Q2 2021 Pinterest Inc Earnings Call
Okay.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Pinterest second quarter earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation.
Patients there will be a question and answer session.
To ask a question during the session you will need the press star 1 on your telephone keypad. Please be advised that today's conference is being recorded and if you require any assistance. Please press star zero for the operator the.
The deal. It is now my pleasure to turn the call over to.
MS Jane Penner head of Investor Relations for Pinterest, Ms painter the floor is yours.
Good afternoon, and thank you for joining US welcome to Pinterest earnings call for the second quarter ended June 30 of 2021 I'm Jane Penner head of Investor Relations for Pinterest, joining me today on the call of our Ben Silbermann.
Pinterest, President and CEO and Todd Morgan felt our Chief financial Officer, and head of business operations.
Now I'll cover the safe Harbor.
Some of the statements that we make today regarding our performance operations and outlook, including the impact of the COVID-19 pandemic may be considered forward looking and such statements involve a number of risks.
Risks and uncertainties that could cause actual results to differ materially.
In addition, our results trends and outlook for Q3.2021 are preliminary and are not an indication of future performance.
We are making these forward looking statements based on information available to us as of today and we disclaim.
Tim any duty to update them later unless required by law.
For more information please refer to the risk factors discussed in our most recent forms 10-Q, and 10-K filed with the SEC 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 non-GAAP to GAAP measures is included in today's earnings press release and letter to shareholders, which are distributed and available to the public through our Investor Relations website, located at Investor Pinterest, Inc. Dot com.
And now I'll turn the call over to Ben.
Thank you.
Jamie Hi, everyone. Thank you for joining the call today.
I'm going to talk for a few minutes and then Todd will follow up with some additional insight and then we'll open up the questions.
Earlier today, we released our latest shareholder letter.
As you've seen we grew revenue faster than expected and at the same time, we saw a decrease in engagement.
Stay at home orders eased around the world.
Wanted to discuss each in turn.
Starting with revenue revenue increased to 125% year over year to $613 million.
We saw on more and more advertisers here in the us and increasingly across the globe recognize the value of <unk>.
And then conducting a of people planning for the lives.
It's a clear signal that our investments in shopping automation and tools are working and we plan to continue investing to make it easier for advertisers to scale and reach new customers on Pinterest.
On the user growth front, we grew globally you monthly active users.
<unk>, 9% year over year and I am sure. There are questions about this so I thought I'd take a few of the obvious ones head on.
The first question is what happened with user behavior.
As we all know the pandemic was an unprecedented and unique global event in.
In past earnings calls we talked.
Users stay at home orders significantly increased usage of interest and for the past year. We've highlighted how people change the interest for inspiration to reinvent their lives during such a difficult time.
Now as the World opens up we're seeing the similar effects in the opposite direction.
That impacted our growth, particularly.
But has some of the core use cases, we see on our platform are less common in 2021 than they were a year ago.
That's shifting behavior in Q2 impact of engagements.
Which brings me to the second question what users of this impact of the most.
Well most of the difference between what we guided and.
And what we reported our people who came to pinterest from the web vs for mobile apps.
Users tended to be on average less engaged and generated less revenue than people who came directly to contribute.
In contrast in Q2 monthly active users on our mobile apps grew in the us year over year and internationally kind.
Because 20%.
We're continuing to closely monitor opinion engagement. So later Todd will talk you through more about what we've learned a few weeks into our current quarter.
While we navigate the current volatility caused by Covid, we remain focused on building for the long term.
Interest is at the beginning.
The more than fundamental transition going from a place to browse save an organized inspiring images to the place to connect with the inspiring people sharing their passions and lifestyle expertise in the form of rich interactive videos.
We're doing this on a number of ways.
Sure.
Idea of pins are first.
Many of the fishing tool, enabling creators to share ideas with lasting value.
Second the creator code is our initiative to make sure of interest remains a positive and supportive environment.
And third we'll be adding new features to help creators foster community we.
We intend to go beyond likes and comments and will build.
For us the let people share the creations asking answer questions and offer encouragement and share tips.
We're still early in this transition, but those early results of positive.
The number of idea of pins created daily has grown more than 7 fold since the beginning of the year.
More and more creators of publishing ideas.
And opening up new worlds on Contrist on everything from outfit ideas school activities workout routines indication ideas.
And idea of hens are resonating with our fastest growing audience Gen Z <unk>.
This audience grew double digits year over year.
We plan to continue to execute on the strategy with more.
So on shoes like product tagging, which came out this week to help reward creators for their work and get Pinterest another way to go from inspiration to purchase.
The later this year when we make it possible for all payments to create idea of trends as well as many more capabilities.
Sure Us these arent just a series of 1 off moves rather.
The product to a larger vision on how we intend to pursue our mission.
And as to do something we believe pinterest is uniquely positioned to do.
To tie together the lifestyles of inspiration you've seen on television.
