Q3 2021 Pinterest Inc Earnings Call
Cause actual results to differ materially.
In addition, our results trends and outlook for Q4, 2021 and beyond 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 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 or 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 religious Investor Relations website, located at Investor <unk> Pinterest, Inc.
Dot com.
Now I'll turn the call over to them.
Okay.
Hi, everyone. Thanks, so much for joining the call.
Now I will give a bit more context about the quarter and then we'll open it up to questions.
I wanted to start by saying, how grateful I am for our team.
In the face of so much uncertainty in the world, we continue to deliver great products for Pinterest creators businesses.
And I'm proud that despite macro challenges like supply chain shortages, we grew revenue, 43% year over year to $633 million.
That was thanks to increasing demand from larger retail advertisers and growth in our international business.
It's another signal that advertisers see different value on pinterest and other platforms.
On engagement monthly active users grew 1% to $444 million as we continue to see the pandemic unwind impact our engagement.
While we had an uptick in our core out of home use cases like fashion and beauty.
Didn't outweigh the downtick, we saw with core in the home use cases, a trend that began in March.
We don't believe this is a permanent change in behavior.
The timing is hard to predict we think that <unk> will return to more normal seasonal growth pattern in the future.
As more and more people returned to looking for ideas for their homes trustees their families and so much more.
In the bigger picture, we think there is growing demand for positive place on the internet to discover great ideas try them and buy them in.
And that's why we remain focused on building a place that feels healthy and encouraging a place to envision your best life with rich new tools and a place to connect seta ideas businesses and creators to healthy turn inspiration into reality.
For a long time, we've talked about helping people make the journey all the way from installation to realization, which is why we continue to invest in the core product to make it more shovel we've.
We've added new features like slideshow collections, which allow merchants to easily display more of their products in a full screen video format.
We've expanded our verified merchant program into seven new markets, including Brazil, Italy and Spain.
We've introduced product tagging and affiliate links for idea pins. So creators can help pinner shop their favorite brands and.
These efforts are showing results.
Overall product searches were up over 100% year over year.
Searches on the shop tapped by Gen Z, we're up 200% year over year.
In Q4, we started testing a more seamless checkout experience and so we're excited about momentum.
At the same time, we continue to execute our longer term creator strategy to evolve how we inspire payments.
We believe that our investments in a native credo, driven ecosystem will lead to deeper engagement over time with.
With idea pins accelerating the rich video content on Pinterest offering new ways to get inspired and giving people new reasons to visit Pinterest more frequently as they find and follow creators their loans.
In just the past few weeks, we've released a number of new features to execute on the strategy on.
In just the past few weeks, we've released a number of new features to execute on the strategy on.
When you watch tab, where folks can watch a vertical feet a full screen idea pins.
A new feature called takes where users can publish their own personal spin idea pins and encourage others to try the same ideas.
New rewards program to pay creators for sharing their passions with their audience.
And most recently Pinterest TV, which offers live original episodes featuring careers.
And this is just the beginning this is a long term investment for us into the future of inspiring lifestyle media.
So while that's changed in the world over the past year and a half Watson, we believe hasn't changed the value proposition that people want a place to focus on themselves not others define what they truly love not just what others like into envision their best selves and to make that future possible.
We believe that places pinterest and that's why I'm as excited as ever about our future.
Now I'll turn it over to Todd.
Thanks, Ben I'll share. Some further details on the trends we saw in Q3 and provide a preliminary outlook for Q4.
We were pleased with the financial results that we delivered Q3 revenue of $633 million grew 43% year over year with adjusted EBITDA margins, expanding nearly 1100 basis points to 32% when compared to the third quarter of last year.
While most of the details about our financial performance is in our shareholder letter I'd like to provide a little bit of additional color.
We estimate that absent the macro supply chain issues this year and the benefit from the social media boycott last year.
Advertising spend from CPG advertisers would have had a positive mid single digit impact on our Q3 year over year revenue growth growth.
