Q3 2023 Pinterest Inc Earnings Call
Good afternoon. Thank you for attending today's Pinterest third quarter 2023 earnings Conference call. My name is Anna and I will be your moderator for today's call.
Speaker 1: transcript
Speaker 1: for today.
Yeah.
Speaker 1: transcript
Speaker 1: All lines will be muted during the presentation person of the call with an opportunity for questions and answers as.
All lines will be muted during the presentation person up the call with an opportunity for questions and answers at the end if he would like to ask a question. Please press star one I would now like to pass the conference over to our host Neil Doshi head of Investor Relations. You May go ahead.
Speaker 2: transcript
Speaker 2: If you would like to ask a question, please press star one. I would now like to pass the conference over to our host, Neil Doshi, head of investor relations. You may go ahead.
Speaker 3: transcript
Speaker 3: Good afternoon and thank you for joining us. Welcome to Pinterest earnings call for the third quarter ended September 30th, 2023. Emil Doshi had investor relations for Pinterest. Joining me today on the call are Bill Ready, Pinterest CEO and Julia Donnelly, our CFO . Now we'll cover the safe harbor.
Good afternoon, and thank you for joining US welcome to Pinterest earnings call for the third quarter ended September 32023.
Neil Doshi head of Investor Relations for Pinterest, joining me today on the call are bill ready Pinterest, CEO and Julia Donnelly, our CFO now I will cover the safe Harbor.
Speaker 3: transcript
Speaker 3: Some of the statements that we make today regarding our performance, operations and outlook may be considered forward-looking and set statements involve a number of risks and uncertainties that could cause actual results to differ materially. In addition, our results, trends and outlook for Q4 2023 and beyond are preliminary and are not an assurance of future performance.
Some of the statements that we make today regarding our performance operations and outlook 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 Q4 2023 and beyond are preliminary and are not uninsured.
<unk> of future performance.
Speaker 3: transcript
Speaker 3: 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 RISF Actors discussed in our most recent forms, 10Q.
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.
Speaker 3: transcript
Speaker 3: or 10K file that the SEC and available on our Investor Relations website.
Our 10-K filed with the SEC and available on our Investor Relations website during.
Speaker 3: transcript
Speaker 3: During this call, we will present both GAP and non- GAAP financial measures. A reconciliation of non-GAP to GAAP measures is included in today's earnings press release and presentation, which are distributed and available to the public through our Investrelations website located at investor.pinterestink.com.
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 presentation, which are distributed and available to the public through our Investor Relations website, located at Investor <unk> Pinterest, Inc. Dot com.
Speaker 3: transcript
Speaker 3: Lastly, all growth rates discussed in today's prepared remarks should be considered year over year unless otherwise specified. And now we'll turn the call over to Bill.
Lastly, all growth rates discussed in today's prepared remarks should be considered year over year, unless otherwise specified and now I will turn the call over to bill.
Speaker 3: transcript
Speaker 3: Thanks, Neil. And thank you all for joining our third quarter, 2023, earnings call. We made great progress in Q3 as we accelerated our revenue growth and strengthened our fundamentals.
Thanks, Neil and thank you all for joining our third quarter 2023 earnings call. We made great progress in Q3, as we accelerated our revenue growth and strengthen our fundamentals.
Speaker 3: transcript
Speaker 3: Our efforts in deepening engagement and growing monetization are yielding results.
Our efforts in deepening engagement and growing monetization are yielding results.
Speaker 3: transcript
Speaker 3: We ended the quarter with 482 million monthly active users, up 8% to an all time high, exceeding our peak users from the pandemic period surge by refocusing on Pinterest's unique differentiators as a visual search, discovery, and shopping platform.
We ended the quarter with 482 million monthly active users up 8% to an all time high exceeding our peak users from the pandemic period surge by refocusing on Pinterest unique Differentiators is a visual search discovery and shopping platform.
Speaker 3: transcript
Speaker 3: Total revenue was $763 million, up 11% on a reported and constant currency base.
Total revenue was $763 million up 11% on a reported and constant currency basis.
Speaker 3: transcript
Speaker 3: This represents the third quarter in a row of accelerating revenue growth.
This represents the third quarter in a row of accelerating revenue growth.
Speaker 3: transcript
Speaker 3: Finally, the strong revenue growth couple with Disciplined Expense Management allowed us to deliver adjusted EBITDA of $185 million and an adjusted EBITDA margin of 24%. A 1300 basis point improvement from the year ago quarter.
Finally, the strong revenue growth coupled with disciplined expense management allowed us to deliver adjusted EBITDA of $185 million and an adjusted EBITDA margin of 24%, a 1300 basis point improvement from the year ago quarter.
Speaker 3: transcript
Speaker 3: Last month, we hosted Pinterest's first-ever investor day, where we shared an in-depth view of our strategy, the progress we've made to date, and what we're building for the future. It was great to see many of you in person, and if you haven't seen it, you can watch the event on our investor relations website.
Last month, we hosted <unk> first ever Investor day, where we shared an in depth view of our strategy. The progress we've made to date and what we're building for the future.
It's great to see many of you in person and if you haven't seen it you can watch the event on our Investor Relations website.
Speaker 3: transcript
Speaker 3: You heard there for many members or senior management on why Pinterest is unique and different
You heard there for many members of our senior management on why Pinterest is unique and different from other platforms and why we have such a massive opportunity ahead of us.
Speaker 3: transcript
Speaker 3: Pinterest users engage in dynamic multi-session journeys that go from inspiration to action. In other words, people are saving and curing ideas and products they hope to make, do, or buy today and in the future. That means they easily pick up where they left off every time they use Pinterest. With our recommendation getting increasingly relevant each time.
Pinterest users engage in dynamic multi session journeys that go from inspiration to action and <unk>.
Other words people are saving uncured, any ideas and products, they hope to make do or buy today and in the future.
That means they easily pick up where they left off every time, they use pinterest with our recommendations getting increasingly relevant each time.
Speaker 3: transcript
Speaker 3: These user journeys can span many verticals and include a wide variety of actionable outcomes like freshening up your wardrobe, finding gift ideas, or creating a travel eye gallery.
These user journeys can span many verticals and include a wide variety of actionable outcomes like freshening up your wardrobe, finding gift ideas or creating a travel itinerary.
Speaker 3: transcript
Speaker 3: The inspiration to action journey refers us to long and building a shopping. We know more than half our users view Pinterest as a place to shop. So our focus over the last year has been to make Pinterest more shoppable. When users are in a commercial mindset, we can drive better engagement through highly relevant ads, and we can grow monetization by delivering more views, clicks, and conversions, and customers to our advertising partners, thereby fueling our flywheel for engagement and revenue growth.
The inspiration to Ash and journey, we're furthest along in building a shopping we know more than half our users viewed <unk> as a place to shop. So our focus over the last year has been to make pinterest more solvable.
Operator: Good afternoon. Thank you for attending today's Pinterest third quarter 2023 earnings conference call. My name is Anna and I will be a moderator for today's call.
When users are in a commercial mindset, we can drive better engagement through highly relevant ads and we can grow monetization by delivering more views clicks and conversions and customers to our advertising partners, thereby fueling our flywheel for engagement and revenue growth.
Operator: All lines will be muted during the presentation person of the call with an opportunity for questions and answers at the end. If you would like to ask a question, these are star ones.
Neil Doshi: I would now like to pass the conference over to our host, Neil Doshi, how to invest relations. You may go ahead.
Speaker 3: transcript
Speaker 3: This ability to have a full funnel for users and advertisers on the same platform provides compounding benefits to both parties and is one of our core differentiators.
This ability to have a full funnel for users and advertisers on the same platform provides compounding benefits to both parties and as one of our core differentiators.
Neil Doshi: Good afternoon and thank you for joining us.
Neil Doshi: Welcome to Pinterest earnings call for the third quarter ended September 30th, 2023. I'm Neil Doshi, head of investor relations for Pinterest.
Speaker 3: transcript
Speaker 3: We also laid out our financial targets for the future, where we expect to drive revenue growth at a mid to high-teams compound annual growth rate.
We also laid out our financial targets for the future, where we expect to drive revenue growth at a mid to high teens compound annual growth rate.
Neil Doshi: Joining me today on the call are Bill Ready, Pinterest CEO, and Julia Donnelly, our CFO. Now we'll cover the safe harbor. Some of the statements that we make today regarding our performance, operations and outlook may be considered forward looking and set statements involve a number of risks and uncertainties that could cause actual results to differ materially. In addition, our results trends in outlook for Q4 2023 and beyond our preliminary and are not an assurance of future performance.
Speaker 3: transcript
Speaker 3: and expand our adjusted EBITDA margins to reach the low 30% range in the next three to five years. We plan to achieve this by focusing on three key priorities.
And expand our adjusted EBITDA margins to reach the low 30% range in the next three to five years, we plan to achieve this by focusing on three key priorities.
Speaker 3: transcript
Speaker 3: growing users and DPN engagement per user, improving monetization, and delivering profitable growth through operational rigor.
Growing users and deepen engagement per user improving monetization and delivering profitable growth through operational rigor.
Speaker 3: transcript
Speaker 3: Today, Julia and I will provide you with an update on those priorities.
Julien I will provide you with an update on those priorities.
Speaker 3: transcript
Speaker 3: Let's start with our work on growing users and deepening engagement. We continue to use AI to improve the relevance and personalization of our content recommendations, and satisfy user intent on our platform through improved shopping experience.
Okay.
Let's start with our work on growing users and deepening engagement, we continue to use AI to improve the relevance and personalization of our content recommendations and satisfy user intent on our platform through improved shopping experiences.
Neil Doshi: We are making these forward looking statements based on information available to us as of today, and we just claim 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. 10Q or 10K filed with the SEC and available on our investor relations website. During this call, we will present both gap and non-gap financial measures.
Speaker 3: transcript
Speaker 3: As we noted at our investor day, we're seeing strengths with our Gen Z users, who are fastest growing and most engaged users.
As we noted at our Investor day, we're seeing strength with our Gen Z users, who are our fastest growing and most engaged users.
Speaker 3: transcript
Speaker 3: We are also seeing our strongest product market fit in years, as evidenced by our recent cohorts, who save two times more content in their first year on Pinterest relative to older cohorts.
We're also seeing our strongest product market fit in years as evidenced by our recent cohorts, who save two times more content in their first year on pinterest relative to older cohorts let.
Neil Doshi: A reconciliation of non-gap to gap measures is included in today's earnings press release and presentation, which are distributed and available to the public through our investor relations website located at investor dot Pinterest ink dot com.
Speaker 3: transcript
Speaker 3: Let me walk you through some of the product updates we've made that are driving these outcomes.
Let me walk you through some of the product updates we've made that are driving these outcomes.
Speaker 3: transcript
Speaker 3: A MMR efforts to deepen engagement with our users is helping users rediscover existing use cases and find new use cases and categories on Pinterest.
Among our efforts to deepen engagement with our users is helping users rediscover existing use cases and find new use cases and categories on pinterest.
Neil Doshi: Lastly, all growth rates discussed in today's prepared remarks should be considered year over year unless otherwise specified, and now we'll turn the call over to Bill.
