was from our neighbor air being be they really wanted to drive awareness of tourism in France outside of the major cities and they partner with our team to create a campaign on call first sight on US the video campaign and they just saw great results, a double digit increasing awareness in that market.
So we think that it is more costly, but we have to give users. The most inspiring experiences and on the flip side of it a video represents still a very bright and fast growing opportunity.
On our advertising side.
Thank you.
Your next question is from Eric Sheridan If Youve. Yes. Please go ahead, Sir your line is open.
Thanks for taking my question on these weren't asked two of the advertising tried one in the letter you talked about automation and.
Measurement the big priority for 2024 to talk about how far you walked through the investments you need to make to amplify.
Those as as elements.
The business going forward and delivered for advertisers and Andrew or how much you've started to see a return on those investments but to be the prior period and then one just clarification you talked about the number of active advertisers doubling year on year wouldn't any specific.
Industry sectors or verticals between small advertisers in large advertisers.
Big drivers of that doubling fits for such a big deviation from growth rates in prior years from the shareholder commentary. Thanks, so much.
Sure. So it's the first part of your question kind of got to how far we are along in that roadmap.
And the answer is seen a despite the fact I'm very proud of all the progress.
Made there's still a really long way to go you got to remember that advertisers are used to sophisticated solutions built by companies that then in this market for more than a decade, and we see opportunities really all over the places on the measurement side, we want to really make sure that their self serve measurement tool. So you don't even account manager you can pull that data in real time.
On the tool side, you pointed out automation, but that covers a whole range of things automated bidding is a huge opportunity for us as well as automation on creative optimization.
Finally, we do have a lot of progress still to making formats and it's something I touched on the video, but we're very early on and all of those areas and so we do see more.
Our opportunity to come.
Your second question was where the growth in the number of advertisers came from and last year. We made an important investment to make a lot of our advertising tools accessible to folks on the phone for the first time. So we saw a lot of growth in very small and medium sized businesses now those businesses today don't make up a large.
A portion of our revenue, but we think they're important for two reasons first because long term a lot of those businesses will grow up and second because relevance is sort of our north star and a lot of those small businesses increased the number of ads and therefore drive relevance.
This year, we're shifting a little bit and we're starting to focus on what we call mid size.
Hi users. So these are folks that are very sophisticated they are super quantitative and the way they advertise but they may not be at this scale to be able to have a dedicated account manager.
The investment in a lot of the automation in the desktop I'm adds manager is really to support them.
Thanks for the color.
Your next question.
Students from Justin Post of Bank of America. Please go ahead. Your line is open.
Great. Thank you essence shop is a priority I was wondering if you could help us a little bit about the business model is that it take rate model or is it still bidding for placement and then and then secondly, how do we think and I know you can't quantify exactly but how do you think about.
The yields when people come in for a shopping experience versus versus current just the uptick there. Thank you.
Yeah, just and I will try to answer both questions. The first one was about the business model, we're not doing the take rate.
The monetization comments when businesses to start to see organic.
Hi can choose to use our shopping ads.
Proven to be something it's really really high quality.
Internally you know one thing we're excited about is that as we grow the amount of inventory in the system. We can show people more and more relevant products on organic side and on the page side and that's why things like catalog upload or and the verified merchant program are really.
Important in Q4 alone we were happy to see a 70% increase from the number of catalogs all of that in service. So idea that the more trustworthy products you'd have an index to more relevance you can drive.
Your second question and I apologize I don't fully understand it kind of how to deal with the yield of folks that come in with commercial intent versus those.
Two Dell and what I would say that Justin is it something that we can't quantify right now, but we know something from our research, which is a lot of focus for many years have come to interest with commercial intent.
There will be redecorating their home they'll be thinking about outfits. So they become frustrated when they can't find exact products that they're seeing.
We also know that when.
I will then go into those shopping surfaces that are all products you see good click through rates and get conversions and so I can't give you kind of the math on what the differences we think that it's good on two fronts like one it's a satisfying user experience because they come in and they can go from inspiration and then turn that into reality and second we think it's a good business opportunity for us and for their appetite.