Also we continued to scale the distribution and placement of idea pins during the quarter, we estimate that the negative impact to our Q3 year over year revenue growth was in the mid single digits.
This impact was factored into our guidance for Q3.
Finally, we don't believe we saw a material revenue impact from Apple's ATT policy changes during Q3.
That said, it's still too early to predict the long term revenue impact of these and future iOS changes.
On engagement global monthly active users grew 1% year over year, we continued to face headwinds primarily from pandemic easing as Ben described but also due to a lower contribution to monthly active user growth from Gen Z users and due to FCO changes that impacted web.
Tourists or service, particularly in certain emerging international markets.
We remain encouraged by the fact that global mobile App meus continue to grow double digits year over year.
In the U S. Our mobile App and they use remained relatively resilient when compared to our web based and they use which declined double digits year over year.
Turning to our preliminary outlook for Q4.
The exact impact of the pandemic and its aftermath on our engagement and revenue remains unknown.
On the engagement side, it's worth pausing for a moment to recap our understanding of engagement trends on pinterest over the last couple of quarters.
When Lockdowns began to ease last spring, we saw a precipitous drop in some of our core at home use cases like home decor cooking and DIY.
And they haven't fully recovered yet.
When you look at Pinterest today, the propensity to adopt at home use cases, such as home decor, and food and drink is less than it was before the pandemic began while the propensity to adopt use cases like beauty and women's fashion has grown.
That's what's driving our belief that we're not in a normal environment yet.
As Ben said, we don't believe that this trend reflects a permanent change in human behavior, and we think monthly active users will eventually return to a more normal seasonal growth pattern.
While we believe this the timing is uncertain because of the pandemic and subsequent user behavior remains difficult to predict as evidenced by Q3 monthly active users not following a typical seasonal trend.
So we're monitoring this as well as the FCO changes and the impact of time spent on competitive platforms as we mentioned last quarter.
In this environment, we continue to build the most inspiring product we can and we're confident that the investments we're making in native content will be engagement and revenue accretive in the long term.
Given this context, we think it is most helpful to let you know where we are today.
As of Tuesday November 2nd.
U S monthly active users were approximately $89 million.
And global monthly active users were approximately $447 million.
While the quarter to date trends suggest some stabilization.
Monthly active users the pandemic unwind has distorted our typical seasonal trends as we saw in Q3.
So it's hard to predict exactly how the quarter will play out from here.
On the revenue side, we expect total revenue to grow in the high teens on a percentage basis year over year.
Note that our Q4 revenue guide takes into account a few considerations.
First the macro environment remains challenging.
For our CPG advertisers supply chain issues are still front and center.
They're not sure when things will improve also it's possible that the macro and supply chain issues will affect other non CPG verticals more in Q4 than they did during the third quarter.
Second we are facing tough year over year comps this quarter and the year ago quarter.
Our investments in ads automation meaningfully drove year on year revenue, we had a very strong Q4 2020 holiday season and.
And we attracted AD spend for being a positive platform during the social media boycott in the 2020 election.
Third we continue to monitor the impact that higher CPA it could have on our more price sensitive advertisers there.
There are some exogenous factors that appear to be resulting in higher CPA, including overall demand for digital ads from advertisers.
On Pinterest, specifically engagement declines continue we would eventually expect to see some constraints on our monetize able supply and in turn higher cpas.
This is not something we're seeing today and.
And we are monitoring this dynamic at the same time, we're investing in a number of opportunities to monetize our existing supply.
And help advertisers achieve their goals.
Finally, as we scale the distribution of idea pins traffic will increasingly shift to relatively under monetized surfaces, such as idea Penn streams.
And our new vertical video watch tab.
These new surfaces will likely remain under monetized in the medium term as we optimize the user experience to drive engagement.
This investment will likely be a modest headwind to revenue in the future quarters as it was in Q3 and is reflected in our Q4 guide.