Speaker 3: transcript
Speaker 3: During a quarter, we launched the More Ideas tab at the top of the home feed to allow users to easily access their board themes and quickly refocus on an ongoing use case.
During the quarter, we launched the more ideas tab at the top of the home feed to allow users to easily access the board themes and quickly refocus on an ongoing use case.
Bill Ready: Thanks, Neil, and thank you all for joining our third quarter 2023 earnings call. We made great progress in Q3 as we accelerated our revenue growth and strengthened our fundamentals. Our efforts in deepening engagement and growing monetization are yielding results. We ended the quarter with 482 million monthly active users up 8% to an all time high exceeding our peak users from the pandemic period surge by refocusing on Pinterest unique differentiators as a visual search, discovery, and shopping platform.
Speaker 3: transcript
Speaker 3: Our AI recommendation engine builds off of the save content from those boards to recommend additional pins that provide users with more points of inspiration, resulting in strong growth and saving on the platform.
Our AI recommendation engine builds off of the save content from those boards to recommend additional pins that provide users with more points of inspiration, resulting in strong growth in saving on the platform.
Speaker 3: transcript
Speaker 3: We also made continued progress on incorporating shopping into the forefront of the user experience on Pinterest, which is driving engagement by helping users seamlessly pick up where they left off from previous sessions, and complete their inspiration to action journeys.
We also made continued progress on incorporating shopping into the forefront of the user experience on Pinterest, which is driving engagement by helping users seamlessly pick up where they left off from previous sessions and complete their inspiration to action journeys.
Speaker 3: transcript
Speaker 3: Our new Shop The Look module, which we launched in Q2, helps users to easily shop what they see in lifestyle images.
Our new shop, the look module, which we launched in Q2 helps users to easily shop, what they see in lifestyle images.
Bill Ready: Total revenue was $763 million up 11% on a reported and constant currency basis. This represents the third quarter in a row of accelerating revenue growth. Finally, the strong revenue growth coupled with discipline expense management allowed us to deliver adjusted EBITDA of $185 million and an adjusted EBITDA margin of 24%. A 1300 basis point improvement from the year ago quarter.
Speaker 3: transcript
Speaker 3: When a user clicks on one of these lifestyle images, the shop-to-look module will appear as a carousel within the pin close-up. Within that module, we employ AI and computer vision to then recommend similar viable items within our merchant catalog that users can easily shop. In fact, 70% of the products recommended in shop-to-look are rated as exact or highly relevant match
When a user clicks on one of these lifestyle images the shop to look module will appear at the carousel within the Penn close up within that model, we employ AI and computer vision to then recommend similar buyable items within our merchant catalog that users can easily shop in fact, 70% of the products recommended and shop. The look are rated as exact or highly relevant.
Matches.
Speaker 3: transcript
Speaker 3: We've previously discussed the launch of a new AI-driven guided browsing experience to recommend new content from adjacent use cases based on user interest.
We've previously discussed the launch of a new AI driven guided browsing experience to recommend new content from adjacent use cases based on user interest.
Bill Ready: Last month, we hosted Pinterest first ever investor day, where we shared an in-depth view of our strategy, the progress we've made to date, and what we're building for the future. It was great to see many of you in person, and if you haven't seen it, you can watch the event on our investor relations website. You heard there for many members of our senior management on why Pinterest is unique and different from other platforms, and why we have such a massive opportunity ahead of us.
Speaker 3: transcript
Speaker 3: In Q3, we expanded our guided browsing modules in the US and Canada region to promote more shopping behavior by resurfacing relevant Bible pins based on content users have engaged with in the past.
In Q3, we expanded our guided browser routing modules in the U S and Canada region to promote more shopping behavior by resurfacing relevant Bible turns based on content users have engaged with in the past.
Speaker 3: transcript
Speaker 3: For example, if you previously saved or clicked on a leather jacket and a pair of boots, we can serve a personalized carousel on the home feed, resurfacing those same pens, or related items to encourage you to continue your shopping journey.
For example, if you previously saved or clicked on a leather jacket and a pair of boots. We can serve a personalized care sell on the home feed resurfacing those same pens or related items to encourage you to continue your shopping journey.
Bill Ready: Pinterest users engage in dynamic, multi-session journeys that go from inspiration to action. In other words, people are saving and curing ideas and products they hope to make, do, or buy today and in the future. That means they easily pick up where they left off every time they use Pinterest, with our recommendations getting increasingly relevant each time. These user journeys can span many verticals and include a wide variety of actionable outcomes like freshening up your wardrobe, finding gift ideas, or creating a travel itinerary.
Speaker 3: transcript
Speaker 3: These improvements enable us to show users shoppable content aligned with their interests, with seamless handoffs to the merchant app or website so users can easily purchase.
These improvements enable us to show users sharpeville content aligned with their interests with seamless handoffs to the merchant app or website. So users can easily purchase.
Speaker 3: transcript
Speaker 3: Next, I'd like to discuss how we're improving monetization by making Pinterest more valuable for advertisers as a full funnel platform.
Next I'd like to discuss how we are improving monetization by making pinterest more valuable for advertisers as a full funnel platform.
Speaker 3: transcript
Speaker 3: the continued innovation in our ADSDAQ across formats, tool and measurement solutions, enables us to improve performance for our advertisers and grow our revenues.
The continued innovation in our AD stack across formats tools and measurement solutions enables us to improve performance for our advertisers and grow our revenue.
Bill Ready: The inspiration to action journey refers us to long and building a shopping. We know more than half our users view Pinterest as a place to shop, so our focus over the last year has been to make Pinterest more shoppable. When users are in a commercial mindset, we can drive better engagement through highly relevant ads, and we can grow monetization by delivering more views, clicks, and conversions and customers to our advertising partners, thereby fueling our flywheel for engagement and revenue growth. This ability to have a full funnel for users and advertisers on the same platform provides compounding benefits to both parties, and is one of our core differentiators.
Speaker 3: transcript
Speaker 3: At the lower end of the funnel, which now makes up roughly two-thirds of our revenue, we are focused on helping advertisers gain clicks, conversions, and customers.
At the lower end of the funnel, which now makes up roughly two thirds of our revenue we are focused on helping advertisers getting clicks conversions and customers.
Speaker 3: transcript
Speaker 3: On past earnings calls, we've discussed the success we're seeing with mobile deep links or MDL, where advertisers can now link users directly into the relevant product page and check out experience in their mobile app.
On past earnings calls we discussed the success, we're seeing with mobile deep links or M. D. L where advertisers can now linked direct link users directly into the relevant product page and checkout experience in their mobile app.
Speaker 3: transcript
Speaker 3: This is a great solution for merchants who have standalone apps with broad consumer penetration.
This is a great solution for merchants, who have standalone apps with broad consumer penetration.
Speaker 3: transcript
Speaker 3: As we've noted before, MDL is performing extremely well in our tests. Participating advertisers saw a 235% lift in conversion rates, along with a 35% improvement in their CPAs.
As we've noted before <unk> is performing extremely well and our tests participating advertiser saw a 235% lift in conversion rates, along with a 35% improvement in their <unk>.
Bill Ready: We also laid out our financial targets for the future, where we expect to drive revenue growth at a mid-to-high-teens compound annual growth rate, and expand our adjusted EBITDA margins to reach the low 30% range in the next three to five years. We plan to achieve this by focusing on three key priorities. Growing users in deep engagement per user, improving monetization, and delivering profitable growth through operational rigor.
Speaker 3: transcript
Speaker 3: We're now bringing this solution to those advertisers who either don't have an app or rely primarily on their website for traffic and sales.
We're now bringing the solution to those advertisers, who either don't have an app or rely primarily on their website for traffic and sales.
Speaker 3: transcript
Speaker 3: This product is called direct links, which we launched into three.
This product is called direct links which we launched in Q3.
Speaker 3: transcript
Speaker 3: I'd like to spend a moment to dive deeper into direct links and why I believe this can become a significant unlock for average hiser value.
I'd like to spend a moment to dive deeper into direct links and why I believe this can become a significant unlock for advertiser value.
Speaker 3: transcript
Speaker 3: Direct links bring the user experience similar to MDL to merchant websites. Taking the user from an ad on Pinterest directly to a product purchase experience on the merchant website and just one click.
Direct links brings a user experience similar to M. D L to merchant websites, taking the user from an add on pinterest directly to a product purchase experience on the merchant website in just one click.
Bill Ready: Today, Julian and I will provide you with an update on those priorities. Let's start with our work on growing users and deepening engagement. We continue to use AI to improve the relevance and personalization of our content recommendations, and satisfy user intent on our platform through improved shopping experiences. As we noted at our investor day, we're seeing strengths with our Gen Z users, who are fastest growing and most engaged users. We are also seeing our strongest product market fit in years, as evidenced by our recent cohorts, who save two times more content in their first year on Pinterest relative to older cohorts.
Speaker 3: transcript
Speaker 3: The simplified experience creates a more seamless shopping journey for the user and drives more website traffic and conversions for the advertisers.
This simplified experience creates a more seamless shopping journey for the user and drives more website traffic and conversions for the advertiser.
Speaker 3: transcript
Speaker 3: So far, we've migrated approximately 60% of our lower funnel revenue to direct links and have seen strong results.
So far we've migrated approximately 60% of our lower funnel revenue to direct links and have seen strong results as.
Speaker 3: transcript
Speaker 3: As we noted at our investor day, we saw 88% higher outbound click through rates and a 39% decrease in cost per outbound click for CPC objectives from early adopts.
As we noted at our Investor day, we saw 88% higher outbound click through rates and a 39% decrease in cost per outbound click for CPC objectives from early adopters.
Speaker 3: transcript
Speaker 3: We plan to roll direct links out to the remaining eligible lower funnel objectives, including CPC video ads and conversion ads by the end of Q-124, to increase our penetration of direct links and lower funnel revenue.
We plan to roll direct links out to the remaining eligible lower funnel objectives, including CPC video ads and conversion ads by the end of Q1 'twenty four.
Bill Ready: Let me walk you through some of the product updates we've made that are driving these outcomes. Among our efforts to deepen engagement with our users, is helping users rediscover existing use cases and find new use cases and categories on Pinterest. During a quarter, we launch the more ideas tab at the top of the home feed to allow users to easily access their board themes and quickly refocus on an ongoing use case.
To increase our penetration of direct links and lower funnel revenue.
Speaker 3: transcript
Speaker 3: On the video side, we believe bringing direct links to video will be an important unlock for us given the strength we're seeing with video ads on the platform, especially in a lower funnel.
On the video side, we believe bringing direct links to video will be an important unlock for us given the strength, we're seeing with video ads on the platform, especially in the lower funnel.
Speaker 3: transcript
Speaker 3: And for conversion objectives, results from initial testing have been very strong, driving similarly substantial results as we saw with CPC campaign.
And for conversion objectives results from initial testing have been very strong driving similarly substantial results as we saw with CPC campaigns.
Bill Ready: Our AI recommendation engine builds off of the saved content from those boards to recommend additional pens that provide users with more points of inspiration, resulting in strong growth and saving on the platform. We also make continued progress on incorporating shopping into the forefront of user experience on Pinterest, which is driving engagement by helping users seamlessly pick up where they left off from previous sessions and complete their inspiration to action journeys.