With the positivity of enjoyment the concept being part of the community of shared interests with the utility of the comes from Great planning and shopping to us.
Traders are important building blocks fulfilling our mission of giving everyone. The inspiration to create a life day luck.
Now I'd like to turn it over to Todd for his thoughts.
Thanks, Ben I'll share. Some further details on the trends we saw on Q2 and provide a preliminary outlook for Q3.
The data Ive no reason of our shareholder letter fewer monthly active users came to pinterest in Q2 than we expected.
<unk> remarks on the letter of detailed why do we think this happened but in summary, we believe that nearly all of what we're seeing now is the unwinding of some of the engagement benefits that we got during an unprecedented period of time when people are stuck at home.
And have more time to spend on some of our core use cases.
We also continue to monitor other factors, including competition and the impact of Google's recent search algorithm changes, while continuing to improve on products and ramp up our marketing efforts to increase engagement over time.
We are encouraged that our most engaged.
Monthly active users those that use our mobile applications grew year over year, both on the us and globally.
These users contributed a significant majority of both total impressions.
In total revenue in Q2.
Additionally, the investments, we've been making to more efficiently realized.
Some of the unique existing engagement, we have there is working well.
Specifically the engagement we have on shopping surfaces appears to be more resilient than overall engagement.
We plan to continue investing in helping pinterest shop for products they loans at a price point they want.
And then helping merchants get discovered and connected the people who.
We will of the products and services.
While we're still early in the journey to fully monetize our shopping engagement. We believe that we of the right sales coverage model and we're delivering conversions to advertise advertisers who are seeking sales on the platform.
Looking beyond the COVID-19, driven volatility RV.
The value on the long term opportunity to grow our user base both in the US and globally is unchanged from what it was before the pandemic.
Turning to our financial performance year over year revenue growth accelerated to 125%.
With adjusted EBITDA margins.
Of 29%.
This remarkable growth was propelled by 2 main drivers.
First we saw momentum from large advertisers, especially retailers, who returned to the platform enforce as consumers resumed social activity 1 pandemic restrictions ease.
The other going out some verticals like beauty and travel.
Also returned to strength in Q2.
Second our international business again performed really well growing 227% year over year in Q2, and contributing 22% of total revenue.
Both of these trends show the growth and diversification of our active advertiser base, which grew both sequentially and year over year.
Turning to our preliminary outlook for Q3.
The engagement headwinds the observed in Q2 have continued in July as of Tuesday Us monthly active.
The users have declined approximately 7% and.
And global monthly active users have grown approximately 5% year over year.
The evolution of COVID-19 pandemic restrictions.
Pandemic prescriptions remain unknown.
And we're not providing guidance on Q3.
2021 monthly active users given our lack of visibility into certain key drivers of engagement, which could continue to play out for a few quarters.
On the revenue side, we expect total revenue to grow in the low forty's on a percentage basis year over year.
Please note that our Q3 revenue.
It takes into account a few things.
First.
Ben talked about the important transition, we're making from being a place where people view static images sales from the web.
To the place where people go to discover the best native immersive lifestyle content that's.
That's a big behavior change for us.
Until the new ecosystem for creators, we have to invest and that means giving distribution of the idea of <unk> at the expense of some high value advertising inventory.
Which impacts revenue.
We believe the in the long term this strategy will be engagement accretive and that will have a significant opportunity to monetize.
Is that engagement.
Second we are facing tough year over year comps this quarter and the year ago quarter auto bid was ramping and meaningfully drove revenue through the course of the year and in Q3.
There was a big rebound in AD spend during the quarter as large CPG and retail advertisers re engaged.
Aged after the initial shock of Covid.
And we believe we benefited from being a positive platform during the social media boycott on this.
The 2020 election cycle.
Finally, we are carefully monitoring the impact of increasing prices on the platform. These increases are consistent with our strategy to grow our advertiser base increase.
Kris auction density and deliver ads more efficiently over time.
That may increase the churn for some price sensitive advertisers, whose cost per action has increased.
Before opening it up for questions I also wanted to touch on expenses.
We continue to invest in the growth of the business in accordance with our key strategic.
Priorities of inspiring content the <unk>.
Center experience advertisers' success and shopping.
Non-GAAP operating expenses grew 51% year over year, driven in part by a brand marketing campaign.
We increased our head count 21% year over year, our third quarter of sales.
The sequential acceleration.
We expect sequential non-GAAP operating expenses to grow modestly in Q3, as we continue to ramp of investments in our long term strategic initiatives and growth drivers.
And resume our brand marketing campaign again in early Q4.
Thank you to our teams of interest our advertising partners are creators and all of the people that come to pinterest to find inspiration.
And with that we can open it up for questions.
Thank you, ladies and gentlemen, as a reminder, in order to ask a question. Please press star 1 on your telephone keypad.
Pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Ross Sandler from Barclays.
