Q4 2021 Pinterest Inc Earnings Call
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Good afternoon.
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Welcome to today's Pinterest fourth quarter earnings Conference call. My name is Jordan and I'll be coordinating your call today.
To Register a question you may do so by pressing star followed by one on your telephone keypad now going to hand over to Neil Doshi head of Investor relations to begin.
Please go ahead.
Thank you Jordan good afternoon, and thank you for joining US welcome to Pinterest earnings call for the fourth quarter and full year ended December 31 2021.
Neil Doshi head of Investor Relations for Pinterest, joining me today on the call are Ben Silbermann interest, President and CEO and Todd Morgan, 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 operation and outlook, including the impact of the COVID-19 pandemic may be considered forward looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. In addition, our results trends and outlook for Q1 2022 and beyond.
Our preliminary and are not an indication of future performance.
We're 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, 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 Dot Pinterest, Inc. Dot Com and now I'll turn the call.
Over to Beth.
Thanks, Neal and hi, everyone. Thank you for joining the call.
2021 was an important year for Pinterest, we remain laser focused on helping everyone get inspiration for their lives and building a dedicated space online to plan and create their futures.
Believe that the demand for positive place to plan their future will only continue to grow over the long term.
That's why we spent the past year investing heavily and evolving how we inspire pinterest by building a new publishing platform for creators we.
We believe that when we connect printers, not just with great ideas, but also with the great creators behind them enrich new formats like short form video. The overall experience is more inspirational.
And when people are more inspired do more planning and shopping advertisers are able to reach consumers with more intent and that in turn drives more value for pinterest.
In 2021, we made our publishing tools available in 37 markets and launched 150, New features many of which were released in October .
So it's still very early but we're already seeing signs of promise specifically arising session frequency and time spent for people who followed multiple creators.
This supports our hypothesis that our investments in native content can be engagement accretive over time.
We believe that with sustained investment, we'll see these trends grow as more and more printers find and follow creators paybacks.
We know we are building this new platform in a challenging environment in.
In Q4, we saw monthly active users decreased 6% year over year to $431 million.
This was primarily due to the continued unwinding of the pandemic lower traffic coming from search and increasing competition for user attention.
We're clear eyed about these recent headwinds and we believe that over the long term, our new polishing platform will deepen engagement by painters.
We're also continuing to improve the core experience to help surface. The most relevant content at the right time.
With shopping we're building a more dedicated experience to help people discover and buy what they love as well as expanding our test of seamless checkout.
We're also working to improve the advertiser experience, helping them optimize their budgets and more effectively measure performance with the changing privacy landscape.
And we're working to build on the business milestones, we achieved in 2021, where we surpassed $2 billion in revenue for the year growing revenue, 52% over the previous year.
We also posted our first full year of GAAP profitability.
Our aspiration is to build an end to end platform that give people great inspiration and the tools to buy to make and to do those ideas for their lives all in a space that is both positive and encouraging.
We believe that the world needs us and Thats why we are increasing our investment to build it and I'm confident that our team is up to the task.
So now I'll turn it over to Todd who will share more.
Thanks, Ben I'll share. Some further details on the trends that we saw in the fourth quarter and provide a preliminary outlook for the first quarter of 2022.
We were pleased with the financial results that we delivered in the fourth quarter.
Revenue grew 20% year over year to $847 million with an adjusted EBITDA margin of 41%.
While most of the details about our financial performance are in our shareholder letter.
I'd like to provide some additional color.
Strength in the quarter came from large retailers mid sized and managed small advertisers and international markets.
This was offset by muted demand from CPG advertisers, who continued to face pressure from supply chain issues.
Furthermore, with the continued distribution and placement of idea pins during the quarter, we estimate that the negative impact to our fourth quarter year over year revenue growth was in the mid single digits similar to the third quarter.
This impact was factored into our guidance for the fourth quarter.
I wanted to take a couple of minutes to discuss fourth quarter engagement, particularly in the U S.
Our U S monthly active users declined 12% year over year to $86 million, primarily due to pandemic easing relative to the year ago quarter.