Factors, such as you get people that have genuine commercial intent, but they didnt come in with a specific idea of an exact product. They were looking for and that's something really unique to our platform you. Unlike a search engine where people are often searching for a specific brand name or really long query. These are people that start with something like living room ideas or fall fashion.
Brian or vacation plans and then our guided to a product that generates net new demand for advertisers and we think in a long term that value proposition is very differentiated in the market.
Great. Thanks, you very helpful.
Your next question is from Ross Sandler of Barclays. Please go ahead, Sir your line is open.
Hey, guys.
Maybe just two questions on on.
For the retail advertising category and so you you said conversion optimization ads gifts for all categories was up 150% and then you also said shopping ads are huge from first to after second.
So I guess, how big is the retail segment of your business at this stage and then Weve CPM are there any learnings that you're seeing from you.
Ecommerce companies retailer using those types of adds that you think you could bring into other transactional advertising.
Allegories outside of retail and Tom as you look at your 2020 God calls for 33% growth 1.2 level. So.
Higher mix of re to how do you how do you think about modeling the seasonality.
Over the business in 2020, thank you.
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Yes, I'll take the first part of the question and Todd can talk about modeling seasonality, we don't break out our revenue by industry sector, but we have seen that a retail has been a historically strong sector for us overall and on conversion optimization as while shopping as we've learned a lot.
But I'm one of the things that we've learned is the importance of properly implemented measurement, so that advertisers and retailers specifically can see those conversions starting in Q2 last year, we started to invest and first party tag. So we can see those conversions, but we've learned is that while integrations with things like.
And we'll tag manager squared ecommerce are good we also need to invest in helping to make sure that those businesses have implemented things correctly and they've set the REIT conversion windows and I think that's possibly like the most interesting opportunity beyond its also a challenge for the business a lot of our advertisers are used to Alaska click model, even though they know.
So with that their average buying cycles are a lot longer than just one day. So we've been working on multiple fronts to help them quantify how many conversions, they're missing out by having a short windows I mean, we're baking that into both our sales motions and into our products themselves.
So with respect to Ross to the guide.
For the year.
What I would say is that we had a very strong Q4. This year and it was strong in three areas that may not be directly extensible into Q1 Q2 in Q3, even though I have a lot of confidence that towards the end of next year It'll show up again around Black Friday and cyber Monday.
Time period, so the first of first.
The strength in Q4 was around conversion optimization as you noted accrue.
150%, that's driven by a two and a half times improvement in attributable conversions that we saw this Q4 versus a year ago, and frankly investments in the product that we made that paid off like new conversion events like.
The court that we launched earlier in the year that paid off in Q4 and a lot of the work that we've been talking about on these calls around tag integration and efforts to make sure. Those tags, we're working as expected in Q4 of those help to drive that outperformance.
A year ago, we had three times as many conversions in Q4 as we.
In Q1, and so that speaks to some of the seasonality that you may expect to see in Q1.
Where I would frankly expect a little bit more.
Lightly more seasonality or slight dip a slight increase in the amount of the step down Q4 Q1 sequentially.
I would say the second source of strength would have.
The same impacts we saw a lot of strings inflated campaigns around seasonal moments from CPG advertisers in the fourth quarter.
These are advertisers like Albertsons, who came up with static in video festive themed food and drink idea pins around events like.
I would like Halloween Thanksgiving and the end of year holidays, and that drove a lot of store lift, but those types of campaigns again or heavy.
The their flighted and their Q4 events. So I think we'll have strengthened CPG, but it's skewed toward Q4.
And then finally, the international market as I talked about earlier tends to be still intact.
Trees and not necessarily always on budget. So I'm Super encouraged by what we saw in Q4, but it speaks to a little bit more seasonality going into Q1.
The only other thing I would say is Easter last year was entirely almost entirely acute you event. This year, it's basically split between Q1 and Q2.