Hey, guys just 1 for Dan 1 for Todd.
Ben you mentioned in the letter and just now some of us at home categories.
Sure.
Please or use cases are kind of dropping off which makes sense given where we are on the on the reopening but just I guess can you just since we haven't talked about this before maybe kind of break down these use cases into.
How much of the behaviors around the home versus other things and.
Is it relative to or is the drop off.
So in those areas or is there something kind of more systemic going on.
And then Todd the.
The <unk> numbers are obviously outstanding the low forties, I think of a little bit lower than we had thought in the probably some conservatism.
On the year, so is that what youre describing around this.
Swapping out the the ads for the creator pins or.
Any more color on on what Youre seeing thus far in <unk> from your larger retail and CPG clients and do you think the 2 year stacks should.
Hold at this level that you are talking about.
With the 40% and <unk> on a go forward basis. Thanks, a lot.
Sure Ross. Thanks for the question I can start with your first of all on which raised a little bit more color on the changes in user behavior that we're seeing.
And of Ted outlined on.
There are few things that are changing as on the pandemic has eased 1 overall time at home has shifted into a lot of the use cases that we're especially relative to last year things like redecorating your home edgy.
Educating your kid of homes.
Cooking meals at home on those.
Have lessened.
Now it's early to say, how those will normalize over time I wouldn't describe the current user behavior, where the current social environment exactly the same but we're seeing some promising early signs we're looking at things like back to school, we are seeing an uptick in fashion and as mentioned, we continue to see strength in areas like Gen Z, which engaging.
Age and continue to be our fastest growing.
Demographic.
1 of if that starts to answer your question.
I'm not sure if you on adding more color there.
No I think that's that's great then I Ross why don't I take the second part of your question, which I tried to.
Talk about a little bit on my prepared remarks.
But all of applause and double click on it a little bit.
I think you were interested in the impact of our creator and content ecosystem in particular, the distribution of idea pins.
There were really 3 reasons that were 3 factors that are kind of influencing that low Forty's guide.
On.
Remarks about quantification perspective, it's difficult to pin down exact numbers, but the 3 things are in my head when 1 of flying that got the first is we.
We are building out of content creator ecosystem with our idea of pen format that will require some investments to get up and running.
There are things around that around pivoting people.
From the grid format to streaming experiences consuming some of our highest value AD slot inventory to distribute those idea pins and.
And of course of the cold start issue, because we don't have enough content, yet relevance of the bit of a challenge until we get the marketplace with content marketplace and effects.
So it.
It is an investment in the long term engagement and growth potential of the company to use some of that supply to distribute idea of trends. We believe that that will be accretive to engagement longer term and we know and we have talked about in the past the.
We've already seen some evidence we can monetize that format I'm confident.
Given the short form video nature of that content and our enormous success and scaling video advertising over time that will find.
Similar success with these creator efforts.
I might remind folks that we went through a similar exercise of the shopping over the last couple of years, when we made an investment and the user.
Our experience first to find product market fit.
Before we put our foot on the gas around monetizing.
And I view the similarly, we're investing in the user experience to get this content marketplace up and running with idea of pins on the belief that with the right product market fit we will drive organic engagement.
And be able to follow with monetize the bowl engagement over time. So that's the bet that it requires an investment that we're starting to scale going into this quarter and beyond.
The second and I don't think I need the dwell on this too much of it.
Self explanatory and we went up went through it in detail on the call the Q3 call from.
Year, but the impact of high returning automation through the course of 2020, the big rebound in CPG and retail and the benefits to us of not being of social media platforms. During the social media boycotts during in the contentious election cycle last year makes for a pretty tough comp in <unk>.
Q3.
Free.
And then as I mentioned, we're looking at.
The things that are on strategy for us, which is diversifying our advertiser base.
Delivering more auction pressure driving more cost per action on the platform and that may cause some rotation amongst our most price sensitive advertisers.
But advertisers.
The value the commercial intent, we bring the value of our demographic and they value our brand safety narrative and for those advertisers. The we're continuing to see tremendous success, but we're in a on escalating pricing environment that may squeeze out those that are.
The value of some of those characteristics of less and so it isn't the things that are on my mind.
Behind Us we guide to the over 40% for the quarter does that makes sense.
That's super helpful. Thanks to open expense.
Yeah.
Your next question comes from the line of Brian Nowak from Morgan Stanley.
Great. Thanks for taking my questions I have 2.
First of all on Yeah, I understand that you have a lot of questions about users.
Maybe just to give us a little more clarity can you just tell us what percentage of the the U S. So the global users are part of the App user base. Just so we can sort of better understand the magnitude of some of the dynamics you are talking about app users versus web users.
And then secondly, I think in the in the past you've talked about you know new initiatives like Latam and APAC and native checkout, maybe just talk to us about where you are on sort of those 3 growth areas.
Yeah, so on the.