We also believe that time spent on competing video app platforms contributed to the year on year declines.
Furthermore, our monthly active users were negatively impacted from lower search traffic due to Google's November algorithm updates in fact.
More than half of the Q3 to Q4 sequential decline in U S. Monthly active users was attributable to Google's algorithm updates starting in mid November .
We're examining the overall impact from recent search algorithm changes as it appears to be more persistent than we've seen historically.
<unk> are working diligently to understand this but it may take some time.
Looking at users by platform U S monthly active users coming to Pinterest from the web desktop and mobile web declined around 30% year over year, while U S monthly active users coming to Pinterest for mobile apps, who account for a significant majority of our impressions and our revenue declined around 6%.
Year over year.
We're taking a number of steps to increase engagement on pinterest.
First we're investing in native video content and a creator led content ecosystem timber.
In the long run we believe that this can be engagement and revenue accretive as Ben mentioned, the early data make us cautiously optimistic.
But bending the curve on overall engagement will require us to scale this effort with sustained execution over several quarters.
In the near term, we plan to invest in our core discovery and planning engines to provide our users with a richer even more personalized experience across our various surfaces.
Plan to apply more data and larger models to our sophisticated machine learning stack to help with content recommendations home feed personalization.
And an improved search experience for existing previous and new users who come to pinterest.
Turning to our preliminary outlook for Q1.
In my remarks last quarter, I noted that engagement trends on Pinterest had not yet returned to pre pandemic norms.
Specifically to the mix of at home versus out of home use cases that we saw in 2019.
In Q4 of these trends began to normalize for example, the propensity of printers to adopt use cases like home decor or cooking in the fourth quarter of 2021 with similar to what we saw in the fourth quarter of 2019.
As we revert to our pre pandemic use case mix, we expect that the pandemic unwind will be a less meaningful engagement headwind as we move through 2022.
Particularly after mid March when we will lap the widespread easing of lockdown restrictions.
That said engagement headwinds from search algorithm changes and from time spent on competing platforms are more persistent.
And could potentially disrupt normal seasonal trends.
Given this context, we think it's most helpful to tell you where what we know today.
As of Tuesday February <unk>.
U S monthly active users were approximately $86 6 million.
And global monthly active users were approximately $436 8 million.
On the revenue side, we expect Q1 revenue to grow in the high teens on a percentage basis year over year.
Please note that our Q1 revenue guide takes into account a few considerations.
First the macro environment remains challenging for our CPG advertisers, who are still dealing with supply chain and other macroeconomic issues.
We believe this headwind could persist for a few quarters.
Second we continue to monitor the impact that higher CPA is could have on our more price sensitive advertisers.
There are some exogenous factors that appear to be resulting in higher CPA is including overall demand for digital ads from advertisers.
On Pinterest, specifically if engagement declines continue we could eventually expect to see some constraints on or monetize mobile supply and in turn higher CPA.
This supply constraint is not something that we're seeing today, but we're monitoring it carefully at the same time, we're investing in a number of opportunities to monetize our existing supply and to help advertisers achieve their goals.
Third our investment in idea idea pins and native video content will likely be a modest headwind to revenue in future quarters as it was in Q4.
However, we believe that <unk> will be both engagement and revenue accretive over time.
Finally, I wanted to ask.
Touch on expenses.
non-GAAP operating expenses in the fourth quarter grew 27% year over year.
This year, we plan to accelerate our investments in the business in accordance with our key strategic priorities of inspiring content shopping.
Our <unk> experience.
And advertisers' success.
We expect our first quarter non-GAAP operating expenses to grow around 10%.
Order over quarter sequentially.
As we continue to scale, our investments and our native content ecosystem, our core pinner experience and head count across research and development and sales and marketing.
For the full year, we expect non-GAAP operating expenses to grow around 40% year over year.
The sequencing of that spend may change from quarter to quarter, but we would suggest you look at the quarterly growth cadence in 2021 as a likely template.
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.
Yes.