Speaker 3: transcript
Speaker 3: In addition to lower funnel innovation, this year we continued to launch new formats building on our strength at the top of the funnel, such as Premier Spotlight, Showcase, and Quizad.
In addition to lower funnel innovation. This year, we continued to launch new formats building on our strength at the top of the funnel such as Premier spotlight showcase in quiz ads.
Speaker 3: transcript
Speaker 3: These formats help brands interact with the user and tell their story in an engaging way.
These formats helped brands interact with the user and tell their story in an engaging way.
Speaker 3: transcript
Speaker 3: In Q3, we expanded our premier spotlight ads from search to the home feed. And we're seeing good traction from this ad unit among brand advertisers.
In Q3, we expanded our premier spotlight ads from search to the home feed and we're seeing good traction from this AD unit among brand advertisers.
Bill Ready: Our new Shop the Look module, which we launched in Q2, helps users to easily shop what they see in lifestyle images. When a user clicks on one of these lifestyle images, the Shop the Look module will appear as a carousel within the pen close up. Within that module, we employ AI and computer vision to then recommend similar viable items within our merchant catalog that users can easily shop. In fact, 70% of the products recommended in Shop the Look are rated as exact or highly relevant We've previously discussed the launch of a new AI-driven guided browsing experience to recommend new content from adjacent use cases based on user interests.
Speaker 3: transcript
Speaker 3: For example, Maybelline Canada leveraged both Premiere Spotlight on the home feed and search to promote their new concealer. This high-impact format drove a two times higher video completion rate versus the average video campaign.
For example, mailing Canada leveraged both premier spotlight on the home feed and search to promote their new concealer.
This high impact format drove a two times higher video completion rate versus the average video campaign.
Yeah.
Speaker 3: transcript
Speaker 3: Not only are we driving full funnel outcomes for advertisers, we are also helping them measure the value that Pinterest uniquely delivers in privacy safe ways. This is a critical element to our success, especially as we look towards a coogulous future.
Not only are we driving full funnel outcomes for advertisers. We're also helping them measure of the value that <unk> uniquely delivers and privacy safe ways. This.
This is a critical element to our success, especially as we look towards a cookie less future.
Speaker 3: transcript
Speaker 3: We continue to move along the adoption curve for our API for conversions product. Adoption for this product comes from two avenues, direct implementation with advertisers and partner integration.
We continue to move along the adoption curve for our API for conversions product adoption for this product comes from two avenues direct implementation with advertisers and partner integrations.
Bill Ready: In Q3, we expanded our guided browsing modules in the US and Canada region to promote more shopping behavior by resurfacing relevant Bible pens based on content users have engaged with in the past. For example, if you previously saved or clicked on a leather jacket and a pair of boots, we can serve a personalized carousel on the home feed, resurfacing those same pens or related items to encourage you to continue your shopping journey. These improvements enable us to show users shoppable content aligned with their interests, with seamless handoffs to the merchant app or website so users can easily purchase.
Speaker 3: transcript
Speaker 3: Our sales force continues to make great strides in getting advertisers to integrate with our API for conversions. With revenue coverage being a top level goal across the sales organization.
Our sales force continues to make great strides in getting advertisers to integrate with our API for conversions with revenue coverage being a top level goal across the sales organization.
Speaker 3: transcript
Speaker 3: We are also integrating with partners that many of our advertisers plug into. For instance, in Q3, we onboarded several partners like Adobe Commerce and Salesforce Commerce Cloud to help drive more adoption of API for conversion.
We're also integrating with partners that many of our advertisers plug into for instance in Q3, we on boarded several partners like Adobe Commerce, and Salesforce Commerce cloud to help drive more adoption of API for conversions.
Speaker 3: transcript
Speaker 3: Integrating with partners allows us to meet advertisers where they are and enables a more frictionless experience and improving conversion visibility.
Integrating with partners allows us to meet advertisers, where they are and enables a more frictionless experience and improving conversion visibility.
Bill Ready: Next, I'd like to discuss how we're improving monetization by making Pinterest more valuable for advertisers as a full funnel platform. The continued innovation in our ad stack, across formats, tools and measurement solutions, enables us to improve performance for our advertisers and grow our revenue. At the lower end of the funnel, which now makes up roughly two-thirds of our revenue, we are focused on helping advertisers gain clicks, conversions and customers. On past earnings calls, we've discussed the success we're seeing with mobile deep links or MDL, where advertisers can now link users directly into the relevant product page and check out experience in their mobile app.
Speaker 3: transcript
Speaker 3: For example, Pac-Sun, a leading US-based retailer that is popular with Gen Z, seamlessly adopted our API for conversions through our new Salesforce Commerce Cloud app.
For example, Pac Sun, a leading U S based retailers. It is popular with Gen Z seamlessly adopt our API for conversions through our new Salesforce Commerce cloud App.
Speaker 3: transcript
Speaker 3: After installing API for conversions, PacSun saw a 7 times increase in attributed conversion rates.
After installing API for conversions Pac Sun saw a seven times increase in attributed conversion rate.
Speaker 3: transcript
Speaker 3: And as we mentioned during our Investor Day, we are making solid progress here. Our API for conversion solution accounted for 28% of our total revenue as of August , up from 14% at the start of the year.
And as we mentioned during our Investor day, we're making solid progress here, our API for conversion solution accounted for 28% of our total revenue as of August up from 14% at the start of the year.
Speaker 3: transcript
Speaker 3: In addition to helping advertisers measure the value of Pinterest, we're also working toward fundamentally improving our ability to show the right ad to the right user at the right time, which feeds into the overall performance of our ad.
In addition to helping advertisers measure the value of Pinterest. We're also working toward fundamentally improving our ability to show the right AD to the right user at the right time, which feeds into the overall performance of our ads.
Bill Ready: This is a great solution for merchants who have standalone apps with broad consumer penetration. As we've noted before, MDL is performing extremely well in our tests. Participating advertisers saw a 235% lift in conversion rates, along with a 35% improvement in their CPAs. We're now bringing this solution to those advertisers who either don't have an app or rely primarily on their website for traffic and sales.
Speaker 3: transcript
Speaker 3: We've long said that ads, when relevant, are ad-libbed to the user experience. This year, we've made step-function modeling improvements to better match ads to the users for whom they are most engaging and relevant. And as we flex up ad-load with whole page optimization, we're able to serve more of these relevant ads to users who are displaying commercial intent, all of us simultaneously growing engagement on the platform.
We've long said that adds when relevant are additive to the user experience. This year, we have made step function modeling improvements to better match ads to the users for whom they are most engaging and relevant.
And as we flex up AD load with whole page optimization, we're able to serve more of these relevant ads to users who are displaying commercial intent all while simultaneously growing engagement on the platform.
Bill Ready: This product is called Direct Links, which we launched in Q3. I'd like to spend a moment to dive deeper into Direct Links, and why I believe this can become a significant unlock for advertisers' value. Direct Links bring the user experience similar to MDL to merchant websites, taking the user from an ad on Pinterest directly to a product purchase experience on the merchant website and just one click. This simplified experience creates a more seamless shopping journey for the user and drives more website traffic and conversions for the advertiser.
Speaker 3: transcript
Speaker 3: For example, in Q2, we expanded our use of GPU serving to our monetization engine, which enabled us to use model that were 100 times larger.
For example in Q2, we expanded our use of GPU, serving to our monetization engine, which enabled us to use models that were 100 times larger.
Speaker 3: transcript
Speaker 3: As a result, we're able to better use our first party user signals to understand commercial intent and thus show more relevant ads to Maxrad intent.
As a result, we're able to better use our first party user signals to understand commercial intent and thus show more relevant ads to match that intent.
Speaker 3: transcript
Speaker 3: In Q3, we began leveraging a longer history of users on platform behaviors in our ads models. Longer user history means more user signals, which in turn enables us to better predict and surface ads tailored to our user's preferences and tastes.
In Q3, we began leveraging a longer history of users on platform behaviors and our ads models longer user history means more user signals, which in turn enables us to better predict and surface ads tailored to a user's preferences and tastes on.
Bill Ready: So far, we've migrated approximately 60% of our lower funnel revenue to Direct Links and have seen strong results. As we noted at our investor day, we saw 88% higher outbound click-through rates and a 39% decrease in cost per outbound click for CPC objectives from early adopters. We plan to roll Direct Links out to the remaining eligible lower funnel objectives, including CPC video ads and conversion ads by the end of Q124, to increase our penetration of Direct Links and lower funnel revenue.
Speaker 3: transcript
Speaker 3: On search specifically, we made improvements in our ability to match relevant ads to user search queries.
On search specifically, we made improvements in our ability to match relevant ads to users' search queries by.
Speaker 3: transcript
Speaker 3: By utilizing AI and large language models, we were able to more precisely link product metadata to user queries to show ads that are visually and contextually relevant.
By utilizing AI and large language models, we were able to more precisely linked product metadata to user queries to show ads that are visually and contextually relevant.
Speaker 3: transcript
Speaker 3: These two launches drove meaningful improvements across cost per click and cost per action and better ads relevant.
These two launches drove meaningful improvements across cost per click and cost per action and better ad relevance.
Speaker 3: transcript
Speaker 3: Improve capability in our ad delivery model are also important as we think about augmenting our first party sales definition.
Improved capability and our AD delivery model are also important as we think about augmenting our first party sales efforts.
Bill Ready: On the video side, we believe bringing Direct Links to Video will be an important unlock for us, given the strength we're seeing with video ads on the platform, especially in a lower funnel. And for conversion objectives, results from initial testing have been very strong, driving similarly substantial results as we saw with CPC campaigns.
Speaker 3: transcript
Speaker 3: Opening up our platform to third party ad partners will allow us to accelerate monetization by improving ad relevance and auction density.
Turning up our platform to third party AD partners will allow us to accelerate monetization by improving AD relevance and auction density.
Speaker 3: transcript
Speaker 3: As we mentioned during our Investor Day, our first 3P partnership with Amazon Ads is ramping ahead of schedule, and we are pleased with early results, with over 50% improvement in relevance on search and a 100% improvement in relevance on related items in early tests.
As we mentioned during our Investor day, our first three P partnership with Amazon ads is ramping ahead of schedule and we are pleased with early results with over 50% improvement in relevance on search and a 100% improvement in relevance unrelated items in early tests.
Bill Ready: In addition to lower funnel innovation, this year, we continued to launch new formats building on our strength at the top of the funnel, such as Premiere Spotlight, Showcase, and Quizad. These formats help brands interact with the user and tell their story in an engaging way. In Q3, we expanded our premier spotlight ads from search to the home feed and we're seeing good traction from this ad unit among brand advertisers. For example, Maybelline Candle leveraged both premier spotlight on the home feed and search to promote their new concealer.
Speaker 3: transcript
Speaker 3: We noted that we were testing this on search in the US and we are now beginning to roll out this test on our related item surface in the US as well.
We noted that we were testing this on search in the U S. And we are now beginning to rollout. This test on our related items surface in the U S as well.
Speaker 3: transcript
Speaker 3: Consistent with our prior comments on this topic, a partnership of this scale is a multi-quarter implementation with the most meaningful revenue impact likely being in early 2024.