On the user base question Brian.
On our mobile App users contribute a significant majority of our total impressions the higher frequency and therefore they deliver this.
Difficult majority of our revenue.
If you look globally and there are a lot of ways to cut this but 1 way we think about it is globally about 75% of our users of our mobile users.
And the large majority of those users are mobile app users so that dimensionalize us to some extent now these web users that come in not on the mobile app are important to us because they are upper funnel user acquisition right theyre not heavy consumers of impressions or big delivery of near term revenue, but they do inform growth.
Potential over time, so they are important to us just not important to the not as important to the near term revenue performance of the company.
Folks may remember a couple of years ago, and I think it was the second quarter of 2018.
We had.
Some external factors that impacted the user growth the continued to grow our revenue right through those.
Engagement issues and it's a similar dynamic that we saw last quarter.
And apologies can I can you. Please repeat your second question.
And it's all good yeah just on.
Just sort of looking for any update on timing of some of the the new growth initiatives you talked about on the path like a native checkout.
Is out.
Latin American expansion on the monetization side, and then APAC on the incremental website side or the incremental upside.
Yes on the on the native checkout side I think we said last quarter that we were planning to begin testing at some point this year.
Less friction filled.
On the friction free way for our users to buy what they found on Pinterest, which is 1 of our.
The big requests from our users how do I buy what I've found on Pinterest and we've enabled that.
Over time, but we're making it even easier for people to do that as a result of some of these tests that are on track for later this year.
Our investments in Latin America are early we've got a great team in place. The early returns are scaling nicely we're building great relationships.
It's working but it's still incredibly early we just launched.
A couple of months ago in Brazil, and Mexico, and while I'm really encouraged by the user.
Base that we have down there on the market opportunity, it's still very early and that will continue the scale overtime.
And then lastly, we're investing in.
Growing our user base in some markets in Asia Pacific that we think we could open up over time, but that's not on the roadmap for the sheer yet.
Got it okay.
Thanks Scott.
Thank you.
Your next question comes from Rich Greenfield from <unk> partners.
Hi, Thanks for taking the questions.
I guess.
Just from a high level of a couple of housekeeping points, maybe just first just because I think there is just to make sure everyone's on the same.
On page when Youre, saying, USDA us down 7% so far in the quarter I believe that just makes USDA us effectively flat sequentially and on a international basis. The subs would actually be up sequentially I just wanted to make sure. We're all reading that properly through the what.
The interpretation is could.
Could you just tell.
Percentage of how many idea of kind of seems to be such a focus of what's been sort of the product team are working on sort of any way to think about what percentage of your M&A us globally are interacting even though the U S or globally whichever of the best way to look at it us are interacting with the idea of turns at this point and then just sort of the main question just when I think about sort.
Also give us comment that in the letter of <unk>.
Advertisers being driven by the adoption of measurement solutions I was wondering if you could sort of.
Give a little bit finer detail of what you actually mean like what what is attracting advertisers into pinterest based on your measurement solutions like what are we at what are you actually seeing could you give us a couple of concrete.
Great examples.
Of where that's actually making a difference.
Sure why don't I take the.
The first and third and then May.
Take the second.
If that works on idea of pen so on the user side rich.
We were talking.
Sort of monthly active users rather than to us.
And we are as you mentioned were down.
Tuesday about 7% on a year over year basis those of preliminary numbers.
We're just trying to give some direction post the end of the quarter to show some updated trends.
If they're not the least flat sequentially.
Yes, if it were to hold.
I think thats right. If it were to hold through the quarter, what I call would want to caution folks. So yes that math is correct, but it.
It implies that we stay current at these levels, which is something I didn't want to lead people to believe on this call because I don't have enough visibility into how these pandemic restriction.
On a bank or any other pandemic related.
Changes in user behavior may play out.
Because it's been very difficult to discern we look at.
Just for color commentary on this we look at pretty detailed time series analysis, we've looked at historical seasonality and we've.
Done using third party analysis based on time spent at home to correlate usage against what we see us mobility data.
And in geographies, where we have users and so our best judgment.
Right now just given the volatility is to give the update on where we are in July.
Because of our.
The seasons in forecasting recently has been a little on.
Off of where it was historically if that makes sense. So yes, there's a lot of words to say, yes. Your math is correct, but I would caution people that we're not guiding to Q3 and the adults at this point given the uncertainty around the pandemic.
Does that makes sense.
It does.
<unk>, Okay, and then on the Advertiser side, we've made.
Part of the the value of being on Pinterest and we hear this from advertisers a lot they loved the the brand safety and the inspiration that the platform brings day.
I love the early commercial intent.
But our user base brings to the platform because youre looking for ideas to bring into your life.
And a lot of the activity of unbranded when people come they are looking they don't yet know what they want but they're effectively shopping they're looking for new ideas, considering those ideas and eventually purchasing them.