Thank you as a reminder, if you'd like to register a question. Please press star followed by one on your telephone keypad. If you change your mind. Please press star followed by two and please ensure your mute when speaking.
Our first question comes from Ross Sandler of Barclays Ross The line is yours.
Okay.
<unk>.
It's not really a nice way to ask this so I'll just try to ask it anyway, but there has been some pre.
With the recent.
Press reports that pointed to a number of senior executives, leaving the company recently, but can you just comment on what's going on with that.
Is that not accurate.
How you feel about the senior management ranks as we look at your agenda in 'twenty two and then.
You guys have watched it.
One of the fastest growing products in the history, so any way to just put some numbers around.
How big this could be in 'twenty. Two is it still too early or are you expecting us to be a needle mover in terms of engagement. Thanks a lot.
Sure Ross.
I will take your questions in turn so first of all taking a step back you know a lot of people are coming out of the pandemic and they're reassessing their careers and so along with many companies.
See what some people are calling a great employee reshuffle, but based on conversations with some of our peers. We believe that our attrition rate, it's roughly in line with others and I'd also remind everyone that we've been hiring pretty aggressively we grew head count by 27% over the last year.
<unk> has covered our pet prices cover some recent departures and many of the folks in articles that were named or people that joined pre IPO several years ago. They joined our relatively small private.
And a company they made an incredible contribution I'm grateful for what they've done and I am excited for a lot of them to take their next step and bigger roles at smaller companies or in some cases changing industries entirely.
I would also say that we just have an amazing bench of talent here at Pinterest and it provides our existing employees.
Take on more responsibility and to step in and new leadership roles, which we're just thrilled about.
Finally, we've been able to welcome some great senior talent in new areas, where we're making investments including shopping and content.
That's kind of the story there.
On your second question is about the watch tab I am glad to say is that we're not breaking out engagement by surface, just yet, but we're really optimistic even though it's early days on the creative effort in general and then watch watch tab, specifically and I would just remind folks why we're making the investment and why we're excited about it.
Reason, we're making the investment really comes down to the core value proposition on Pinterest, which is to provide inspiration and we think short form video and connecting people with real creators is just an enormous opportunity to advance that vision in new ways.
From video is being adopted all over the industry, but today, what we see from most of our competitors is that the innovation on short form video has been focused on entertainment. While pinterest is more focused on providing inspiring and useful experiences that can help people get ideas and then actually realized by making by buying <unk>.
Doing something in real life.
The second reason that we're excited as we think that over time. The creators effort can increase both times spent on the platform, but also the frequency with which people visit.
People often come to Pinterest, when something is going on in their life.
You might want to remodel their home they might want to take on a new life project or plan, a trip and Thats fantastic engagement tends to be more periodic.
If you look at a lot of the largest platforms in the world. They are either social networks with a strong messaging component, which policy back where they have some sort of published subscribed mechanism between creators and their audiences and up until late last year of interest had neither it was really buoyed by the utility of the platform, we think by connecting people to inspiring trade.
Others, who can share their passions and their ideas every day over the long term that can shift. So we're in really early days, but we're excited about both improving the core experience for users and the net impact will have on the business.
Operator next question.
Our next question comes from Eric Sheridan of Goldman Sachs, Eric The line is yours.
Thank you so much for taking the question maybe two if I can as we exit 'twenty, one I'd love to look back and reflect on some of the learnings you had from some of the international expansion efforts, both on the investment side and building out.
Versus what you've seen is monetization has started to come through in some of those international markets and in the release you talked a little bit about some of the markets you're expanding into in 'twenty. Two can we can frame. It in terms of like what some of those investments might be versus what you see at some of the market opportunities, especially in a market the size of Japan.
Yes, Thanks, Eric.
It's a great question, because we're obviously one of the biggest growth drivers.
Clearest.
Opportunities for us to continue the momentum we've had with our great traction with revenue performance is through international markets.
I think the thing that we.
It starts with building a great team, we have some tremendous country leaders, we have some great sales leadership and I'm really excited about the folks that we brought onboard and we've had a lot of hiring over the last year and we've just done a great job of bringing the right people into pinterest with the right leadership team.