However, we believe that idea pins will be both engagement and revenue accretive over time.
Finally, I'd like 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 pinner experience.
Advertisers' success and shopping.
Our non-GAAP operating expenses in Q3 grew 26% year over year.
We expect Q4, non-GAAP operating expenses to grow in the low teens percentage basis quarter over quarter.
As we continue to ramp investments in our long term strategic initiatives and invest in our brand marketing campaign in the fourth quarter.
Thank you to our teams or pinterest or advertising partners, our creators and all of the people that come to pinterest to find inspiration.
And with that we can open it up for questions.
Secondly.
We will now begin the question and answer session. If you would like to ask a question. Please press star followed by one on your Touchtone keypad. It for you.
Any reason you would like to remove that question. Please press star followed by <unk>.
To ask a question please press star one.
As a reminder, if youre using a speakerphone. Please remember to pick up your handset before asking your question, we will pause briefly to allow questions to generate in Q.
The first question is from the line of Ross Sandler with Barclays. You May proceed.
Hey, guys two questions.
I guess one for Ben.
The new creative tools and idea opinions and watched him just all the new creator activity, but when we look out.
Two to three years, what kind of uptake do you think this could.
Again, what kind of impact on overall engagement talking iterative, who could it be material any thoughts on that.
How it's going in the early.
Early days here and then Todd.
The <unk> guide actually pretty decent if you look at it sequentially kind of low <unk> quarter on quarter.
Pretty good considering all the moving pieces right now.
I guess any more color on like what's outperforming you go into <unk> with underperforming aside from CPG and can we get an update just high level on how.
How big.
The big three are retail CPG and all other.
As a percent of revenue thanks, a lot.
Yeah.
Thanks for your question Ross I'll start by talking about creators and then and then Tuttle address your second question.
So our traders like maybe just taking a step back I just want to remind everyone of why we're investing in this in the first place.
And there are two there are two principal reasons. The first is that Pinterest is fundamentally that inspiration we've long inspired people with web based images, but we think that video is a fundamental format for inspiration in the future and.
And today mobile video is really still in its infancy. So you're seeing all these different platforms develop video products that play to their core strength somewhere about entertainment somewhere about social connection and of interest we see this opportunity to enable creators to produce videos that are really aligned with what people are there to do on Pinterest, which is get inspired and take action and so we think.
We have a unique value proposition in that space. So one strategic goal is to better deliver on our mission through rich interactive video and we think this is both deepen engagement over time and drive actions that you shop either.
The second goal and you kind of suggested is to give our users more reasons to come back to pinterest with greater frequency.
Historically people, mostly come to pinterest when something in an offline lives needs attention. For example, they might be planning of projects to the homely model or preparing for a seasonal events such as back to school and that means engagement tends to be episodic driven by events that are exogenous to the service itself.
But on the Internet when people subscribed to content from their favorite creators and brands. They have more reasons to visit a service and engage more frequently regardless of what else is happening offline.
So integrating as publish subscribe model and deep interest can not only make the product when inspirational and more useful but can also meaningfully change engagement.
It's still early days.
It's going to take several quarters for these efforts and native content to meaningfully move the needle, but I'm really proud of the team you know we invested significant resources off of kind of more conventional growth investments to build out on your watch tab disability to tag products. The new feature that we mentioned call takes and as you mentioned.
Recently pictures television and we're starting to see those efforts gaining some momentum and idea of hens created daily grew more than 15 acts since the beginning of the year.
The number of weekly active idea pins creators grew 30 X and the time spent on those pins and increasing as well so.
All of that is to say, we're really optimistic about it we're going to continue to invest we considered it a long term priority.
And we tend to go long on the things that we believe we did it with shopping we didn't with global expansion in performance advertising and now we're going to deal with online content creation.
Yeah.
And then Ross I think your second question was about the fourth quarter guide and I can give a little bit more color on that so.
I know folks look at this in a variety of ways, but.
We often get the question on the stacked growth basis, I think it's in the mid nineties.