So the value of being out in the Sun.
And we've demonstrated this with our delivery of insights over the last couple of years tied the seasonal moments.
Well, we can see consumer behavior before it unfolds and help our advertisers design campaigns against the seasonal moments.
That speaks to the value of an earlier touch and the industry has been conditioned on last click analysis for a long time, so a lot of our marketing and sales work as designs of premiums.
The months with earlier touch us.
Where you want to be when Youre diversifying your spend sort of consumer internet advertising tools like our pinterest conversion analysis conversion of insights, which looks at the GMB delivered by organic and promoted.
Shopping behavior, and then on Pinterest conversion lift to all of these are all.
The ones that we've delivered over.
The last several quarters.
A couple of years to better demonstrate the value of longer attribution windows and that earlier touch.
And so those of the those of the things that we've delivered but this is part of our go to market and our marketing program in general is.
Demonstrating the value of inspiration on the platform.
Demonstrating the value of insights that we can uniquely Glenn from our consumer behavior and help show increasingly the value of that earlier touch.
For those that are willing to consider that as a factor in their spend does that makes sense.
It does.
Okay.
Don't know Ben if you had thoughts on the idea of pins question.
Sure Rich.
So I think your question is kind of like how many people are seeing us over the past.
Where are we in that journey and I think it's probably worth taking a moment some of their stuff like why we are why we're going through the why we are describing as the big transition.
Today I'm not sure.
Content is based on users pending items for the web and it's created enormous value for businesses enormous value for people looking for ideas and of.
Over the last few years, we've told you about increasing importance of video content, which has grown significantly and I think things of the next logical step because they not only enable people to say the video but the enabled.
Creators to produce original content, that's aligned with our unique brand and the purpose, which is inspiring useful ideas and encourage people to try something new.
But as Todd mentioned, that's a new user behavior and so the reason we say it's early is because we're going to get our opinion of community use of the idea of following and subscribing to creators.
And on the flip side, we're going to empower creators with not only publishing tools of ways to engage that audience and eventually to make a living and we think there's an enormous opportunity there because while there is a lot of long form video and there's a ton of short form of entertainment video there isn't as much in the type of things the pinterest specialized which are inspiring ideas.
It had durable value and ultimately ideas that can drive action. So we're really excited about that and the early results are really promising. So in Q2, we launched idea of when that is the ability to publish them in 22 markets to those with the business account.
We have not yet released it to everybody on Pinterest.
At the end of a business account on <unk>.
Not yet create idea of hands, but that will be coming but already idea of pins treat of daily it's grown more than 7 ex and on the user side, we're seeing really good adoption with daily impressions growing more than 10 times since January.
So this is going to be a big shift for the company as Todd mentioned, we're really leaning into investing investing.
So if you don't get us, helping us traders build the community, but over the long term, we think that can change picture us from a passive experience, where youre browsing industry to 1 where you're following people.
And we also think that it can bolster all of the other initiatives of our dominant giving people exploration, but helping them take action by letting the purchasing things that they've seen.
Are there.
<unk> are there milestones the people should be judging you on in this transition and as you think about this rollout.
Sure I mean, I think that the first step which is we're really going to make it much more broadly available and we're going to make it so people encounter creators to the idea of hands a lot more.
Often I think that's really the first phase and we're focused on helping us traders.
Build build the community and that's the first phase and then we're going to build out from there. So.
That's how we're approaching it internally and we're looking forward to updating people on the journey.
Yeah.
Thanks, so much.
Your next question comes from the line of Mark <unk> from Bernstein.
Hi, Thanks for taking my questions. A couple of if I may just the the kind of follow on on the the creator points.
It seems like every platform is kind of a focused on on the creator economy, and so can you share a little bit more details on like who these creators are are they.
They are already on the platform and this is about empowering them to do more or attracting new types of creators and then for Todd.
Can you provide a bit more color on that shopping behavior and what it looks like I think you mentioned at the top of the call that it's been more resilient, but wondering if there's any more color you can share out of whether it's product searches of the shopping type of what it might be thank you.
Sure I'll start Mark with this question of who the creators are I think it starts with of what's our machine and our unique places of the platform. The Pinterest has always been a place that provides lifestyle inspiration on things where people arent share just to get some of the team. There also there to do something and we're focused on short form and so that means there are a lot of creators that exist on.
Platform, but theyre also creators where other platforms that are focused more on pure entertainment on serving their needs as directly and so we've seen a lot of really interesting early kind of creator success things that are a quarter of use cases that are expressed in a much more engaging way, making on breakfast workouts cleanup.
On the books for low.
Just to put a point on it..1 example is a fashion photographer on who's been in the early data came as Shane he has cultivated in the audience of 18000, averaging 9 million monthly views in only a few months and what he does is the use of this idea of tends to take payers kind of behind the scenes the fashion shifts in share.