Consistent with our prior comments on this topic a partnership of this scale is a multi quarter implementation with the most meaningful revenue impact likely being in early 2024.
Speaker 3: transcript
Speaker 3: Our extensive upfront work integrating third party demand into our platform has laid the groundwork for more streamlined integrations of potential additional third party partners in the future.
Our extensive upfront work integrating third party demand into our platform has laid the groundwork for more streamlined integrations of potential additional third party partners in the future.
Bill Ready: This high impact format drove a two times higher video completion rate versus the average video campaign. Not only are we driving full funnel outcomes for advertisers, we are also helping them measure the value that Pinterest uniquely delivers in privacy safe ways. This is a critical element to our success, especially as we look towards a coogulous future.
Speaker 3: transcript
Speaker 3: Finally, we're continuing to drive operational rigor through further cost discipline, which resulted in strong EBITDA and EBITDA margin expansion again this quarter.
Finally, we're continuing to drive operational rigor through further cost discipline, which resulted in strong EBITDA and EBITA margin expansion again this quarter.
Speaker 3: transcript
Speaker 3: We are tracking nicely toward our mid to long-term margin expansion goals.
We are tracking nicely toward our mid to long term margin expansion goals.
Speaker 3: transcript
Speaker 3: I'm proud of our teams for all their hard work and execution this past quarter, the results of which are abundantly clear. I'll now turn the call over to Julia, who will provide further updates on our financial...
Bill Ready: We continue to move along the adoption curve for our API for conversions product. Adoption for this product comes from two avenues direct implementation with advertisers and partner integrations. Our sales force continues to make great strife for advertisers and getting advertisers to integrate with our API for conversions with revenue coverage, being a top level goal across the sales organization. We are also integrating with partners that many of our advertisers plug into. For instance, in Q3, we onboarded several partners like Adobe Commerce and Salesforce Commerce Cloud to help drive more adoption of API for conversions.
I'm proud of our teams for all their hard work and execution. This past quarter. The results of which are abundantly clear I'll now turn the call over to Julia who will provide further updates on our financials.
Speaker 2: transcript
Speaker 2: Thanks Bill and good afternoon everyone. Today I'll be discussing our third quarter financial results and provide an update on our preliminary fourth quarter outlook. All financial metrics except for revenue will be discussed in non-gap terms unless otherwise specified. And all comparisons will be discussed on a year over year basis unless otherwise noted.
Thanks, Bill and good afternoon, everyone.
Today I'll be discussing our third quarter financial results and provide an update on our preliminary fourth quarter outlook, all financial metrics, except for revenue will be discussed in non-GAAP terms, unless otherwise specified and all comparisons will be discussed on a year over year basis, unless otherwise noted.
Speaker 2: transcript
Speaker 2: To echo build sentiment, I am proud of our team's execution, which resulted in a great quarter marked by strong, monthly active user growth, continued revenue acceleration, and significant year-over-year adjusted EBITDA margin expansion.
To Echo Bill sentiment I am proud of our team's execution, which resulted in a great quarter marked by strong monthly active user growth continued revenue acceleration and significant year over year adjusted EBITDA margin expansion it.
Bill Ready: Integrating with partners allows us to meet advertisers where they are and enables a more frictional experience and improving conversion visibility. For example, PACSUN, a leading US-based retailer that is popular with Gen Z, seamlessly adopted our API for conversions through our new Salesforce Commerce Cloud app. After installing API for conversions, PACSUN saw a seven times increase in attributed conversion rate. And as we mentioned during our investor day, we are making solid progress here. Our API for conversions solution accounted for 28% of our total revenue as of August, up from 14% at the start of the year.
Speaker 2: transcript
Speaker 2: It is clear that the strategic shifts we have implemented in our business over the last year leaning into the differentiators of our platform and accelerating our ads product velocity are resonating with users and advertisers alike.
It is clear that the strategic shifts we have implemented in our business over the last year leaning into the differentiators of our platform and accelerating our ads product velocity are resonating with users and advertisers alike.
Speaker 4: transcript
Speaker 4: We ended the quarter with 482 million global monthly active users growing 8% and reaching a new all-time high.
We ended the quarter with 482 million global monthly active users growing 8% and reaching a new all time high.
Speaker 4: transcript
Speaker 4: Our investments in increasing shoppability and deploying AI across our recommendation engine are paying off.
Our investments and increasing shop ability and deploying AI across our recommendation engine are paying off.
Bill Ready: In addition to helping advertisers measure the value of Pinterest, we are also working toward fundamentally improving our ability to show the right ad to the right user at the right time, which feeds into the overall performance of our ads. We've long said that ads, when relevant, are ad live to the user experience. This year, we've made step-function modeling improvements to better match ads to the users for whom they are most engaging and relevant.
Speaker 4: transcript
Speaker 4: In the US and Canada, we had 96 million monthly active users, up 1% year over year. And we added approximately 1 million users versus last quarter.
In the U S and Canada, we had 96 million monthly active users up 1% year over year, and we added approximately 1 million users versus last quarter.
Speaker 4: transcript
Speaker 4: In Europe , we finished the quarter with 128 million monthly active users, up 7%, an acceleration from last quarter.
In Europe, we finished the quarter with 128 million monthly active users up 7% an acceleration from last quarter.
Bill Ready: And as we flex up ad load with whole page optimization, we're able to serve more of these relevant ads to users who are displaying commercial intent, almost simultaneously growing engagement on the platform. For example, in Q2, we expanded our use of GPU serving to our monetization engine, which enabled us to use models that were 100 times larger. As a result, we're able to better use our first party user signals to understand commercial intent and thus show more relevant ads to match that intent.
Speaker 4: transcript
Speaker 4: In our rest of world markets, monthly active users were 258 million, up 12 percent, continuing the trend of acceleration throughout 2023.
In our rest of World markets monthly active users were $258 million up 12% continuing the trend of acceleration throughout 2023.
Now to revenue.
Speaker 4: transcript
Speaker 4: The strength we saw this quarter further demonstrates how we are driving value for advertisers across the full funnel.
The strength, we saw this quarter further demonstrates how we are driving value for advertisers across the full funnel.
Speaker 4: transcript
Speaker 4: Total revenue came in at $763 million, up 11% on a reported and constant currency base.
Total revenue came in at $763 million up 11% on a reported and constant currency basis.
Bill Ready: In Q3, we began leveraging a longer history of users on platform behaviors in our ads models. Longer user history means more user signals, which in turn enables us to better predict and surface ads tailored to our users preferences and tastes.
Speaker 4: transcript
Speaker 4: Strength and overall revenue was driven by our awareness objectives and conversion objectives, including our lowest funnel shopping ads format.
Strength in overall revenue was driven by our awareness objectives and conversion objectives, including our lowest funnel shopping ads format.
Speaker 4: transcript
Speaker 4: In the US and Canada, revenue was $618 million, an increase of 8%, accelerating to the highest growth we've seen since Q322.
In the U S and Canada revenue was $618 million, an increase of 8% accelerating to the highest growth we've seen since Q3 'twenty two.
Bill Ready: On search specifically, we made improvements in our ability to match relevant ads to user search queries. By utilizing AI and large language models, we were able to more precisely link product metadata to user queries to show ads that are visually and contextually relevant. These two launches drove meaningful improvements across cost per click and cost per action and better ads relevance.
Speaker 4: transcript
Speaker 4: Strengths came from CPG, retail, and certain emerging categories like financial services and restaurants.
Strength came from CPG retail and certain emerging categories like financial services and restaurants.
Speaker 4: transcript
Speaker 4: Europe revenue was $114 million, growing 33% or 25% on a constant currency base.
Europe revenue was $114 million growing 33% or 25% on a constant currency basis.
Speaker 4: transcript
Speaker 4: we experience strong growth across CPG, emerging verticals such as travel, technology, and auto, and from large agencies.
We experienced strong growth across CPG emerging verticals, such as travel technology in auto and from large agencies.
Bill Ready: Improve capabilities in our ad delivery model are also important as we think about augmenting our first party sales efforts. Opening up our platform to third party ad partners will allow us to accelerate monetization by improving ad relevance and auction density. As we mentioned during our investor day, our first 3P partnership with Amazon ads is ramping ahead of schedule and we are pleased with early results with over 50% improvement in relevance on search and a 100% improvement in relevance on related items in early tests.
Speaker 4: transcript
Speaker 4: Revenue from rest of the world was $31 million, growing 29% or 28% on a constant currency basis.
Revenue from rest of world was $31 million growing 29% or 28% on a constant currency basis.
Speaker 4: transcript
Speaker 4: It is also useful to look at revenue through the lens of add impressions and add pricing trends.
It is also useful to look at revenue through the lens of AD impressions and AD pricing trends.
Speaker 4: transcript
Speaker 4: As we mentioned at our investor day, ad impressions growth is driven by total impressions, both organic and paid, and ad load. Over the last several quarters, we've been able to drive increases in both total impressions and in ad load simultaneously, thereby demonstrating that relevant ads can be synergistic with engagement.
As we mentioned at our Investor Day AD impressions growth is driven by total impressions, both organic and paid and AD load.
Bill Ready: We noted that we were testing this on search in the US and we are now beginning to roll out this test on our related items surfaced in the US as well. Consistent with our prior comments on this topic, a partnership of the scale is a multi-quarter implementation with the most meaningful revenue impact likely being in early 2024. Our extensive upfront work integrating third party demand into our platform has laid the groundwork for more streamlined integrations of potential additional third party partners in the future.
Over the last several quarters, we've been able to drive increases in both total impressions and in AD load simultaneously, thereby demonstrating that relevant ads can be synergistic with engagement.
Speaker 4: transcript
Speaker 4: In Q3, we continued this trend, with ad impressions growing 26% driven from both increases in total impressions and increases in ad load.
In Q3, we continued this trend with AD impressions growing 26% driven.
Driven from both increases in total impressions and increases in ad load.
Speaker 4: transcript
Speaker 4: Meanwhile, the price of ads declined 12% this quarter.
Meanwhile, the price of ads declined 12% this quarter.
Bill Ready: Finally, we are continuing to drive operational rigor through further cost discipline which resulted in strong EBITDA and EBITDA margin expansion again this quarter. We are tracking nicely toward our mid to long-term margin expansion goals. I am proud of our teams for all their hard work and execution this past quarter, the results of which are abundantly clear.
Speaker 4: transcript
Speaker 4: While pricing still remains under pressure, this is an improvement from the 20% decline we saw last quarter. Driven by industry-wide demand stabilization, as well as the AI-fueled ad stack efficiencies we drove on the platform in Q3.
Pricing still remains under pressure. This is an improvement from the 20% decline we saw last quarter driven by industry wide demand stabilization as well as the AI fueled AD stack efficiencies, we drove on the platform in Q3.
Yeah.
Speaker 4: transcript
Speaker 4: Now let's turn to expenses. Cost of revenue was $167 million. Down 7% year over year, and roughly flat versus Q2.
Now, let's turn to expenses cost of revenue was $167 million down 7% year over year and roughly flat versus Q2.