That's one.
More broadly we often get the question why weren't we monetizing internationally quicker and part of the reason was we wanted to get the user experience and the advertising experience right both for our <unk>.
Centers and to make sure we are delivering great results to our advertisers when we started to monetize internationally.
And that's what we've done we've proven that our full funnel advertising platform works in the U S. We built the right AD Tech stack against that we have the right go to market model on the right coverage model that we built out in the U S.
And what we've been able to do internationally is start to replicate the same trends.
There's a lot of learning and a lot of it.
Education and.
And sales that needs to happen because of the nature of this platform.
What we've found and you've asked questions in the past about which kinds of advertisers find success on Pinterest. What we've learned is that those that value being on an inspiration driven platform. One that is brand safe advertisers.
Advertisers value unique insights into the commercial mindset of users' long before they buy something.
And who are open therefore to longer attribution windows.
Those are the advertisers that find success and so we're seeing that same playbook, which takes a little longer to unfold to build those relationships generate that kind of understanding in the advertising community, but when it pays off it's paying off with.
Great Great traction and great growth in those markets that we've opened most notably in Western Europe .
You asked a question about 2022.
In terms of growth, we're opening up in a couple of more countries in Latin America, So, Colombia, Chile, and Argentina will open this year, so extending the reach within Latin America.
And then as you as you mentioned, we're really excited to start monetizing in a very deep AD market in APAC and in Japan. So all of that work is on track and I would expect us to continue to see some contribution from those markets by the end of this year, but it takes time and.
Reflecting on your question, we opened Latin America last year, and while we've seen some early contribution.
Got a long way to go and I think thats exciting for the future growth potential of the company.
Great. Thanks for the color.
Operator next question.
Our next question comes from Mark Mahaney of Evercore ISI.
Please go ahead.
Okay. Thanks, I'll, just ask about MA user of the monthly active users and I know you've talked about this a little bit before but just please double click on it.
Whats going to cause North American may use two to stabilize and then start growing again like what what series of steps are you going to be looking for in order to gain conviction that you'll be able to get back to kind of that reasonable growth you had pre COVID-19 .
Covid rise and fall thanks.
Yes, Mark I don't know if.
I'm happy to start and then Ben can weigh in a little bit on the product work that we're doing I think the.
The short answer to your question is.
We're investing in our short form video content creator led content native content ecosystem to address exactly that point and we think thats the path toward enriching the user experience and building connections to shopping experiences over time that will drive frequency of use more people to the platform and over time.
The connection to shopping and commercial activity that will differentiate the platform both with respect to users and advertisers. So that's the the overall longer term answer. We're also focused on making the user experience more rewarding this year by leveraging the data we have increasing personalization improving our recommendation and.
And so continuing a lot of the things that we've talked about over the last couple of years to further build out a really rewarding user experience and I think that will drive more people to the platform for more things in their life more session frequency and ultimately more conversions.
Economic activity.
I don't know if it came through clearly before but the.
In terms of stability, we're looking at a couple of things one is <unk>.
Last quarter, we talked a lot about the pandemic impact we had the benefit of the pandemic.
From an engagement standpoint, when folks locked down we shifted user behavior shifted to more at home use cases versus out of home use cases.
Because of our strength and use cases associated with at home activities, we benefited that reversed last year in the spring.
Went out of home use cases became more prevalent.
We saw the unwinding of some of those engagement gains and user growth.
We.
The Q3 to Q4 did see a large impact globally and in the U S from the search algorithm changes from Google and so sequential growth. The bulk of that decline Q3 to Q4 was not pandemic related it was more related to search algorithm changes that drove less search related traffic to pinterest.
You stripped out the impact of that digits year over year.
Internationally, we were up 11% in the U S. We were down around 6%.
So much more resilient engagement with respect to the users who are the deepest most dedicated resilient users who drive the bulk of our impressions time spent and revenue I don't know if thats helpful. But I don't know if you want to.
Taiwan with respect to the investments, we're making in product.