Tips on how to succeed as the young entrepreneurial photographer creative ideas on what he says is that interest us, allowing them to connect with his audience of his community on a deeper level of it's harder for them to reach some of the platforms part of that is because of its search engine like nature on people are actively looking to turn internally we call that.
Kind of intense and in the feedback that <unk> received you described is really breathtaking and so he is excited about cultivating an audience that's more intentional versus passing 1 of inspiring we're entertaining the person. After another so that's kind of the character. We think there are a lot better on the platform that haven't had the publishing tools. We're focused on that we think there are a lot of outside the.
1 of them and we're eager to bring them on and give them the best tools to inspire the community and eventually the make a living from us.
Okay.
So on the on the shopping question I'll go into a couple of things of that number 1 we continue to invest of the product experience and so.
That's shown where our ability.
Profit for more inventory has continued to increase we delivered.
The 50% more sequentially in terms of product inventories through catalog uploads in Q2 versus Q1, we rolled out shopping features to Australia, Canada, France and Germany.
We launched shopping list, which is the way for Pinterest too.
<unk> product tens of 1 place for easy shopping and enable notifications when price drops on sleep product trends and these are all in service of creating a better shopping experience, but we've talked about.
Those early test showed that our pinterest or 7 times more likely to buy products. They saved as we talked about earlier, we're also launching.
<unk> the.
Forecast of growth plan to test that on platform transaction experience later this year.
The most direct way of talking about it and the thing that we.
As Mike pointed to in terms of shopping behavior was our weekly shoppers on the U S was more performance than our overall monthly.
The active users, they're about flat year over year versus down a few points.
Does that answer your questions.
Yes. Thank you.
Okay.
Your next question comes from Mark Mahaney from Evercore ISI.
2 questions 1.
Mitigating ones the bigger picture of the Nitty gritty 1 is that the update you gave on MA US could you also do that for the mobile the really engaged and they use what those trends look like through the quarter to date, both globally and in the U S. I E is there.
Our U S Army us declining year over year.
Whatever the 5% to 7%, but the hardcore mobile ones are rising a comment there and then secondly, just step back a little bit and just talk about with Covid.
What impact you think that that clearly created this kind of comp issue for you we get that.
But talk about if there were wins and I think you've probably had some sustained.
1 is you probably have a large cohort of users who came on and have permanently stayed on with us. So just talk about the kind of the.
What you saw from the debt Covid cohort I think at the time of you talked about this a year ago. Those engagement trends were relatively similar to what you'd seen in prior or may be even greater just talk about the all of those users that came in.
<unk>.
What trends do you think you saw from those that are sustainable. Thank you.
So mark I'll I'll start with the first 1 then I'll, let Ben comment a little bit on some of the user behavior that we've seen I don't have an update through Tuesday.
On the.
Mobile app and the use but what we saw last quarter was they were modestly positive year over year in the us and grew about roughly 20% globally.
And so that gives us some sense, but I didn't update them through Tuesday, and don't have the share on this call.
And then my second question was what does the observed about folks of the joined during Covid like what's the same on what's different.
The things that of the same are we continue to see that these core lifestyle verticals fashion food beauty health they continue to be very important and while on.
Coming from last year the this year.
While usage is lower.
We think those are durable things because of the.
The things that people care about and they are going to continue the care about and so in terms of progress we continue to invest to make sure those experiences, including making all of us experiences more shop. The poll on continue to be really great.
1 interesting thing that we have noticed is.
The overall to see Gen Z go on interest so the US monthly active users under 25 grew double digits year over year, they've got really high activation rates and while there is still in the single digit percentage of our user base today, and we see them really taking too a lot of any of the features notably things like idea of sense.
Jonathan.
That we can just have slightly different interest categories on our core user base and day disproportionally engage in things like art women's fashion.
But it's a really exciting early trends.
It's 1 that we're really excited to cater to us, it's obviously of future demographic.
<unk> will grow into an incredibly valuable cohort in the future.
Thanks, Dan Thanks, Todd.
Yeah.
Your next question comes from Justin Post from Bank of America Merrill Lynch.
Great. Thank you maybe 1 for Ben when you take a step back and you look at $91 million range in the quarter.
The $85.2 years ago.
How do you feel about your progress kind of attack.
Getting new.
Demographics on the site.
And where do you think you can go from here I mean, we still have aspirations of maybe getting 150 million users. How are you thinking about really driving growth in new demographics from here.
And then I guess on the catalog really interesting.
And the growth there, 50% quarter over quarter could you just help us understand what that got us up on the advertising side and does that put us in better position for shopping on the side of how youre thinking about that thank you.
Sure Justin So I think at a high level, you're asking what.
Where do we think that future growth is going to come from and we've covered a little bit new demographics that are growing but maybe 1 way to interpret it as 1 of the functionalities how is the platform improving to be more useful to multiple at the time.
I think we covered at some length on why do we think of the creators while the long term initiatives, it's pretty fundamental.