Your next question is from Mark Mahaney of RBC. Please go ahead, Sir your line is open.
Thanks two questions. Please.
And you talked about one of the four priorities for this year been expanding use cases for users and I guess, one way the for us to try to track that is.
Tend to which people are users are going beyond kind of the three core three or four verticals into other verticals or is there any.
Are there any data points, you could share with us about people using up interest across a broader range of categories than they were in the past and then the second question I want to ask Todd is and I know, it's an output, but this gap between us.
Yes, and international ARPU always strikes people as an interesting gap up opportunity.
Because it's so much greater than it is in other markets again I know, it's an output but are you seeing things that suggest to you.
That there is a path overtime I know for that for that gap to narrow and I guess, what I really mean, except for international ARPU to really start.
I, even maintaining somewhat close to the current growth levels that would do it but just anything you could talk about in terms of that I bet that gap narrowing over time. Thank you.
Thanks Park. So on the first part of the question around use cases, I think one thing that's hard to appreciate as it is a really long tail of use cases on interest.
Honestly anything that's visual and taste space, we have boards on and so you see things from custom surfboards to tattoos.
And that long tail is ever expanding when we talk about growing the number of use cases, we're doing it on two fronts, we're going to start by really trying to cross sell to core use cases.
You've seen some examples of that with things like search suggestions diversifying the home feed but we're also going to experiment with things like seasonal content and more of an editorial point of view.
Second you know one that long tail, we're going to develop the recommendation technology to take you from use case to an adjacent use case and so that's ongoing work it's heavily.
Based in sort of our ml modeling, but we think thats, a really exciting thing as well right. Now we don't have any data to share about a breakout use case, that's really bucked the trend, but should we see that it would be excited to share with the community.
And then mark on the on the ARPU gap I think there is a tremendous opportunity for us to.
Due to monetize internationally.
Overall, we've seen great success in monetizing it English speaking countries outside of the U.S. and the investments we've made in western Europe are paying off nicely I think the playbook is working.
Your question about the ARPU and you'd characterize it as an output.
It's a blessing.
In a curse that our user numbers are still growing at the rate they are today because.
It's obviously great for us that interest is now up to well north of 300 million monthly active users, but the growth rates in international markets, where we're not yet monetizing means that we're weighing down our ARPU even at the same time, we're having.
Very solid performance in the international markets, where we are monetizing.
We need to do a couple of things three things that I would say that would help to narrow that gap over time. One is continue to execute in the markets that we have started to execute.
Particularly in Western Europe, where we have a lot of runway.
The second thing.
We will need to do over time is monetize in other.
Sectors or other geographic regions like Latin America in high value markets in Asia Pac.
And the third will be to monetize in rest of world countries, where we have a lot of users and that continues to grow.
Successfully so those are kind of the three waves and I think until.
Will that happens.
The ARPU as an output will continue to lag the financial performance, which is what I'm most focused on the contribution to revenue growth.
Thank you Todd Thank you Ben.
Your next question comes from Jason is that of Citi. Please go ahead, Sir your line is open.
Thanks, Kevin can I just go back to Mark's question on this international ARPU gap.
So interesting to me is.
Other social media companies that were sort of small and sort of embryonic in their development Didnt exhibit this sort of gap.
Even when they were generating sort of a similar level of revenue that you guys are.
I just.
I Wonder if theres something beyond those three things that you just outlined it says there's something.
Endemic to other markets where.
They really don't understand the value of the platform just yet and it requires more education or maybe it's more intuitive on it on a more traditional social media platform.
Now I understand the question I would I would say some taking a giant step back every week. We just started in the last year to take international monetization seriously and we focused our efforts on western Europe.
And it goes European countries outside of the U.S. So.
There are examples of other companies that are operating at roughly our scale.
And then have been you know in our in our market segment that had been monetizing more aggressively.
On top of us growth, whereas we were proving the playbook worked in the U.S. for a few years and then began to monetize internationally.
And that coupled with our.
Very high user growth now I would.