Julia Donnelly: I will now turn the call over to Julia who will provide further updates on our financials. Thanks Bill and good afternoon everyone. Today I will be discussing our third quarter financial results and provide an update on our preliminary fourth quarter outlook. All financial metrics except for revenue will be discussed in non-gap terms unless otherwise specified and all comparisons will be discussed on a year-over-year basis unless otherwise noted. To echo Bill's sentiment, I am proud of our team's execution which resulted in a great quarter marked by strong monthly active user growth, continued revenue acceleration and significant year-over-year adjusted EBITDA margin expansion.
Speaker 4: transcript
Speaker 4: This result is due to efficiencies being driven across storage and compute infrastructure. Even amidst our strong user and engagement growth and continued AI deployment throughout our business.
This result is due to efficiencies being driven across storage and compute infrastructure, even amidst our strong user and engagement growth and continued AI deployment throughout our business.
Speaker 4: transcript
Speaker 4: Overall, non-gap operating expense was $415 million. Down 4% year over year, and down 6% quarter over quarter.
Overall, non-GAAP operating expense was $415 million down, 4% year over year and down 6% quarter over quarter.
Speaker 4: transcript
Speaker 4: This outperformed our expectations and is a reflection of our overall focus on expense management as we realize additional cost savings in the quarter on lower spend in technology and outside services.
This outperformed our expectations and is a reflection of our overall focus on expense management as we realize additional cost savings in the quarter on lower spend in technology and outside services.
Julia Donnelly: It is clear that the strategic shifts we have implemented in our business over the last year leaning into the differentiators of our platform and accelerating our ads products velocity are resonating with users and advertisers alike. We ended the quarter with 482 million global monthly active users growing 8% and reaching a new all-time high. Our investments in increasing shoppability and deploying AI across our recommendation engine are paying off. In the US and Canada we had 96 million monthly active users up 1% year-over-year and we added approximately 1 million users versus last quarter.
Speaker 4: transcript
Speaker 4: We have been pleased by our ability to drive double-digit revenue growth even as operating expenses declined year over year.
We have been pleased by our ability to drive double digit revenue growth, even as operating expenses declined year over year.
Speaker 4: transcript
Speaker 4: Adjusted EBITDA had a strong quarter, coming in at $185 million, for a 24% margin, up 13 percentage points versus a year ago, driven by strong revenue performance, efficiency in our cost of revenue, and the year over year to climb and operating expenses.
Adjusted EBITDA had a strong quarter coming in at $185 million or a 24% margin up 13 percentage points versus a year ago, driven by strong revenue performance efficiency and our cost of revenue and the year over year decline in operating expenses we.
Speaker 4: transcript
Speaker 4: We ended the quarter with approximately $2.3 billion in cash, cash equivalents and marketable securities.
We ended the quarter with approximately $2 $3 billion in cash cash equivalents and marketable securities.
Speaker 4: transcript
Speaker 4: Now I'd like to provide preliminary financial guidance for the fourth quarter.
Now I'd like to provide preliminary financial guidance for the fourth quarter.
Speaker 4: transcript
Speaker 4: For the fourth quarter 2023, we expect revenue to grow in the 11 to 13 percent range, continuing the trajectory of accelerating year-over-year revenue growth throughout 2023.
For the fourth quarter 2023, we expect revenue to grow in the 11% to 13% range continuing the trajectory of accelerating year over year revenue growth throughout 2023 or.
Julia Donnelly: In Europe we finished the quarter with 128 million monthly active users up 7% and acceleration from last quarter. In our rest of world markets monthly active users were 258 million up 12% continuing the trend of acceleration throughout 2023.
Speaker 4: transcript
Speaker 4: Our revenue guidance also takes into account a modest foreign exchange impact.
Our revenue guidance also takes into account a modest foreign exchange impact.
Speaker 4: transcript
Speaker 4: Moving down the P&L, while we don't guide cost of revenue specifically, we do want to remind everyone that cost of revenue as a percentage of total revenue typically runs lower in Q4 due to the higher seasonal revenue we see in the fourth quarter.
Moving down the P&L, while we don't guide cost of revenues, specifically, we do want to remind everyone that cost of revenue as a percentage of total revenue typically runs lower than Q4 due to the higher seasonal revenue, we see in the fourth quarter.
Julia Donnelly: Now to revenue. The strength we saw this quarter further demonstrates how we are driving value for advertisers across the full funnel. Total revenue came in at $763 million, up 11% on a reported and constant currency basis. Strength and overall revenue was driven by our awareness objectives and conversion objectives, including our lowest funnel shopping ads format. In the US and Canada, revenue was $618 million, an increase of 8%, accelerating to the highest growth we've seen since Q322.
Speaker 4: transcript
Speaker 4: We expect Q4 non-GAP operating expenses to decline in the 9-13% range year-over-year, as we lap our large brand marketing campaign in Q4 last year. Please note that our operating expense guidance does not include cost of revenue.
We expect Q4, non-GAAP operating expenses to decline in the 9% to 13% range year over year as we lap our large brand marketing campaign in Q4 of last year. Please note that our operating expense guidance does not include cost of revenue.
Speaker 4: transcript
Speaker 4: Finally, our focus on revenue growth and operational rigor has allowed us to meaningfully expand adjusted EBITDA margins over the course of this year.
Finally, our focus on revenue growth and operational rigor has allowed us to meaningfully expand adjusted EBITDA margins over the course of this year at.
Speaker 4: transcript
Speaker 4: At the beginning of this year, we committed to 200 basis points of adjusted EBITDA margin expansion year over year for full year 2023.
At the beginning of this year, we committed to 200 basis points of adjusted EBITDA margin expansion year over year for full year 2023.
Julia Donnelly: Strength came from CPG, retail, and certain emerging categories like financial services and restaurants. Europe revenue was $114 million, growing 33% or 25% on a constant currency basis. We experienced strong growth across CPG, emerging verticals such as travel, technology and auto, and from large agencies. Revenue from rest of world was $31 million, growing 29% or 28% on a constant currency basis.
Speaker 4: transcript
Speaker 4: As the year progressed, we felt confident in our ability to exceed 200 basis points based on our expense discipline, and we doubled our commitment to roughly 400 basis points.
As the year progressed, we felt confident in our ability to exceed 200 basis points based on our expense discipline and we doubled our commitment to roughly 400 basis points.
Speaker 4: transcript
Speaker 4: Based on our progress in accelerating revenue growth and further controlling cost, we now expect to see significant adjusted EBITDA margin expansion again in Q4, which would put us on track to achieve approximately 600 basis points of adjusted EBITDA margin expansion for full year 2023.
Based on our progress and accelerating revenue growth and further controlling cost. We now expect to see significant adjusted EBITDA margin expansion again in Q4, which would put us on track to achieve approximately 600 basis points of adjusted EBITDA margin expansion for full year 2023.
Speaker 4: transcript
Speaker 4: To close, our Q3 performance tells an impressive story. Significant monthly active user growth, strong and accelerating revenue generation, and effective cost management, all of which continues to put us on the path to deliver on the longer-term financial targets we recently provided. I'll now turn the call over to Bill.
To close our Q3 performance tells an impressive story significant monthly active user growth strong and accelerating revenue generation and effective cost management, all of which continues to put us on the path to deliver on our longer term financial targets. We recently provided on.
Julia Donnelly: It is also useful to look at revenue through the lens of ad impressions and ad pricing trends. As we mentioned at our investor day, ad impressions growth is driven by total impressions both organic and paid and ad load. Over the last several quarters, we've been able to drive increases in both total impressions and in ad load simultaneously thereby demonstrating that relevant ads can be synergistic with engagement. In Q3, we continued this trend with ad impressions growing 26% driven from both increases in total impressions and increases in ad load.
I'll now turn the call over to Bill.
Thanks Julien.
Speaker 3: transcript
Speaker 3: We've made great progress across our business in the past year, and we're just getting started. I want to thank our teams at Pinterest, our advertising partners, and all the people that come to Pinterest to find inspiration and to shop. And with that, we can open.
We've made great progress across our business in the past year and we're just getting started.
To thank our teams at Pinterest, our advertising partners and all the people that come to pinterest to find inspiration in the shop.
And with that we can open the call up for questions.
Yeah.
Certainly.
Speaker 2: transcript
Speaker 2: If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason, you would like to remove that question.
If you would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by two again to ask a question press Star one.
Julia Donnelly: Meanwhile, the price of ads declined 12% this quarter. While pricing still remains under pressure, this is an improvement from the 20% decline we saw last quarter driven by industry wide demand stabilization as well as the AI fueled ad stack efficiencies we drove on the platform in Q3.
Speaker 2: transcript
Speaker 2: star followed by two. Again to ask a question, press star.
Speaker 2: transcript
Speaker 2: As a reminder, if you are using a speaker phone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are read.
Reminder, if you are using a speaker phone. Please remember to pick up your handset before asking a question, we'll pause here to briefly ask questions are registered.
Julia Donnelly: Now let's turn to expenses. Cost of revenue was $167 million, down 7% year over year and roughly flat versus Q2. This result is due to efficiencies being driven across storage and compute infrastructure. Even amidst our strong user and engagement growth and continued AI deployment throughout our business. Overall non-gap operating expense was $415 million, down 4% year over year and down 6% quarter over quarter. This outperformed our expectations and is a reflection of our overall focus on expense management as we realized additional cost savings in the quarter on lower spend and technology and outside services.
The first question is from the line of Eric Sheridan with Goldman Sachs. You May proceed.
Speaker 5: transcript
Speaker 5: Thanks so much for taking the questions and thanks for all the details and the prepared remarks. Maybe two if I can, Bill, you know, this year's been dominated by elements of some of the headwinds, the advertising industry has faced brand advertising and the macroeconomic conditions. How would you characterize the headwinds from those dynamics versus the tailwinds building?
Thanks, so much for taking my questions and thanks for all the details in the prepared remarks, maybe two if I can bill. This year has been dominated by elements of some of the headwinds the advertising industry is facing brand advertising and the macroeconomic conditions, how would you characterize the.
The headwinds from those dynamics versus the tailwind is building on.
Speaker 5: transcript
Speaker 5: on the shopping and the direct response side when you think about the exit velocity. Investors should have in mind in terms of revenue moving out of 2023 and into 2024. And then Julia, at the investor day, we talked a lot about the long-term margin potential. Can you balance the margin potential you see in the business against some of the investments that you will see as critical to make in the short to medium term to set up for that revenue success? Thanks so much.
From a shopping in the direct response side when do you think about the exit velocity investors should have in mind in terms of revenue moving out of 2023, and then into 2024 and then Julien.
The Investor Day, we talked a lot about the long term margin potential can you balance the margin potential you see in the business and some of the investments that you would bill C is critical to make in the short to medium term to set up for that revenue success. Thanks. So much.
Julia Donnelly: We have been pleased by our ability to drive double digit revenue growth even as operating expenses declined year over year. Adjusted EBITDA had a strong quarter coming in at $185 million or a 24% margin up 13% points versus a year ago driven by strong revenue performance efficiency in our cost of revenue and the year over year to decline in operating expenses.
Okay.
Speaker 3: transcript
Speaker 3: Thanks for the question, Eric. So in terms of the broader ad environment, we've seen some stabilization there, and for us particularly, retail's been an area of strength. I think it's been most pronounced with...
Thanks for the question Eric.
So in terms of the broader AD environment, we've seen some stabilization there.