On a CAGR basis over the last couple of years around the mid Forty's, which is largely consistent with trend. So I think your point holds.
Holds there.
The color behind that is we expect that the CPG headwinds, which are unique to us. It's an industry wide phenomenon and I would expect that that continues for the fourth quarter.
<unk> is whether it broadens beyond CPG, but we haven't seen that yet.
And I.
I mentioned this a little bit before but we had a lot of really compelling product improvements through our work on automation last year auto bed campaign budget optimization and other things that had great results through the year, we had especially strong holiday season last year and then we had some election your benefits that persisted.
Beyond Q3 into Q4.
So we're lapping that.
And then we're monitoring as I mentioned and the impact of higher prices on the platform.
But the strength is really around our larger retail advertisers many of whom are buying consideration or traffic objectives right. Now continued strength in international and the benefits of our investments in a full funnel performance platform are working.
The strategy that we've been talking about for the last couple of years is working and we're seeing great success.
With our larger managed mid market advertisers as a result, which means we're using or monetize it will supply more efficiently.
Does that answer your question.
Yes, yes, it does.
I don't know if you guys are willing to give it to Mike.
Yes.
Our revenue mix.
Is that something that comes up often in our conversations around <unk>.
CPG retail and other than just consuming.
Moving pieces with those three so.
Any any color high level on that thanks.
But for us at the highest level.
Thanks for reminding me about that last bit of your question. We grew the business initially on the back of strength in.
Larger retail and CPG advertisers and Thats been a healthy place for us over the last several years, we've diversified as you know.
Into other verticals and deeper into the mid market in particular, the larger managed mid market advertisers, especially as we built out more automation on our AD stack and better serve their objectives.
Arc of diversification has has moved away on a secular basis, meaning the mix of non CPG and retail has improved we still have a lot of exposure to those two and given the.
The strength, we saw last quarter in retail, we actually saw that kind of mixed back toward retail in some respects our larger advertisers showed up in force last quarter.
Next question.
Thank you Mr. Sandlin. Your next question comes from the line of Eric Sheridan with Goldman Sachs. You May proceed.
Thanks, so much.
Had to ask two questions if I could a lot of the other players in the industry have called out the need to build a better internal mechanisms and tools around measurement and attribution and intent on the back of the privacy changes that we've made can you just give us a little bit of a sense of how you feel youre positioned.
<unk> broader privacy headwinds in the industry in the coming years and what investments are key to you and then I wanted to ask the company. He's obviously been written a lot about in the press from our strategy and strategic standpoint, Big picture lately. How are you thinking about the way interesting sort of positioned against some of the broader industry trends around commerce and advertising.
And the creator economies you called out how much of that you can accomplish sort of organically by yourself.
Sure why don't we start with your question on measurement.
Look we've been talking about being prepared for the shifts in the privacy landscape for quite a while so for past three or four quarters now we've talked about investing in first party measurement.
We don't believe that in Q3, we saw material results, but over the long term, we think that any loss of signal is not helpful. In an effort to provide value to advertisers and it's just early to tell what the long term revenue impact of Apple's policy changes.
The reason, we don't think we've seen as much of an impact is multi fold one is that historically and app install ads, which depend heavily on the usage of <unk> have not contributed a meaningful amount of revenue.
We deprecate that format altogether in 2021, so we didn't have much exposure to the loss of signal.
Number two.
Our users often have commercial intent and because our service encourages deep engagement. We do have a rich set of first party data and that makes us relatively less dependent on third party signals to serve highly relevant ads and so we think our models have been pretty resilient to the loss of off site data and then finally as I mentioned at the top.
<unk> been investing in our AD Tech stack just to improve conversion buildup is visibility any privacy centric solution. So that's kind of the mix I think one area that we want to continue investing in honestly because it makes the product better for users is more and more seamless checkout.
It's another area, where over time as we see more traction there.