I thought you did a great job getting an overview mark the only thing I would add is we've talked about kind of three different kind of investments that we're making investment in creators and investment in shopping so when people see things. They can buy them and then of course the investment in our core personalization discovery experience.
But if you take a step back as a user like our aspiration is to build one coherent experience, where all three of those things play an important role.
Today, there are places to connect with your friends there places to be entertained, but our vision is to build kind of inspiration to realization platform, where you visit you check with traders that are aligned with their interests. We understand your tastes can we recommend individual products and then you can eventually buy those things directly and then end to end experience is something that doesn't exist online.
So these three investments will play out over time.
I would say the trainers is the earliest most of those features just launched in October but it adds an important new element. This year will continue to improve our shopping experiences will expand our test of native checkout will build more dedicated and personalized services on top of the shopping API and then we're always investing in fact core personalization relevance and Thats really been buoyed.
By advances in machine learning and computer vision, which are core competencies for the company. So this is really charting a different course I know in these calls everything gets reduced down into time spend and ads and that's of course fundamental things that we look at all the time, but we're really focused on owning this inspiration to realizations space in the market. We think that is.
Very differentiated from social networks and from share entertainment platforms and the three investments that Todd mentioned on creators shopping and personalization are all driving towards that common vision.
Thank you Ben Thank you Todd.
Our next question comes from Brian Nowak of Morgan Stanley Brian . Please go ahead.
Sure. Thanks for taking my question, let me, let me ask one about sort of the investment areas on the advertising or the monetization side I mean, I know you typically have a pretty robust pipeline of different types of innovation that you're focused on to deliver more return for your advertisers as you look into 2022.
What are the products or areas than where maybe you're most excited to really invest in and roll out do you think can really move the revenue for you and also really deliver more return for your advertisers throughout 2022.
Sure Brian .
I'll talk about for kind of themes that are advertising in shopping teams keep in mind, and then I'll go into them in a little bit more detail and the first one we talked about before but its automation. So we're going to continue our automation journey, especially automating AD campaign management.
The second is going to be relevant and optimization.
Third, which Todd touched on was international expansion and then finally shopping and I'll just walk through them individually and I think together they will give you some more color on the journey that we're on.
So look just starting with automation, we still believe that we have a lot of runway as the automated AD campaign management.
Our goal has always been that an advertiser should be able to show up with their budget their goals and their content and pension should take care of the rest and we're still pretty far away from doing that so in the past you've heard us talking about bidding automation, but this year. Our investments are really directly linked to providing more value to mid sized and small advertisers that are natural fit for pinterest.
And so that should result in increasing the efficiency of our ads marketplace.
Delivering greater value.
Second is relevance. This is sort of this thing that never stops, but we really believe we have room to improve our relevance engines, which should further improve the efficiency of our ads.
Underlying that is leveraging our taste graph and leveraging machine learning so when people see ads they feel just like content.
Third we talked a little bit about international advertising Todd did a great job of covering that we're expanding into new markets and I'm really excited that the team that we built there and a playbook that we've developed over the last few years, we're kind of learning with each subsequent market how to get off our feet a little bit quicker.
And then finally, when we look across all of our surfaces, we know that the shopping surface in particular, the surface with the highest commercial intent still a huge headroom for monetization. So we're investing in building that great consumer experience first.
We see year over year increases in the number of people doing product searches amount of time that they are spending on shopping surfaces and we're also simplifying our shopping AD formats sub brands can just more easily promote their products.
There's a lot there.
We'll be experimenting with idea pins monetization and we expect that to lag we're going to wait for that.
That creator economy to sort of get up to speed, but we think there is some pretty significant drivers of future revenue growth that we're still in the early innings of pursuing.
Okay. Thanks Pat.
Our next question comes from Rich Greenfield of light chat partners.
Rich the line is yours.
Hi, Thanks for taking the question.
Like last year, there was obviously a lot of speculation surrounding salesforce acquiring you are looking to acquire.
The question is especially when you sort of highlight Ben the challenges of platform changes and how tweaks.
I guess, you're looking at what happened with iOS.