If you think about large scale consumer Internet platforms, you have social platforms, and then you of a long list of ones that have some form of publishing subscribe or you can follow people that create content of usually thats video content Pinterest is somewhat unique in that it's grown as the utility where you browse.
The non focused content and so we're introducing something that we think that our users are really looking for our users tell us that they want a place where they can browse video content. They can follow inspiring people, who really nature in expertise and lifestyle and minor celebrity and entertainment on rather than the other way around.
Housing and so we're really excited about that long term prospect.
On the flip side of that you have utility like how useful as pinterest of helping you go from inspiration to actually of purchase and there we've made tremendous progress.
On a year or 2 ago, 1 of the most common user concerns was that I would see an image I would want of purchases.
<unk> said, but I couldnt reliably get there, but a lot of the investments we've made from increasing the amount of products uploaded through catalogs to better ways to pivot from the image or video to products and then share related products into our brand page to the future things like the shopping with US that we released the test the need of checkout.
To make the interest itself more and more useful for taking us on a full journey from inspiration all the way to purchase so I think both of these things are long term tailwind I hope that if you believe we are still early days in terms of international growth and expansion and so we're going to continue to invest there.
And I think Theres, a lot of great future growth to be had.
And then just on I think the second part of your question was about the impact of the.
The 50% sequential increase in catalogs on.
On the platform.
Can you get around a little bit to say you may remember sort of echo some of the conversations we've had over the last few quarters, but I'll I'll remind folks that.
Similar to how it kicked off the call.
During in the user experience on product market fit with respect the shopping so our investments in catalog ingestion or designed to improve the inventory of <unk> content, we have available to us to deliver.
And then marry that with better access to natural high intent discovery surfaces for our users.
Users to find that content and the natural journey through interest from inspiration to purchase.
The catalog ingestion ex success that we've had really improved the first of those the inventory available to us to deliver products to user of that match the aesthetic.
From a retailer that they trust and appropriate price point.
And so we have seen nice growth in our shopping revenue.
With that product market fit that still developing the improvement as advertisers see the value of promoting the shopping content that our users are increasingly engaging us so that that is zone.
Hopefully, that's a little bit better.
Helpful color on how I think about the catalog piece or availability of shopping content means that we have a bunch of potential content to promote for advertisers who are seeing that gmg success on the platform.
Great. Thank you that's very helpful. Thanks.
Your next question comes from.
And from Jpmorgan.
Great. Thanks for taking the questions I just wanted to circle back to the <unk> revenue just trying to understand the low forties growth better just as restricted from static images to more idea of pins can you help us quantify the impact there.
So in terms of dollars and how do we rationalize that just with the comments that mobile users are still growing overall net they monetize better.
And then separately is there any risk as you go through this transition is there any risk to users and engagement just as you shift the user experience more of 2.
Idea of teams over these next few or several quarters.
Yes.
I can kick off with the guidance piece and then maybe Ben can talk about the user.
Second part of your question.
The way I think about it is we do have.
Highly engaged.
<unk> App.
<unk> users, where we drive the bulk of our revenue, but some of those users as we pivot.
And introduce the creator ecosystem the more idea pens. There are couple of things, we're doing even with those users that we're pivoting them from a grid snatch a streaming product that consumes some of the time. They would have spent on the platform.
We're using some of our highest value AD spots for those users and we're replacing them with.
Idea of pets. So the distribution is coming in place of knowing.
Economic return AD slots, but we think that's accretive.
So the engagement and revenue longer term as users are introduced to that short form video.
And find that if the compelling way to go from idea of action.
We're also evaluating this relevant question, we've talked a lot about how the diversifying our advertiser base is important because we want the increasingly deliver ads the speed of light content to users.
On this particular area with idea of heads without.
Will the ends of content.
Relevant it's challenging to get up and running and so that has some implications for engagement as people have of less than satisfying experience on site. So these are all things that we.
Now we will deal with US we get this marketplace is content marketplace up and running.
On to be clear about how I was thinking about it it's an investor.
<unk> and <unk>.
Monetize of the supply to get that content marketplace.
<unk> been running and successful that we think is the right long term investment sort of the company.
It's unclear how the adoption rates will go some of us within our control to some extent to how it how it unfolds, but I wanted to give you my best Judge.
Judgment of where we're headed based on my current.
<unk> of roadmap what were seeing in quarter, where we're out of it because that makes sense.
Because.
Okay.
On the user experience on know Ben if you wanted to add any color.
I think we covered it I think.
1 thing to understand is the we are introducing a new user experience and the large scale service. It takes it takes some getting used to but there are a few things that I think are really encouraging of meat will cater to the unique nature of the platform.
1 is where we've seen a lot of IV of Hensby successful early or items that have utility.