There aren't a lot of examples of companies that are growing at this rate at this scale their user base.
And the more recent.
Efforts that we've made toward monetizing that means we're a little bit from a sequencing standpoint, not on top of but rather sequential with our us business.
So I think that's probably where a lot of this is coming from we're seeing a lot of.
People use pentrust for the same reasons in international markets that they use pentrust in the U.S.
The use cases the forms of engagement, it's very similar and so from a monetization perspective.
The only real difference that I.
He is the pricing opportunity, which reflects the depth of AD spend in those markets.
That's true nothing new for us relative to others I would chalk it up to just the timing of our efforts to international monetization relative to scaling the U.S. business.
As the reason for what you're saying.
Okay very helpful. Thank you.
Your next question comes from Mark smell like of Bernstein. Please go ahead. Your line is open.
Yes, thanks for taking my question.
No I think we've talked a little bit on this call and I've heard a bit about.
How do we.
Great more distribution on top of funnel, but also focusing on some of the kind of direct.
Bottom of funnel initiatives as well how do you think about kind of prioritizing across those two because I know there complimentary initiatives and then my follow on question to that as a as we think about international growth I. Similar question around you've got I guess that 20 markets that you're operating in right now how do you think about scaling within those markets versus expansion.
Some of the other markets that are not yet monetizable. Thank you.
Mark I think if I understand question you kind of talked about how do you prioritize top of funnel versus bottom a funnel almond terms that measurement I would say this year and actually for the last few quarters, we've been really focused on making sure that.
Attribution at the bottom of the funnel I think you have to meet customers, where they are I mean, where people have been trained to be for for years now is at the bottom of the funnel last click conversion.
And we believe and what we're seeing with our advertisers that when you get people that visibility and show them, what they're missing out when you extend that window even can connect.
On top of funnel and the bottom of funnel story.
There are a lot of great. Examples that we have from our advertiser base of people have seen a lot of success, but that we just not with a team at Kohl's. They're a great example, a really being able to stitch that whole story together from top of funnel awareness and inspiration all the way down through things like shopping adds to purchases, but we do think that.
Focusing on making sure that measurements in place. So we have that terminal understanding of whether the transaction happened or not is fundamentally important and it's also important for us to invest heavily there given the traditional ways of doing this in the past like cookies are probably going to go away in the future.
[noise] 20 entered on the international side.
What I would say as we as we noted that in the letter we introduced 21, new markets over the course of this year. So we're operating now and 28 markets.
Across the world and the number one goal for US right now is to make those markets successful. We think we've got a great opportunity in English speaking countries outside of the.
So even though that's our most mature international segment, we got a lot of room to continue to grow there.
And our investments in Western Europe are really at the very early stages. So number one goal internationally as prove that it works outside of the U.S. and scale does this investments.
Mostly through the course of the year.
The second thing Andres.
Hi.
By the end of two more things I mean, I want to make sure people or because of the question I'm sure we'll come up what's next.
By the end of this year, we would expect to begin monetizing in Latin America, but it would be immaterial to our 2020 results for sure.
What I would imagine that others would follow in the year or two after.
Thats it.
Your next question.
It's from like Wamsley Keybanc. Please go ahead your line is open.
Thanks, So I want to go back to kind of the Shopability. You said you don't expect monetization here to create a discontinuous path for revenue. This year. So just wondering what.
Is the path ahead for scaling.
As a product and ultimately monetizing this behavior and is there any reason you can't ultimately flip some elements of the site like the more to shop module, maybe in certain verticals ultimately to a paid inclusion model similar to what Google did with Google shopping.
Five or so years ago.
And second related any any update on.
Collaborating with was shopify and kind of getting more smaller businesses into the catalog program.
With with with them or otherwise thanks.
Yes. So the first question was.
Really around how we're thinking about and why are we are projecting just continuous growth I mean, we're already seeing meaningful contribution from shopping ads as I mentioned before retail has been a traditionally strong segment and all the things that you say our true I think that as we get more focused into the verified merchant program and we get more density of really high quality inventory.