Sort of help dampen the effects from those privacy changes so that's sort of the first the first part of your question Andrew.
And your second question, it's a little bit more about how.
How we're thinking about the company strategically and how we're positioned.
I don't want to read between the lines, but maybe one question people are asking is how do you feel as a standalone business.
And I would say and I think thats interest is really well positioned for a few reasons.
First on business significant audience, that's coming to Pinterest for a really differentiated use case and they are not coming to connect with friends.
Actually coming to envision in the future to plan for it and increasingly we're enabling them to take action by check into the retailers and the products that can turn those integrations to reality, that's a pretty unique value proposition and the cost of a very differentiated brand position and we tried to invest heavily to make sure that interest remains a positive and inspiring place.
Both competence safety measures, but also through policies, which protect that ability for people to envision that positive future.
Second <unk> sits if it's really interesting intersection of a few trends that are really secular growth trends in the industry.
And as he mentioned is commerce and the part of Commerce that large online players say and Amazon are really great at are showing your products that you already knew that you wanted but when it comes to tasty shopping things like furniture clothing. Thanks for aesthetics really matter people are looking for better tools and interest is the one place.
Where they're going they're expressly to save things that resonate to explore possibilities across brands and across retailers and I think that puts us in a great position, it's a competitive space, but I think that the most important things that we have users coming with that specific intent and then we're working hard to fill in the gaps in that experience through our shopping solutions.
And then finally, you look the newest investment is an investment in a creator ecosystem and online video.
I said it before but I think online video and mobile video is still in its infancy, and youre going to see vertical position happen overtime, I think pinterest is really well positioned to pioneer new media formats to do both inspiration, but also allow creators to facilitate action providing different revenue models for them in the future.
That's what's unrelated our strategy for the last couple of years, we've been pretty transparent about it and it's been great to see progress on that strategy in the form of more shopping conversions, increasing traction with our new creative suite, which really just went to market towards the end of October.
Really positive sentiment from our users about pinterest being the place that they go to to feel inspired and to plan really important parts of their life.
Thanks Ben.
Thank you Ms security.
The next question comes from the line of Brian Nowak with Morgan Stanley You May proceed.
Great.
Two P M.
First one is I don't want to go a little bit more into the fourth quarter guide and the factories you can help us out with could you just help us understand a little bit you mentioned the supply chain challenges for CPG.
Yes, potentially going into other categories.
What are you already seeing in October are you already seeing CPG companies pullback are you seeing other categories pullback et cetera, I'm trying to figure out what you've seen in October versus what you were just sort of you're having conversations about so far.
And then the second one maybe maybe it's for Ben that we depreciate the stat about product searches being up 100% in the Jan do you end up 200% cetera can you just help us out a little more understand what percentage of the people who come to the platform even high level are coming on there and searching with intent as opposed to just.
Browsing I think it would probably help investors understand a little bit just the value of the social shopping opportunity. Thanks.
Yeah.
Thanks, Brian So on the on the Q4 guide.
I E.
Would tell you that the guidance reflects what I know through this call about how we're trending into Q4, and what I see in terms of likely demand and delivery through the end of the quarter. So I'll start there.
I'm not trying to communicate anything about nuance in that message and it's literally a continuation of the trends that we saw in Q3 that I havent seen abate, thus far in the quarter and core CPG and the core a CPG market.
I'm reading the news as you do everyday about supply chain challenges in that part of the market and I'm not seeing anything that's unique to us at all with respect to their advertising demand.
It harkens back a little bit to what we saw.
And the initial part of the Covid period, where we saw pullback from CPG and Omnichannel retailers, who were either sold out.
Or had stores closed or kind of in a same similar dynamic in CPG, where.
Advertising when you can't deliver product is challenging and that's not a petrol specific comment theres nothing thats changed over the last few weeks relative to what we saw in Q3 that I would call out.
And the caution I provided about extensions into other industries is just something that is on my mind, but I'm not yet seeing in the quarter.