<unk> 15, and and meta looking at sort of the way Google continues their algorithm I guess it all just sort of begs. The question is the size and scale look increasingly important in the broader media tech ecosystem and I guess, even commerce ecosystem I would say, how do you think about sort of where interest.
And are you open to consolidation like how do you think about sort of where ultimately you need to be to accomplish what you want.
Sure Rich.
Well I think there are two parts to the answer first like as CEO and fiduciary I'm always keeping an open mind.
But I really do believe that we have a pretty unique place in the market and I touched on it before but I can go into a little bit more detail.
First there is a huge audience since coming to pinterest for something that's fundamentally different than what they come to other platforms, they're not they're not coming to connect with friends. They are actually coming to envision their future and to plan for it and increasingly we're getting better and better at helping them do that planning connecting with the people that can share the knowledge and the inspiration to advance that.
And then eventually connecting retailers ended the individual products they need.
Really think that planning your future that's a fundamental human need that's not going away and we're laser focused on targeting that need above all of the other ones.
Second thing I'd say is that Pinterest sits at this pretty interesting intersection of a few trends that are really secular growth trends in the industry Commerce is one of those.
And we have a lot of people coming with the specific intent to do something but they may not have settled on a specific product, they're looking for and I think that space of shopping not just buying but actually shopping discovering what youre looking for funding some of the line securities that's still quite open.
And then finally, we're investing in a creator ecosystem in online video and I truly believe that video and mobile video. It is still in its infancy as an industry.
Believe that we're going to see virtualization happening over time, and we're well positioned to pioneer new media formats to do both inspiration, but also allow creators to facilitate action and providing different revenue models for them and being a real source of economic growth for that new <unk>.
Creator business.
And just to be clear, we've laid out over the last few years.
Just just to be clear when I think Todd made a comment about the potential risk to growth on sort of engagement types of competition.
I mean are we speaking specifically about tick tock or is there something else beyond something like Tictoc that youre looking at competitively.
Could have impact in the future.
Sure. So I mean look we take we take all competition seriously I would argue that competition for kind of user attention in time right now.
Probably the most competitive industry in the world. So of course Tictoc, we think about we think about.
Meta we think about Google, but we also really try to focus on what we can offer to differentiate it and that was the spirit of the last answer I Hope that's helpful got it.
Thank you.
Our next question comes from Doug Anmuth of Jpmorgan. Please.
Please go ahead.
Great.
Thanks for taking our question.
The first one.
Do you have any views to Cheryl why Google algorithm changes.
Hey, guys more recently and how to think about threat traffic metrics.
<unk>.
Sure I mean going forward and then secondly could you give us some update on where you are with the native checkout piling are predominantly behind us.
Yes, I think couple.
Couple of questions in there one was around direct traffic and search driven traffic and then the other was on native checkout on the second we just started piloting and testing native checkout and we look forward to continuing to scale and broaden those efforts over the course of the year. So it's still pretty early days.
On the direct traffic mix I tried to lay out a couple of ways I've been thinking about one was the bridge on sequential and.
Year over year trends with respect to <unk> and I wanted to give you a little bit more color on that direct you.
Usage mobile app usage to give some color on the difference between search driven traffic and search driven meus versus those that are direct for the reason that you described.
The truth is that Google makes algorithm changes regularly we didn't see another one in November that had a material impact which is why we're calling it out it's not the first time, it's happened in <unk>.
We are working on how to best factor that into our product mix and respond to it but the long term answer is to have a robust native content ecosystem, which we're building and I think that'll be the long term answer on engagement.
Got it thank you.
Thanks.
Our next question comes from Colin Sebastian with Baird. Colin. Please go ahead.
Alright, Thanks, guys. Good afternoon, two for me as well I guess first off I wanted to follow up on some of disparity in performance between the mobile App and desktop.
I know a lot of the work you've done on personalization and native content for example might be more concentrated in the app.
True as the App.
Usage and engagement level of our trend is that is that a better gauge for what overall the platform might look like down the road.