And for US, particularly at retail has been an area of strength I think has been most pronounced with.
Speaker 3: transcript
The larger more sophisticated advertisers and in addition to that stabilization in the broader AD market as we've been improving our performance solutions, particularly at the lower funnel and.
Julia Donnelly: We ended the quarter with approximately $2.3 billion in cash cash equivalents and marketable securities.
Julia Donnelly: Now I'd like to provide preliminary financial guidance for the fourth quarter. For the fourth quarter 2023, we expect revenue to grow in the 11 to 13% range, continuing the trajectory of accelerating year over year revenue growth throughout 2023. Our revenue guidance also takes into account a modest foreign exchange impact.
And better measurement I think thats been reflected in our results with steady acceleration each quarter in <unk> you saw that in our Q3 results you see reflected in our Q4 guide as well around that study.
Acceleration and I'll give it over to Julia for the other part of your question.
Speaker 4: transcript
Speaker 4: Yeah, Eric, so thanks so much for the question. So as we think about kind of margin expansion potential from here, maybe stepping back for a minute, we feel really good about the progress we've made so far in delivering margin expansion. We started the year with the 200 basis points margin expansion goal, and we're on track now to triple that to 600 basis points for 2023. You're right, the Ed investor, we said we plan to get to the low 30s percent range in three to five years from now.
Yeah, Eric Thanks, so much for the question. So as we think about kind of margin expansion potential from here maybe.
Julia Donnelly: Moving down the P&L, while we don't guide cost of revenue specifically, we do want to remind everyone that cost of revenue as a percentage of total revenue typically runs lower in Q4 due to the higher seasonal revenue we see in the fourth quarter. We expect Q4 non-gap operating expenses to decline in the 9 to 13% range year over year as we lap our large brand marketing campaign in Q4 last year. Please note that our operating expense guidance does not include cost of revenue.
Maybe stepping back for a minute we feel really good about the progress we've made so far in delivering margin expansion. You know we started the year with a 200 basis points margin expansion goal and we're on track now to triple that to 600 basis points for 2023, Youre right that at Investor Day, We said, we plan to get to the low 30% range in three to five years from now.
Speaker 4: transcript
Speaker 4: And we get there with a steady progression. We are still planning for that. This year, the combination of revenue acceleration and cost discipline led to outperformance on margin expansion.
We get there with a steady progression we are still planning for that this year. The combination of revenue acceleration and cost discipline led to outperformance on margin expansion. However, there are a lot of investment opportunities with high ROI, particularly in staffing sort of our R&D and product focused and technology areas.
Julia Donnelly: Finally, our focus on revenue growth and operational rigor has allowed us to meaningfully expand adjusted EBITDA margins over the course of this year. At the beginning of this year, we committed to 200 basis points of adjusted EBITDA margin expansion year over year for full year 2023. As the year progressed, we felt confident in our ability to exceed 200 basis points based on our expense discipline and we doubled our commitment to roughly 400 basis points.
Speaker 4: transcript
Speaker 4: However, there are a lot of investment opportunities with high ROI, particularly in staffing sort of our R&D and product focused and technology areas.
Speaker 4: transcript
Speaker 4: that we want to fund as we think about balancing investment in the business and capturing the opportunity ahead of us and flowing through profitability to the bottom line. So given that for next year, we're not providing specific guidance, but we do expect further margin expansion that will be more modest than the 600 basis points we are delivering this year in particular. And overall, we remain committed to steadily expanding our margins as we march up to that low 30th percent range over the next three to five years.
We want to fund as we think about balancing investment in the business and capturing the opportunity ahead of us and flowing through profitability to the bottom line. So given that for next year, we're not providing specific guidance, but we do expect further margin expansion that will be more modest than the 600 basis points. We are delivering this year in particular and overall we remain.
Julia Donnelly: Based on our progress in accelerating revenue growth and further control and cost, we now expect to see significant adjusted EBITDA margin expansion again in Q4, which would put us on track to achieve approximately 600 basis points of adjusted EBITDA margin expansion for full year 2023.
<unk> to steadily expanding our margins as we March up to that low 30% range over the next three to five years.
Yeah.
Thank you.
Speaker 2: transcript
Speaker 2: Our next question is from Ross, Pamela with Barclays. Please proceed.
Our next question is from Ross Sandler with Barclays. Please proceed.
Hey, guys.
Speaker 6: transcript
Speaker 6: For Bill or Julia, just going back to the investor day, there was a slide, I believe it was in Julia's section that showed kind of these colored bar charts.
Julia Donnelly: To close, our Q3 performance tells an impressive story significant monthly active user growth, strong and accelerating revenue generation and effective cost management, all of which continues to put us on the path to deliver on the longer term financial targets we recently provided.
For <unk> or Julia.
Just going back to the Investor day, there was a slide I believe it was in Juliet section that should kind of these colored bar charts around how much of the growth.
Speaker 6: transcript
Speaker 6: around how much of the growth has been coming from
It has been coming from.
Speaker 6: transcript
Speaker 6: Ad load increase versus usage growth following the WPO change. And the question is, as we bring on Amazon and other.
Bill Ready: I'll now turn the call over to Bill. Thanks, Julian. We've made great progress across our business in the past year and we're just getting started.
AD load increase versus usage grew.
Following the WTO change.
Operator: I want to thank our teams at Pinterest, our advertising partners, and all the people that come to Pinterest to find inspiration and to shop. And with that, we can open the call up for questions. Certainly, if you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason, you would like to remove that question, please press star followed by two again to ask a question, press star one. As a reminder, if you are using a speaker phone, please remember to pick up your hands up before asking your question. We'll pause here briefly as questions are registered.
The question is as we bring on Amazon and other third party partners in the future.
Speaker 6: transcript
Speaker 6: third party partners in the future.
Speaker 6: transcript
Speaker 6: What do you think is the sustainability of that trend of increasing ad load? And is that a multiple year dynamic? How do you see that playing out as we bring on more demand? Thank you.
What do you think is the sustainability of that trend.
Increasing <unk>.
And is that a multiply multiple year dynamic how do you see that playing out.
As we bring on more demand. Thank you.
Speaker 3: transcript
Speaker 3: Thanks Ross. So, you know, as we've discussed...
Thanks Ross.
So as we've discussed we have more than half the users on Pinterest say, they're here to shop and when they're used in a commercial mindset.
Speaker 3: transcript
Speaker 3: We have more than half the users on Pinterest and you say they're here to shop. And when they use it in a commercial mindset, relevant ads can be great content for the user. And so you've seen us proving that out over the course of the last year. And when we think about the third-party partnerships, we talked about this at Investor Day in the progress we've seen so far that one of the most encouraging things we've seen is we're bringing on third-party demand with our Amazon ads partnership is the strong improvement in relevance.
Relevant ads can be great content for the user and so you've seen us proving that out over the course of the last year and when we think about.
Eric Sheridan: The first question is from the line of Eric Seridan, the Goldman Sachs, you may proceed. Thanks so much for taking the questions and thanks for all the details and prepared remarks. Maybe two if I can.
The third party partnerships, we talked about this at Investor day, and the progress we've seen so far that one of the most encouraging things we've seen as were bringing on third party demand.
Bill Ready: Bill, you know, this year has been dominated by elements of some of the headwinds, the advertising industry has faced brand advertising, the macro economic conditions. How would you characterize the headwinds from those dynamics versus the tailwinds building on the shopping and the direct response side when you think about the exit velocity investor should have in mind in terms of revenue moving out of 2023 and into 2024.
With our Amazon as partnership.
Is the strong improvement in relevance.
Speaker 3: transcript
Speaker 3: So, we noted at Investor Day that we saw a 50% improvement in relevance on search. And as we're coming into related items, we're seeing 100% improvement on related items from that third-party demand.
So we noted at Investor day that we saw a 50% improvement in relevance on search ad.
And as we're coming into related items, we're seeing 100% improvement on unrelated items from that third party demand.
Speaker 3: transcript
Speaker 3: So, you know, the analogs that I have say to me that, you know, over a multi-year journey, you know, are ad-loaded when they use in a commercial context.
So the analogs that I have say to me that.
Bill Ready: And then Julia, yesterday we talked a lot about the long-term margin potential. Can you balance the margin potential you see in the business against some of the investments that you will see is critical to make in the short to medium term to set up for that revenue success? Thanks for the question, Eric. So in terms of the broader ad environment, you know, we've seen some stabilization there and for us particularly retailed been an area of strength, I think it's been most pronounced with the larger, more sophisticated advertisers.
The over a multi year journey.
Our AD load when they're used in a commercial context can be a multiple of what it is today.
Speaker 3: transcript
Speaker 3: can be a multiple of what it is today. And that's being driven by both improvements in the platform as well as getting the right relevant demand onto the platforms. And we've made continued progress in both. But we see a multiyear period there where that can continue. It's also highlight just the dynamic of...
And that's being driven by <unk>.
Both improvements in the platform as well as getting the right relevant demand onto the platforms and we've made continued progress on both but we see.
Bill Ready: And in addition to that stabilization in the broader ad market, as we've been improving our performance solutions, particularly at the lower funnel and better measurement, I think that's been reflected in our results with steady acceleration, each quarter. And so you saw that in our Q3 results, you see reflected in our Q4 guide as well around that steady acceleration.
A multi year.
Multi year period, there were that can continue also highlight just the dynamic of.
Speaker 3: transcript
Speaker 3: you know, as we've been doing at the best proof point that
As we've been doing it the best proof point that we're turning the ads and the relevant content for users is that even as we've taken AD load up you've seen.
Speaker 3: transcript
Speaker 3: We're turning the ads into relevant content for users, is that even as we've taken ad load up, you've seen all of our measures of engagement growing faster than the user growth, which means we're deeply engaged for user, even as ad load grows at a multiple of, or we go grows faster than the engagement growth. So I think that's the best proof point that as we bring in the right relevant ads for that user in the commercial context, that they're finding that as engaging content.
We've seen all of our measures of engagement growing faster than the user growth, which means we're deepening engagement per user even as AD load growth at a multiple of where we go grows faster than the engage with US I think that's the best proof point that as we bring in the right relevant ads for that usually the cultural context that they are finding that as engaging.
Julia Donnelly: And I'll give it over to Julia for the other part of your question. Yeah, Eric, so thanks so much for the question. So as we think about kind of margin expansion potential from here, maybe stepping back for a minute, we feel really good about the progress we've made so far and delivering margin expansion. You know, we started the year with the 200 basis points margin expansion goal and we're on track now to triple that to 600 basis points for for 2023.
Content.
Okay.
Thank you.
Our next question is from Lloyd Wamsley with UBS.
Yeah.
Okay.
Speaker 7: transcript
Speaker 7: On the partner monetization, it sounds like Amazon is progressing faster than you guys expected and Good early results. Remind us what the big outstanding blocks you need to get through to scale that with with other partners and With other partners and then is there any
Thanks, Ken.
Purchased on the partner monetization it sounds like Amazon is progressing faster than you guys expected.