So hopefully thats, a little bit there's not I'm not trying to communicate anything that's more nuance than that.
Brian on your question.
My question is kind of like how do we think about shopping engagement on the platform. How many folks are searching and kind of what's going on there.
We don't disclose the specifics of engagement breakdown, but what I can tell you is that search is one of the fastest growing areas of engagement on the platform in general and what we tried to do in our philosophy in shopping is to make it so any place that youre feeling inspired we want to make it seamless for you then to connect to a shopping surface. So in search that means.
That will surface products and then as you scroll down and you can see related products. Those are shopping surfaces and overtime. There is a lot of opportunity to grow the number of shopping ads within those surfaces.
When you're just searching generally we make it easier and easier for you to find individual retailers has been a big push by the team this year.
When we talk about new inspirational surfaces, our long term plan is to connect those shopping as well.
We talked a little bit of idea pins and Pinterest television and we want to make sure that experience is great, but a lot of people want to do there if they wanted to actually buy the things they see and so we'll be experimenting ways to connect idea pins and story pins into their shopping surfaces.
Our goal at all times is to make sure that interest steels inspirational no. One wants to feel like products had been shut down their throat, but at the same time to make it really easy for you to pivot from that moment of inspiration when you see that perfect scene, when you see that perfect product and make it seamless feed an interested buyer and so we are just starting to experiment with some of the seamless checkout work.
In partnership with a couple of folks, including Shopify in Q4, we're hoping to learn that's just an early pilot, but again, it's about shortening the path from inspiration to purchase without disrupting the user experience at the same time.
Okay.
Great. Thank you both.
Thank you Sunil.
Your next question comes from the line rich Greenfield with provider partners.
May proceed.
Taking my questions I actually got a couple of questions I guess.
One just to sort of.
Add on to Eric's question, Ben I, just listening to you I think the thing that a lot of people are thinking about your <unk> is still really low versus your peer group and you don't have the ETT issues that many others have because of your parks first party data so whether it's Q4 or even thinking about 2022, I guess the bigger.
There's just like why isn't advertising growing dramatically faster just given where your RP level is is it do you need different AD products do you need a different AD selling team. It just feels like there's a big disconnect between the size that you are and the level of monetization just curious how you think about that and then.
Two we've heard about Facebook sort of changing the way Instagram look to moving to a more video centric feed.
Just thinking like as you think about Pinterest does it need to shift as you lean into the creator economy and sort of video do you need a different sort of look and feel to how pinterest just functionally works does it need to be more cyclical or more video centric from the start versus sort of the historic pins on the main page as you go through it I just love your view on sort of both of those especially.
Thinking about <unk>.
Sure Rich I'll start with your second question first and I think it's really about like are we continuing to evolve the user experience to keep up with changing user expectations on changing behavior patterns and the answer is absolutely. Yes. So you know.
We launched a set of features in October 2000, and for the first time, we provide things like the watch tab, which is sort of an immersive vertical scrolling format, we think absolutely customers, who become really accustomed to.
And we think we can provide that format and that we can differentiate with the type of content. It really aligns to where peers are there to do.
So thats just one example, but youll be seeing us rolling out more and more new experiences that are all sort of.
Principally designed to make it easy to be rebuilt it kind of browse inspiration go deep when they want to and eventually purchase I think they're looking for so you're right you're right to ask and our teams are hard at work and building of new experiences and I'm really excited actually to get them in front of more users that just started to roll out all over the world.
Your first question was.
Why don't we make more money hopefully so.
And I would say yes.
Tim.
[laughter].
Let me say a few things.
First of all I'm actually enormously proud of the team.
We are growing revenue really significantly and we talked before about a few different significant opportunities that we see for further revenue growth.
The first is international so.
So we continue to scale, our international revenue and we're opening up new geographies, and we're getting faster and faster at rolling out products such as shopping that are developed in the U S into markets that are earlier in the maturity and we think that's a big driver of outgrew because as you know a lot of our users are outside the United States.