We can begin to make shopping surfaces.
More paid inclusion I'm overtime, but that's a that's a long journey and the reason. It's so important is that historically you know a lot of folks on interest has not been used to getting access to these really high quality products and we want to make sure that we build the trust that we have relevant high quality.
The products before we allow bid price to be the primary determinable product Tc.
We think that's a little bit of a slower strategy, but long term, we think it's better because we can nurture the commercial and how that's already there and we think it can grow over time as people come to see that reliably can go from inspiration I'm all the.
To a completion.
On the Shopify fraud in a test is going well, we don't have any updates to share.
But as you mentioned the test does allow merchants to upload catalogs and implemented interest tag manager set up advertising campaigns. So.
It's all in the same theme of building out that inventory.
Building out measurement I'm on the merchant side and the theme of matching inspiring.
Which is with really relevant products from high quality merchants at price points that make sense on the consumer side.
Your next question is from Tom Forte of D.A. Davidson.
Please go ahead your line is open.
Great. Thanks for taking my question. So first off one to talk about Pentrust light, but to what extent is that driving international and they use an engagement and then second as there's more regulatory ER bills, passing as it pertains to privacy.
How should we think about that and in particular, the CCP, a and what that means with interest. Thanks.
[noise] yeah. So on Pinchas light you know, we launched that in five countries and the goal was to really improve homepay loading time and make performance better we're seeing strong growth in those countries in countries like this one one contributor to.
To that but even prior to the release of the product we were seeing really strong growth rates in those markets. So I don't think hits the determinant. The real goal. If it was we want to make the service available to focus regardless of the device that they're on or the quality of their data collection or their ability in the short term to pay for data.
The second question was really about.
Cc PA and how it will impact our business and the answer is that we think of it internally as a headwind, but it's a little bit early to quantify that magnitude of the impact.
TCPA, obviously can impact whether businesses willing to share data that helps companies understand and drive the effectiveness of advertising on their platform we.
I think that it can disproportionately impacts smaller companies like pentrust, because bigger tech companies have access to more sources of data and just have more resources. So they may be able to better understand their user base.
At this point, we're not seeing adverse effects and we're obviously committed to developing on privacy safe framework.
It's just a little bit too early to know exactly how it's going to play out and so in the meantime, what we're doing is investing in a lot of the first party measurement that already powers. The majority of our targeting but also thinking about other ways to get that conversion visibility as mentioned before.
Great. Thank you.
Your next question comes.
Doug Anmuth of JP Morgan. Please go ahead, Sir your line is open.
Thanks for taking my question I, just wanted to ask about the budgeting and kind of purchase process for large marketers.
What degree are you able to get out further in front of them you know kind of as as you are in the beginning of the year your.
Relative to last year I'm, just curious how do you think about committed spend.
In the year ahead, and the progress you've made since last year. Thanks.
Thanks, Doug.
We've talked in the past a little bit about our success in signing what we call joint business partnerships switches.
Even though it's not.
Actually guaranteed spend it's an intention to spend a certain amount if not more over the course of a period of time and our.
We've had a lot more success over the last couple of years in signing those up starting with.
The kinds of advertisers, we began to build our business around the large retail and CPG.
Types.
So the first wave of those kinds of deals started a couple of years ago, but as we began to diversify our verticals we've seen similar.
Deals get struck across things like you know automotive financial services electronics et cetera, but theres been more visibility and more.
And covered by those joint business partnerships overtime.
We've gotten a lot of feel very good about the relationships. We've built there and it's been something that that works across a number verticals and is.
Important to building a foundation for our business I don't have that quantified in terms of the amount of spend but it's been growing over the last.
Couple of years.
Great. Thank you Todd.
Your next question comes from Keith Perry of Goldman Sachs. Please go ahead. Your line is open.
Great. Thanks, Ben you've mentioned a few times now the impact that first party measurement is having can you help quantify.
Five for US just the degree that first party measurement is being used.