Julia Donnelly: You're right to add investor, we said we plan to get to the low 30s present range in three to five years from now, and we get there with a steady progression, we are still planning for that. You know, this year, the combination of revenue acceleration and cost discipline led to outperformance on margin expansion. However, there are a lot of investment opportunities with high ROI, particularly in staffing sort of our R&D and product focus and technology areas that we want to fund as we think about balancing investment in a business and capturing the opportunity ahead of us and flowing through profitability to the bottom line.
And good early results remind us what the big outstanding blocks, you need to get through to scale that.
With other partners.
And with other partners and then.
Is there any.
Speaker 7: transcript
Speaker 7: any of the acceleration for Q coming from Amazon. And then the second one would just be more broadly on generative AI. You know, you guys have a lot of interesting user data, content, context, like anything you're working on, interesting on the consumer facing side for generative AI that you wanna call out. Thanks.
Any of the acceleration in <unk>.
<unk> from Amazon.
And then the second one would just be more broadly.
On generative AI you guys have.
A lot of interesting user data content context, like anything you're working on interesting on the consumer facing side for generative AI.
Julia Donnelly: So given that for next year, we're not providing specific guidance, but we do expect further margin expansion that will be more modest than the 600 basis points we are delivering this year in particular. And overall, we remain committed to steadily expanding our margins as we march up to that low 30s present range over the next three to five years.
You want to call out.
Great. Thanks for the question.
Speaker 3: transcript
Speaker 3: So with the Amazon partnership, we gave an update just two weeks before the end of the quarter at our investor day. And what we've continued to see is consistent with the comments we made there. And as a reminder of what we talked about in investor day, we see really good progress. We're testing, learning, iterating. And we're focused on creating a really great, relevant user experience and valuable merchant experience. And we're really,
Operator: Thank you.
So with.
With with.
With the Amazon partnership we gave an update just two weeks before the end of the quarter at our Investor day.
And what we've continued to see is consistent with the comments we made there.
Ross Sandler: Our next question is from Ross family with Barclays. Thank you. Hey guys, for Bill or Julia, just going back to the investor day, there was a slide, I believe it was in a Julia section that showed kind of these colored bar charts around how much of the growth has been coming from Adload increase versus usage growth following the WPO change. And the question is, as we bring on Amazon and other third party partners in the future, what do you think is the sustainability of that trend of increasing ad load.
And as a reminder of what we talked about at Investor Day, We see really good progress we're testing learning Iterating and we're focused on creating a really great relevant.
User experience are valuable merchant experience and we're really well.
Speaker 3: transcript
Speaker 3: we're really pleased with what we're seeing on that front. That's the biggest breakthrough in this, is demonstrating the increase in relevancy from bringing on third-party demand. And as I noted in the prior question, 50% increase in relevance on search and 100% increase in relevance on related items. I think that just bodes really well for where we can go with that. So those are the biggest things to solve for. As we've been calling out, it is a multi-quarter implementation.
We're really pleased with what we're seeing on that front. That's the biggest breakthrough in this is demonstrating the increasing relevancy from bringing on third party demand and as I noted in the.
The prior question.
50% increase in relevance on search and 100% increasing relevance unrelated items I think that just bodes really well for where we can go with that so those are the biggest things to solve for as we've been calling out it is a multi quarter implementation with the most meaningful revenue to hit early in 'twenty four.
Speaker 3: transcript
Speaker 3: with the most meaningful revenue to hit early in 24.
Speaker 3: transcript
Speaker 3: So that's with regard to your question on Amazon. The other part of your question around potential new partners.
So that's with regard to your question on Amazon. The other part of your question around potential New partners. We've commented on this from from early on that part of what made this a multi quarter implementations that we were fitting the platform for third party demand generally not just one partner so that sets us up well to <unk>.
Speaker 3: transcript
Speaker 3: We've commented on this from early on at part of what made us a multi-quarter in the presentation is that we were fitting the platform for third party demand generally, not just one partner. So that sets us up well to expand to other partners as we go into into 24. We've been really focused on making sure we get this first one really right, but we have built it in such a way that we think it sets us up well to expand to additional partners as we go into 24.
Ross Sandler: And, you know, is that a multiple multiple year dynamic? How do you see that playing out as we bring on more demand? Thank you. Thanks Ross. So, you know, as we've discussed, we have more than half the users on Pinterest and you say they're here to shop. And when they use it in a commercial mindset, relevant ads can be great content for the user. And so you've seen us proving that out over the course of the last year.
Spanned to other partners as we go into <unk> into 'twenty, four and we've been really focused on making sure. We get this first one really right, but we have built it in such a way that we think it sets us up well to expand to additional partners as we go into 'twenty four.
Ross Sandler: And when we think about the third party partnerships, we talked about this at investor day in the progress we've seen so far that one of the most encouraging things we've seen as we're bringing on third party demand with our Amazon ads partnership is the strong improvement in relevance. So, we noted that investor day that we saw a 50% improvement in relevance on search, and as we're coming into related items, we're seeing a 100% improvement on related items from that third party demand.
Speaker 3: transcript
Speaker 3: And then on the generative AI front, AI generally has been a really great source of strength for us. And the places that we've talked about where our use of large language models, 100 times larger models, GPU serving, all these great AI technologies, giving us significant increases in relevance, approximately 10 percentage point increase in relevance we talked about on last quarter's call and in investor day.
And then on the generative AI front.
It's AI.
AI generally has been a really great source of strength for us.
And the places that we've talked about where.
Our use of large language models 100 times larger models GPU, serving all these great AI technologies, giving us significant increases in relevance approximately 10 percentage point increase in relevance, we talked about on last quarter's call and an investor day.
Ross Sandler: So, you know, the analogs that I have say to me that, you know, over a multi-year journey, you know, our ad load when they use in a commercial context can be a multiple of what it is today. And that's being driven by both improvements in the platform as well as getting the right relevant demand onto the platforms. And we've made continued progress in both. But we see, you know, a multi-year, you know, a multi-year period there where that can continue.
Speaker 3: transcript
Speaker 3: So that's been going really well. And then newer products like our Creative Studio that is creating dynamic content for ads, for advertisers, to make those ads more compelling and engaging for users. We're early on our testing there, but we've seen just a palpable response from advertisers.
So that's been going really well and the newer products like our creative studio that is creating dynamic content for for ads for advertisers to make those ads more compelling and engaging for users. We're early in our testing there, but we've seen just a palpable response from advertisers.
Speaker 3: transcript
Speaker 3: in terms of their excitement about engaging with that product and the things that we can do there.
Terms of their excitement about engaging with that product and the things that we can do there.
Bill Ready: It's also highlight just the dynamic of, you know, as we've been doing at the best proof point that we're turning the ads into relevant content for users is that even as we've taken ad load up, you've seen, we've seen all of our measures of engagement growing faster than the user growth, which means we're deeply engaged for user, even as ad load grows at a multiple of, or we go grows faster than the engagement growth. So, I think that's the best proof point that as we bring in the right relevant ads for that user in the commercial context, that that's, they're finding that as engaging content. Thank you.
Speaker 3: transcript
Speaker 3: And then finally, you know, other elements of the core experience.
And finally.
Other elements of the core experience.
Speaker 3: transcript
Speaker 3: There's just really nice improvements happening throughout the core user experience that maybe more subtle as a user, but actually driving really great results like guided search experiences, getting you to more related items. These are things we're seeing just
Just really nice improvements happening throughout the core user experience.
Yes.
Maybe.
More subtle as a user but actually driving really great results like guided search experiences.
Getting you to more related items. These are things, where we're seeing just.
Speaker 3: transcript
Speaker 3: You know, areas where you would normally see progress and basis points, you know, I mentioned that, you know, approximate 10% increase in relevancy. That's a place you'd normally see improvements in basis points.
Areas, where you would normally see progress in basis points.
I mentioned that approximate 10% increase in relevancy thats a place you'd normally see improvements in basis points to say, 10% approximately 10 percentage points improvement in relevant either.
Speaker 3: transcript
Speaker 3: to say approximately 10 percentage points, improvement and relevance to their, those kinds of gains are just unheard of. And so we feel really good about the progress that we're making with AI and large language models and the core technologies there.
Those kinds of gains are just unheard of and so we feel really good about the progress that we're making with AI and large language models in the core technologies there.
Lloyd Walmsley: Our next question is from Lloyd Wandsley with UBS. Thank you. I can purchase on the partner monetization that sounds like Amazon is progressing faster than you guys expected. And good early results. Remind us with the big outstanding blocks you need to get through to scale that with with other partners and with other partners. And then is there any. Any, any of the acceleration for Q coming from Amazon. And then the second one would just be more broadly on on generative AI.
Thank you.
Our next question comes from Rich.
Rich Greenfield with buy side partners.
Speaker 3: transcript
Speaker 3: Hi, thanks, Phil and Julia for taking the question. I got a couple. One, I want to follow up, Phil, you were talking about sort of the, I guess you called it the compounding benefit to both Pinterest and your content and advertising partners on AdLoad and how it's not impacting engagement.
Hi, Thanks, Bill Julia for taking the question I got a couple one just I wanted to follow up Bill you were talking about sort of the I guess you called it the compounding benefit to both Pinterest and your content and advertising partners on AD load and how it's not impacting engagement.
Speaker 3: transcript
Speaker 3: What does that tell you in terms of like, does that imply that there's still lots of room to run in terms of what the ad load could be? I mean, you sort of framed it as, I think you were about to say multiples and then you sort of said it was, you know, the percentage increase. But I'm just wondering, is there any way to frame how much is ad load up and as you sort of see the engagement benefits from better targeting of ads?
What does that tell you in terms of like does that imply that there's still lots of room to run in terms of what the AD load.
Lloyd Walmsley: You know, you guys have a lot of interesting user data content, context like anything you're working on interesting on the consumer facing side for generative AI that you want to call out. Thanks. Great. Thanks for the question.
You sort of framed it as I think you were about to say multiples and then you sort of said it was.
The percentage increase but I'm just wondering is there any way to frame how much is AD load up and as you sort of see the engagement benefits from better targeting of add in.
Speaker 3: transcript
Speaker 3: and content. Do you think that there is multiples to go in terms of ad load over the course of, you know, the next several years? And then two, just because I've been using Pinterest a lot over the last few months, and one of the things I've certainly noticed is the presence of Timo. I'm wondering if there's any way you can sort of quantify has Timo been a major advertiser, your year, or how much of an impact it has had positively on your business year over a year would be helpful just to put into context. That's great. Thank you.
Content do you think that there is multiples to go in terms of AD load over the course of.
Bill Ready: So, you know, with with with Amazon partnership, we gave an update just two weeks before the end of the quarter at our investor day. And what we continue to see is consistent with the comments we made there. You know, and as a reminder of what we talked about investor day, you know, we see really good progress. We're testing, learning, iterating. And we're focused on creating a really great relevant user experience and valuable merchant experience.
The next several years and then two just because I've been using pinterest a lot over the last few months in one of the things I've certainly noticed is the presence of chemo wondering if theres any way you can sort of quantify his team who have been a major advertiser year over year, how much of an impact has it had positively on your business year over year would be.
Helpful just to put into context.
Bill Ready: And, you know, we're really, we're really pleased with what we're seeing on that front. That's the biggest breakthrough in this is demonstrating the increase in relevancy from bringing on third party demand. And as I noted in the prior question, you know, 50% increase in relevance on search and 100% increase in relevance on related items. I think that just bodes really well for where we can go with that. So those are the biggest things to solve for.