Second we have a couple of high intent surfaces that.
Not that monetize today and one of the most important is shopping and what we've been doing is really trying to build more automated ways to bring in more and more inventory. So we talked about catalog uploading. We've also added an API. So you can get more and more products, they're thinking about their shopping surfaces to remember is that relevance really matters and what underpins valid.
<unk> is the scale and the structure of the catalog. So that's been a long term investment and we're excited to keep driving that.
If on top of that we then reduce the friction and checkout. We think there is a really significant opportunity their head and look we're working hard and I'm really pleased that the progress that we're seeing.
The final thing is that the team the ads product team has really grown.
<unk> by leaps and Downs Todd mentioned, it just briefly but we've been on this path to improve automation and number of different firms and campaign budget optimization is one of the most recent innovations that we've seen it's really amazing returns aren't we've seen advertisers see 20% to 30% lower cost per clicks.
Which signals to us that we can give more value to those advertisers and we think that is a good thing.
As that automation gets adopted by some of our larger advertisers. We think it gives an opportunity to democratize those tools for some of the midsized and smaller advertisers over time, so that's a third opportunity for growth.
I get that I get the question and we're working hard to grow a great business.
We have a lot of really really great opportunities ahead of us if I could just tag on as you think about 'twenty two.
We have a lot of really really great opportunities ahead of us if I could just tag on as you think about 'twenty two.
Do we start to see some of that you talked about a lot of things there and I appreciate the depth of the answer how much of that can we start to see as we move through 'twenty two.
Well I'll, let Todd expand on it more I mean, I think improvements in things like automation improvements in AD formats and national those are things that are kind of always driving better and better efficiencies and I don't think that we've exhausted all of those opportunities and so we continue to work on that international if were investing pretty significant.
And Todd can speak more about new markets that we're opening we're building an operational teams there.
I think farthest away are probably the monetization of idea pins and idea stream because they're brand new experiences and what we like to do is really get those experience is working well and we're willing to take a hit on short term revenue to make sure that users are having a great experience and then find out how to fold in the right monetization opportunities over time.
Todd mentioned that that may be a headwind in the coming quarters, that's true, but I also think it's an intentional choice we want to make sure that we're.
We're getting creators clear guidance on how to build the most inspiring content, we're growing our ability to show the right content to the right person. So people feel like they're getting information relevant to them. When those things are established and are driving engagement and we will find great ways to add revenue we're beta testing.
Ads, we're beta testing, some really interesting partnerships with brands and creators and I wouldn't expect those to be big revenue contributors in.
In the short term.
Thank you Mr Greenfield.
The next question comes from the line of Mark Mahaney with Evercore ISI you May proceed.
I wanted to ask about.
<unk> retention and reactivation strategies that you're thinking about you.
You, obviously had a good number of users that came on tried pinterest and probably a decent experiences, but maybe like youre very or first or users only saw it for one use case and it may not have appreciated that the breadth of use cases that one could find on pinterest, how do you get those people, who kind of a one and done for that Covid period, how do you get them.
To come back in and look at the broader uses broader applications of Pinterest.
Thanks, Mark I think it's a great question.
I mentioned at the top but unlike more social service, where you engage with it almost daily to talk to your friends Pinterest is something that you might come in user for our product a project and then they pause and historically, we've seen a lot of our users use it for a period of time and then come back.
Two answers to that one is that we can do a better job at re engaging as users and so we're continuing to invest in things like the case faster and better personalization, which will enable us to do that one more efficiently and its ongoing work to do it really well.
The second answer and this is longer term is wed love for folks actually continue using it from the get go and so part of the reason why we're excited about building more publish subscribe model is that people can find creators that resonate with them and visit the service more frequently and again, we're early on in that I think of those two approaches like one is <unk>.
Electing folks by showing them use cases that are relevant and doing that by improving the quality of our personalization and the quality of outreach and a second not letting people lapse in the first place because we connect them with creators and used cases that really resonate in that keeps them using the service more and more often to do more and more different things in their lives.