And so as people add more content that begins to fill up a constant corpus that has long lasting value. So it's not the highlight of today's party it might be a recipe you can cook on outfit that you can try on the new way to style something I mean work out and so over time as more and more of these idea of pins are generated we are a larger and larger body.
The pins to recommend that increases the relevance of helps people find those 1 or 2 creators that really connect with their interest first thing I would say is that historically, we have and we continue to be focused on the long term, we took a really long as competition on shopping and we had a very similar dynamic.
Where we had to help merchants to get some of the products, but as we've grown the volume of its improved relevance and now we're systematically removing friction out of the purchasing experience.
We think of long term, that's what's great free users. Similarly, we think that users would love to go from that has to the experience, which won't go away but.
Have the option to be able to connect directly the creative people, who want to share their passion and expertise. So we've been experimenting with new ways to deepen that experience from uploading on your version of an idea of plan too David is the band where you can take a lot of class will directly engage with the creators so laying that kind of.
Additional subscription system is really low.
On building out right now and we think that as that gets built out it opens up great possibilities for our users to fulfill our mission and opens up great possibilities for businesses, who want to connect with the printers in different ways.
Great. Thank you both I appreciate it.
Your final question comes from the line of Colin Sebastian from Baird.
Great. Thanks for taking my questions I guess first a follow up on users with the U S. US reverting back essentially 2 to pre pandemic or March of last year levels, I guess, what gives you confidence or.
Our conviction that we want to see more of a decline in some of the international markets as they reopen for travel and recreation.
And then and then secondly, with respect to the beyond platform tests transactions, how should we be doing in Q4.
Curious what that will look like compared to some of the other formats. We see in other platforms are.
Or buttons and rich media ads. It takes you 2 of Pinterest checkout page or what does this have more marketplace functionality.
The category searches of product listings, if you could add a little more color there would be helpful. Thank you.
I can start thank you for the questions Colin So I'll start with the.
The.
The user of question about what we're seeing in the us and how that might cascade internationally for a perspective on that and then maybe Ben can talk a little bit about.
These are experienced around shopping that were number of envisioning and the vision to that so.
I wanted to be clear about where we are in the quarter.
And the factors that im looking at the influence the outlook for users in the short term number 1 the number 2 I wanted to reiterate that what I'm feeling in the moment and what I believe is that we're dealing with pandemic related issues of <unk>.
There are other things that we monitor the competitive market for user attention.
<unk> of other consumer applications out there.
And we mentioned that there was of Google Seo change those are small relative to the.
What we believe was almost entirely.
And pandemic unwind in the quarter that impacted our user engagement.
I don't know how that will unfold.
And the even in the us over the course of the next few months.
And I don't know how of it 1 sold internationally because this could go in a variety of directions.
What I am confident in is that this is the service that can appeal to people.
Wider array of people than we had on the service pre pandemic, if we continue to execute.
Q on the strategic initiatives that we've outlined.
I'm highly confident that the work we're doing on our creator and content ecosystem will deepen engagement Ben talked about the success, we've had in growing our Gen Z audience as an example.
They're engaging more.
The most on the idea of <unk> and this is the natural format sort of sustained growth in that.
That area. So that gives me confidence we're investing in the right things to be accretive to engagement and revenue over time.
I don't know however, how on fold over the next couple of months.
So.
That's why we gave the update that we gave with the intra quarter update on made it clear that we're just we're evaluating the pandemic.
In real time.
So.
And then I don't know if you want to talk a little bit about the the <unk>.
Experience of the transactions experienced the envisioning for the product.
Yes, Colin I think that we'll be testing us it'll be a limited test on the back half of the year.
I think that I'd, probably just say that we want to significantly reduce the friction.
For the user and so we're probably not.
Talk about the specific solution yet but.
But youll see it soon enough to share this year.
And then if you put it together into the broader shop envision I think it begins to paint a really compelling story.
Today, we wanted to help you go from an inspiring image that you might see you can identify products in there you can browse related products filter.
And we want to add to that the adult checkout with just 1 click but as I mentioned at the beginning I think over the long term. There is also a way to connect the acquisition 2 edition, where creators are actively sharing their expertise and passion and you saw this week the launch of 1 small step in that direction, which is the ability for creators to tag.
Of our byproduct on products in their shops are in their videos and in early tests, we find that pinterest or significantly upwards of 90% more likely to engage on products tagged on idea and then on just the picture of a product on the white background.
We see these things working in tandem over time.
And we're really excited because thats court.
Our mission of giving people the exploration, but not stopping there helping them go all the way to a lifetime of which often involves purchasing our product.
Thanks.
Yeah.
I think that's our final question.
And the operator.
And Kumar of combat been to close the call.
So I just wanted to thank everyone today for participating in 2 of the thoughtful questions and enjoy the rest of the day and please stay safe and healthy.
Ladies and gentlemen that does conclude the pinterest second quarter earnings.
Question on France call. Thank you for participating you may now all disconnect.
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