In terms of engagement and then and then secondly, I know you added a chief content officer from Youtube and I think <unk> experience was with a lot of premium content and <unk> content creation. So I'm wondering if Youtube strategy in those areas.
Somewhat of a template for what you hope to achieve with respect to video brought onto the platform. Thank you.
Colin why don't I start with the.
The question on.
The search driven traffic and then I'll, let Ben talk about the team and leadership piece.
We've talked there remember back to our when we were marketing the company on the road show, we talked about a lot of our user growth being different on pinterest versus social media, it's not a viral product where if he joined UN immediately invite 70 or friends.
More linear in terms of growth and it's driven largely by word of mouth.
Search driven traffic is kind of a way of getting word of mouth and its automated youre looking for a new idea content that is recommended to you and you discover pinterest. So it's an important top of funnel.
Growth driver and it is also and importantly visitation driver.
For those reasons, we think it's an important part of our engagement because it is a source of re visitation and therefore, reducing churn ultimately RMA use are a byproduct of that and it introduces people to pinterest potentially for the first time to solve new problems in their life.
I wanted to give the color on the mobile app usage, because that is where people spend the bulk of their time impressions and revenue opportunity, but the two are very important when considered together. So that's why we've broken it out the way we did.
Yes, Colin and as you pointed out we welcomed Malik from Youtube is our first.
Chief content officer, it kind of reflects the role and the importance of content on the platform going forward look I would say that there are a few things one is.
As a company we have a lot to learn about audience development, we really impressed with kind of a lease analytical problem solving as well as his experience in both premium and user generated content.
Other thing that I was really interested in is that pinterest really wants to be a place where the content that we serve to folks.
Is nourishing is positive and is inspirational I think over the last few years a lot of our users have appreciated that while many services online.
We have quite a bit of polarization of toxicity or sometimes content. They don't feel like it's enriching interest has tried to have a little bit of a tighter focus on something thats positive and inspiring and thats because thats core to our mission right. If youre thinking about them being inspired for your life. It's important that you're in an environment, where the content is positive overall and so.
Looking at some of his experience working with.
More positive content ecosystem, whether it's like Youtube kids or on the premium side I thought bought some really important insight.
I'd also share that we are building a whole team and so there's always a lot of attention on leaders, but I'm excited about the team's ability to move fast and innovate.
Really chartered some path because I think that all of these content platforms. While in their initial days. They may look similar or theyre going to end up looking different than <unk> and so we're going to need to really follow the pinterest users and develop the content offerings that really works towards our mission of inspiring them in their day to day life.
Okay. Thank you.
Our next question comes from Lloyd Walmsley of UBS. Please go ahead.
Yeah.
Hi, Yes. This is a cost drag along or Lloyd two questions. If I may.
Firstly can you talk about trends in higher frequency metrics like weekly active users or maybe overall time spent or you're seeing us outperform relative to MDU and then the second question would just be you mentioned, how some of the newer formats are driving increases in frequency. What are you seeing with respect to shopping in particular are you seeing.
In consumer to leverage the shopping functionality, we actually come back with greater frequency or is it more.
And the idea is in video.
Yes. Thank you.
I can start.
Thanks for the questions so on the additional metric.
The metrics that you were asking about weekly active users time spent et cetera, we do disclose the ratio and our public filings.
On annual basis around weekly active users as a percentage of monthly active users and that's been pretty stable over the last few years. So that's the answer on one.
With respect to shopping.
We are seeing a much better user experience enabled by a lot of the investments we've been making over the last few years dedicated shopping surfaces that allows users to go from idea to purchase in a much more natural kind of shopping.
And a much more natural shopping journey and at the same time, we've dramatically improved the amount of inventory, we can serve with our catalog ingestion work and the Apis that we've developed as a result of that we've seen the number of users who are engaging and shopping surfaces grow pretty meaningfully we're up 20% sequentially from Q3 to Q4 and 20 <unk>.
Year over year, so really encouraging and I think there are a lot of connections that we can build.
Over the next few years across this native video ecosystem, our creator led.