Yeah.
Thank you Ben.
Yes.
Thank you Mr. Huang.
The next question comes from the line of Colin Sebastian with Baird. You May proceed.
Yeah.
Thanks, I have a couple of questions also.
I guess first off regarding the commentary around new services. The near term revenue headwind I guess, what are your expectations in terms of timeframe needed for those to shift from a negative impact to positive impact.
If there are particular hurdles you're looking for particularly if you are seeing cannibalization in usage away from legacy services and then secondly, with respect to the loss of Gen. Z users just curious from where you can tell us. This part of the cohort that came on during the pandemic or could this be a lots of attention.
Two other platforms.
Okay.
So.
A couple of things one.
Ben I think went into it.
A fair amount of detail on what we're building around our creative strategy, which when we execute we'll bring people back to the platform more frequently and give them a reason not to churn. So I'm excited about the publish subscribe aspect and interest based communities keeping people on the platform.
All that said we're in fairly early innings on all that we just launched our <unk>.
Series of products, a couple of weeks ago, which are a great start I think it will take us.
A few quarters to get that up and running in a way that builds a great ecosystem across the creator community in our user base.
And the reason why I think it takes time as we're been started we take a long term.
Investment philosophy on these big new initiatives, if you go back to <unk>.
What we did around international audiences and monetization and that was a multi year effort to localized content make sure the user experience resonated outside of the U S and the same way it does in the U S across the world.
And make sure that that.
Advertising opportunity as those robust relative to market sizing and those those places as what we've seen in the U S. So that has taken US a few years and we're seeing great success.
And going back to.
I think it was Mark's question around.
What does that mean it means we're still opening up more Latin American markets next year, three more markets will open up Japan next year as well and so those things take years to unfold.
The same was true with shopping.
There was a two sided marketplace, where we need it.
Dedicated high intent surfaces for users to find products.
We needed the merchant community to upload catalogs in a way that would provide the opportunity for us to serve the right organic content or promoted content to the right user at the right time relative to that commercial intent.
Our focus was on making sure the user experience work first and were now monetizing that.
That shopping experience.
Better and better over time, but our first focus is on making sure the user experience is positive.
The same will be true on these idea pen creator ecosystem investments, we're making I am highly confident that we will drive session frequency depth of engagement around rich discovery opportunities.
Publish subscribe model will bring people back more regularly around interest based communities and I think that this will be a terrific platform for shopping over time.
But it will take us.
This is not a next quarter.
You'll see a turnaround in engagement. This is a longer term investment for us.
On the Gen Z point.
Our best belief as people went back to school in person.
And relative to a year ago the amount they spent less time and not Gen Z community on <unk>.
Our platform. We also had if you remember a year ago, we had an iOS.
Update and there was a fair amount of engagement around wallpaper.
That was I think we called out 4 million users in the first quarter of last year, which was roughly split.
Geographically similar to the way, we look at our global audience.
Terms of impact and so that was a bit of a headwind in the third quarter, but the biggest thing that we're looking at is people just going back to school and spending less time on pinterest.
In that cohort.
Thanks, Tom.
Okay.
Thank you Mr. Sebastian.
This will be our last question from the line of Rob Sanderson with loop capital you May proceed.
Mr. Sanderson your line is open.
Thank you Mr Sanderson.
Thank you Mr Sanderson.
I'm sorry, operator.
Rob on the line or should we move to close the call.
Mr. Sanderson did not answer you can now conclude the call.
Great I'll hand, it over to Ben.
He ran the call.
I just wanted to thank everyone again for joining and for all the thoughtful questions.
I want to thank again, the pinterest team for another quarter or framework, we look forward to keeping the dialogue going and enjoy the rest of your day or evening.
That concludes the Pinterest first quarter earnings call. Thank you for your participation you may now disconnect your lines.
Yeah.