And particularly as it is well hopefully along the same lines to what degree your advertisers are using some of the programmatic targeting tools that your bigger developing so targeting that goes beyond just the.
The the the vertical or the content interest layer that thats.
Thats made available to them and then would also be interested or similarly on the AD tool side self serve what you're seeing in terms of its ability to grow the number of advertisers that you that.
You have I know you talked about that a bit and the prepared remarks, but I'm curious if there's any more detail that you can go into there.
Okay Heath and I'll start with it that their part first on AD tools like.
We see we see huge opportunity there you know, we've we've known for a while that up and people wanting more powerful.
Manager they want to be able to pull data directly internationally. They want to had a pie. So they can integrate into agencies and on the road map, we're just getting to it now I'm. So we see we see it really tremendous opportunity and I think what's what's really interesting to me is that although these are folks that don't necessarily have a dedicated account manager that doesn't.
It's fairly mean that they're low spenders a lot of these are digital native brands that are highly quantitative and if you can give them the right tools at the REIT conversion prices they'll spend all day and so we see great growth in those sectors.
You also asked about sort of quantifying first party measurement and I don't have.
Back to data to share with you on that front, but I'll say, it's a fundamental strategic priority and we know two things first set when folks implement our first party measurement and they tend to spend more and they spend more because they have clear visibility into the impact at the AD spend and.
And second that as we educate.
Appetizers about lengthening of the attribution window. So they can see the connection between early touches and purchases.
They spend more as well and that's been substantiated in studies, we had a recent study from Newstar that said Hey, when you take a multi touch attribution approach interest is delivering better return on AD spend that a lot of its search and social.
Our parts.
On targeting again, we're still on early days I think I mentioned in the last quarter that we just rolled out things like region targeting globally. There's also interest targeting and that's coupled with a lot more buying objectives and that combination has been really attractive to a lot of different advertisers. So.
Across the board I think it's in that.
Theme that I mentioned in a prior question, we feel like we're still early in that roadmap on all those fronts. In this year in particular, we continue to focus on measurement, we're making a new and substantial investment in automation and then finally, we'll continue to expand creative formats. So advertisers have more creative tools at their disposal to meet them or meet their.
And checkers.
Great. Thanks, Ben.
Your last question comes from Brian Fitzgerald of Wells Fargo. Please go ahead your line is helping.
Thanks, guys.
Maybe one last is targeting one and I know, we've hit upon and a bunch, but maybe a slightly different pack.
Some other ad.
Platforms, a thus far this quarter pointed to targeting headwinds and signals are getting diminished and you mentioned third party cookies are going away and so there is diminished attribution some have not.
That's a talk through the quarter, but we wanted to ask whether you're seeing a what you're seeing in the industry as a whole and if there is a if moral pig targeting.
The open Internet is causing advertisers to lean more into a and do you guys and your stack. Thanks.
Yeah I mean the question. It's just like how is the evolving landscape of affecting the business and.
As mentioned before you know the answer is that it's causing us to invest a lot more in first party I.
Thinks that a big advantage that interest has is that the majority of our targeting second all is from onsite behavior right and that comes from the fact that people come to interest within 10, right, they're not they're up to talk with their friends or read the news there coming there literally to get inspiration for.
Life projects have a big commercial component.
So that's a tailwind on the flip side of it when you talk about conversions.
That's signal on what things convert is a really important input into targeting over the long term, especially as we go farther into a more conversion based advertising and so to the extent that it's difficult to get that signal back and I think theres a good case that it will be more.
Calls in the future it may impair our ability to grow those products as fast we're investing heavily in those first party measurement tools, we're being very transparent with our users, but that's sort of the the tailwind or headwind story. So I think it's a little bit of a mix and we'll have to see how it plays out in the future.
Great. Thanks, guys.
We have completed see lots of time for questions I will now turn the call over to then silberman for closing remarks.
Well, thanks again to every one of the call for taking the time to join US. We appreciate your questions and we look forward to continuing the conversation down the road have a great Dane.
This concludes today's conference call.
You may now disconnect.
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