Content ecosystem, coupled with a lot of the shopping investments, we're making should make a really differentiated experience on pinterest.
You May have also noted that.
We got some press a couple of days ago.
Sure.
Some of the products, we've been shipping that has really improved from a technology perspective, our ability to deliver pretty interesting shopping experiences. So really excited about some of the innovation that our teams have built.
Our next question comes from.
Thank you our next question comes from.
Tom Justin Post of Bank of America, Justin. Please go ahead.
Great I'll ask just one <unk>.
Revenues really accelerated during the pandemic and you were able to reach 32% margins for EBITDA last year. So it looks like youre going to be doing some more investing next year. What have you learned about the margin potential of the business. It did have a.
A banner year with respect to performance, we gross margins were at.
Incredibly high levels are.
Our spend profile.
We continue to invest aggressively our head count growth I think a year ago was like 15% in the fourth quarter that ticked up a few points every quarter.
In the fourth quarter of this year.
We're investing a lot further more head count growth.
Is that we have.
A great business model.
And that the business is working I think we've also interim only come to the view that the long term.
Potential of the company needs to be enabled by further investments over the course of this year.
Which is how we landed at the guidance that we.
Suggested which is a lot of confidence that when we made.
Make investments with the right plan.
We know what we're looking at to gauge success and we hold ourselves to that from an execution standpoint, we have a pattern of delivering great results.
That started a few years ago, when we were building or rebuilding our international audience.
Our growth rate and international users had been ticking down and with concerted effort the right investment plan and great execution, we turned that around and Reaccelerate weed.
We built our monetization plan in the U S that was forward investing in building our business and that worked well we did the same thing for international monetization and again, we've talked about this in the past.
Put a lot of investment in.
And then in creating a compelling shopping experience from a user perspective and are now building a business around that.
So I am confident that like all of those other projects our long term focus the strategic outcomes that we're looking for the right answer for this business over the next few years and accelerating our investments again next year will help us deliver against that is that helpful.
Yeah, great. Thank you.
Okay.
Operator, we will take our last question.
Our final question will come from Rohit Kulkarni. Please go ahead.
Hi, Thank you two if I could.
One is just in the past year.
Engagement trending one way or the other.
I just wanted you to do that.
Okay.
Showcased in that.
The talent level. So if you didn't.
I'm just going to unlike a.
A lot of the.
I don't think there is an inflationary.
The homes that will.
<unk> spending versus <unk>.
Home use cases.
And another question is on NIM managed horses.
Automated advertising campaigns.
If you could just follow what.
What type of advertisers are choosing one versus the other three that you use.
Think that.
And I think that as it goes from our managed fleet.
Ethan.
<unk>.
Completely automated ad campaign.
So maybe two questions. Thanks.
Why don't I I'll start with the second question I think.
We've seen a lot of success.
SaaS and our managed advertising community those that we cover both with respect to field sellers all the way through our kind of mid market.
The coverage team.
And we've been making a lot of investments in automating our AD stack to make it easier for those advertisers to onboard scaled our spend and increasingly see the results of that spend.
We're not as we would like it to be to have an unmanaged long tail advertiser base on the platform and so we've been focusing on the managed go to market model until we get that up and running and we've been making all the right investments seeing all the right returns.
With respect to building that AD stack. It will just take some time before we get there.
So thats one I don't know Ben if you wanted to talk about these cases.
<unk> use cases, often reflected what's going on in broader society.
So as Todd mentioned.
Hoping for that also say on Pinterest itself.
We've always had historical strengthen in some core lifestyle verticals.
One of our hopes is that as we scale.
Creator ecosystem and give creators to ability to directly build their own communities.
Trust will start to see some expansion.
See different types of use cases emerge still early days, but again, it's kind of one of the benefits. If we can build that ecosystem and so we're excited to continue investing that because we think it will advance our mission of inspiring people and helping them create OSA level.
Yes.
Great. Thank you for joining our call everyone and we'll see you next quarter.
This concludes today's call. Thank you for joining you may now disconnect your lines.
Okay.
Yeah.
Okay.
Okay.
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