Okay great.
Can you for the question rich.
Speaker 3: transcript
Speaker 3: So, stated very simply, there's a lot of room to run on ad load. Again, both through the unlock of whole page optimization and our ability to look at the ads as relevant content. As well as being able to ingest more relevant third party demand, as well as getting more first party demand as our advertisers, particularly retailers.
So stated very simply there is a lot of room to run on AD load again, both through the unlock of whole paid optimization and.
And our ability to look at the ads as relevant content.
As well as being able to ingest more relevant third party demand as well as getting more first party demand as our advertisers, particularly retailers are seeing more performance from us on wanting to bring more relevant inventory onto the platform.
Speaker 3: transcript
Speaker 3: are seeing more performance from us and wanting to bring more relevant inventory onto the platform. We think there's a lot of room to run there over a multi-year period.
Bill Ready: As you've been calling out, it is a multi quarter implementation with the most meaningful revenue to hit early in 24. So that's with regard to your question on Amazon. The other part of your question around potential new new partners. We've commented on this from early on as part of what made us a multi quarter implementation is that we were fitting the platform for third party demand generally not just one partner. So that sets us up well to expand to other partners as we go into into 24.
We think theres a lot of room to run there.
For a multi year period.
Speaker 3: transcript
Speaker 3: The analogs that I would have in my mind would say to me that when the users in a commercial context on our platform, which again more than half the users are here to shop, but when the users in a commercial context...
The analogs that I would have.
In my mind would say to me that when they use it in a commercial context on our platform, which again more than half the user here to shop, when they're used in a commercial context.
Speaker 3: transcript
Speaker 3: you know, I think the analog that I would look to would say that we could support a multiple of the ad load that we currently have.
I think the analogs that would look to say that we could support.
A multiple of the AD load that we currently have that'll be a multi year journey to get to that but I think that means theres just a lot of runway in front of us on where AD load can go in the the key proof points.
Speaker 3: transcript
Speaker 3: That'll be a multi-year journey to get to that, but I think that means there's just a lot of runway in front of us on where Adelo can go and the
Bill Ready: We've been really focused on making sure we get this first one really right. But we have built it in such a way that we think it sets us up well to expand to additional partners as we go into 24.
Speaker 3: transcript
Speaker 3: that I would have had in my mind coming in, you know, five quarters ago, were really around whole page optimization, proving out that the users wanted to shop and would engage all the way through the lower funnel, and the ability to bring in more demand rapidly, and all those major unlaw.
I would have had in my mind coming in.
Bill Ready: And then on the generative AI front, you know, it's, you know, AI generally has been a really great source of strength for us. And the places that we've talked about where, you know, our use of large language models, you know, 100 times larger models, GPU serving, all these great AI technologies, giving us significant increases in relevance, approximately 10 percentage point increase in relevance. We talked about on last quarter's call and an investor day.
Five quarters ago were really around whole page optimization.
Proving out to the users wanted to shop and when engage all the way through the lower funnel.
And the ability to bring in more demand rapidly and all of those major unlocks.
Speaker 3: transcript
Speaker 3: We have progressed quite nicely on all those, but there's a lot more runway to go to get all the goodness out of that. That will be a multi-year journey, which is why we feel confident in our prospects as we look forward.
We have progressed quite nicely on all of those but there's a lot more runway to go to get.
To get all the goodness out of that that will be a multiyear journey.
Which is why we feel confident on our prospects as we look forward.
Bill Ready: So that's been going really well and the newer products like our creative studio that is creating dynamic content for ads for advertisers to make those ads more compelling and engaging for users. We're early on our testing there, but we've seen just a palpable response from advertisers. In terms of their excitement about engaging with that product and the things that we can do there. And then finally, you know, other elements of the core experience.
Yeah.
And then on the.
Speaker 3: transcript
Speaker 3: Then on the other part of your question on Timu, our strength in retail has been broad-based.
Yeah.
Then on the other part of your question.
On <unk>.
Our strength in retail has been broad based.
So if you looked at our strength in retail the largest advertisers the larger more sophisticated advertisers they've been seeing really great results from our latest product developments.
Speaker 3: transcript
Speaker 3: If you looked at our strength in retail, the largest advertisers, the larger, more sophisticated advertisers, they've been seeing really great results from our latest product developments, and they have been leaning into the platform. Each of our largest, most sophisticated advertisers across retail have been growing faster than the growth rate of our revenue overall. So they're leaning in and contributing to growth.
And they have been leaning into the platform each of our.
Bill Ready: There's just really nice improvements happening throughout the core user experience that, you know, maybe more subtle as a user, but actually driving really great results like guided search experiences, getting you to more related items. These are things we're seeing just, you know, areas where you would normally see progress in basis points. You know, I mentioned that, you know, approximate 10% increase in relevance. That's a place you'd normally see improvements in basis points to say 10% approximately 10 percentage points, improvement and relevance either. Those kinds of gains are just unheard of. And so we feel really good about the progress that we're making with AI and large language models and the core technologies there.
The largest most sophisticated advertisers across retail have been growing faster than the growth rate of our revenue overall, so they're leaning in and contributing to.
Speaker 3: transcript
Speaker 3: And then he moved a nice, well, not coming out any one specific, but just sort of Asian e-commerce exporters generally have been a nice contributor to that. But we don't feel particularly concentrated or exposed they're given that our strength and retail have been very broad-based. Thank you.
Growth and then team who has been a nice.
I will not comment on any one specific but just sort of Asia E. Commerce export is generally.
I have been a nice contributor to that but.
But we don't feel particularly concentrated are exposed there given that our strength in retail has been very broad based.
Operator next question.
Our next question is from Brian Nowak with Morgan Stanley.
Speaker 8: transcript
Speaker 8: Great, thanks. Thanks so much questions at two, excuse me. The first one at the analyst day, he gave that great chart where you sort of showed that the growth in engagement, which is at basket of stage and impressions versus the DAU versus the malgrove. Could you just update us for how fast that engagement grew in the quarter? I think it was up 14% in 2Q, just for context. How quickly was it up in 3Q?
Great.
Hey, Thanks, taking my questions.
<unk>.
The first one would be at the analyst day, you gave that Great chart. You showed the growth in engagement or does that basket of saves impressions versus the.
Richard Greenfield: Thank you. Question is from Rich Greenfield with White Subpartners, please proceed Hi, thanks Bill and Julia for taking the question. I got a couple one just I want to follow up, Bill, you were talking about sort of the I guess you called it the compounding benefit to both Pinterest and your content and advertising partners on ad load and how it's not impacting engagement. What does that tell you in terms of like does that imply that there's still lots of room to run and terms of what the ad load can be?
Versus the MAU growth could you just update us for how fast that engagement grew in the quarter I think it was up 14% and <unk> just for context, how quickly or was it up in <unk> and then the second one you have a lot of different monetization sort of irons in the fire sort of walk through some of the key technological hurdles you still have to <unk>.
Speaker 8: transcript
Speaker 8: And then the second one, you have a lot of different monetization sort of irons in the fire. Can you sort of walk through some of the key technological hurdles you still have to overcome for direct link?
Become third direct links and deep links as we think about those fully rolling out throughout 2024.
Richard Greenfield: I mean, you sort of framed it as I think you were about to say multiples and then you sort of said it was, you know, the percentage increase, but I'm just wondering is there any way to frame how much is ad load up and as you sort of see the engagement benefits from better targeting of ads and content. Do you think that there is multiples to go in terms of ad load over the course of, you know, the next several years.
Speaker 8: transcript
Speaker 8: and deep links as we think about those fully rolling out throughout 2024.
Speaker 4: transcript
Speaker 4: Yeah, thanks, Brian , for the question. I'll take the first part and maybe kick it over to Bill for the second part of your question. So we did see engagement trends continue that the same trends that we showed in yesterday. So we talked about strong engagement growth on the call. We also talked about the increase in ad impressions of 26% being driven by both total impressions growth increasing and ad load increasing. So the same trend of ongoing engagement growth across the basket of metrics that we monitor and talked about on yesterday continues to hold for Q3 specifically.
Yes, Thanks, Brian for the question I'll take the first part and maybe kick it over to Bill for the second part of your question. So.
We did see engagement trends continue that the same trends that we showed at Investor day. So we talked about strong engagement growth on the call. We also talked about the increase in AD impressions of 26% and being driven by both total impressions growth, increasing and AD load increasing so the same trend.
Richard Greenfield: And then to just because it's I've been using Pinterest a lot over the last few months and one of the things I've certainly noticed, is the presence of Timo, wondering if there's any way you can sort of quantify has Timo been a major advertiser your year, how much of an impact it has had positively on your business your year would be helpful just to put into context.
Ongoing engagement growth across a basket of metrics that we monitor and talked about it on Investor day continues to hold for Q3, specifically and a bill for the second part yes. So.
Bill Ready: Great. Thanks for the question Rich. So stayed very simply. There's a lot of room to run on ad load again, both through the unlock of whole paid optimization and our ability to look at the ad load. So that adds as relevant content as well as being able to ingest more relevant third party demand as well as getting more first party demand as our advertisers, particular retailers, are seeing more performance from us and wanting to bring more relevant inventory onto the platform.
Speaker 3: transcript
Speaker 3: and I'll build for the second part. Yeah, so this is actually really great area, Brian in terms of what's required to implement our lower funnel solutions here and how that's going. So mobile deep links, which really has had really great results in the 235% lift and conversion rates.
This is actually really great area, Brian in terms of whats required to implement our lower funnel solutions here and how that's going.
Mobile deep links which had really has had really great results in 235% lift in conversion rates, which is really experience taking the user from pinterest straight into the product and buying experience in a retailer's mobile app.
Speaker 3: transcript
Speaker 3: which is really an experience taking the user from Pinterest straight into the product and buying experience in a retailer's mobile app. But there's a lot of retail that may not have users on their mobile app. And so with direct links, we're now taking that similar experience that will drop the user straight into a product and or purchase experience with the retailer's website or mobile website.
But theres a lot of retail that may not have users on their mobile app.
Bill Ready: You know, we think there's a lot of room to run there over a multi-year period. You know, the analog that I would have in my mind would say to me that when they use it in a commercial context on our platform which you get more than half the users are here to shop. But when they use it in a commercial context, you know, I think the analog that I would look to would say that we could support a multiple of the ad load that we currently have.
So with direct links were now taking that a similar experience that will drop the user.
Straight into a product and our purchase experience with the retailers.
Website or mobile web site.
Speaker 3: transcript
Speaker 3: and we're deploying that very rapidly. And we're actually able to deploy that even faster than mobile deep links. So we now have.
And we're deploying that very rapidly and we're actually able to deploy that even faster than mobile deep links.
So we now have.
Speaker 3: transcript
Speaker 3: approximately 60% of our Revenue of our lower funnel revenue has been migrated to Direct Link
Approximately 60% of our revenue of our lower funnel revenue has been migrated to.
Bill Ready: That will be a multi-year journey to get to that. But I think that means there's just a lot of runway in front of us on where ad load can go and the key proof points that I would have had in my mind coming in five quarters ago. We're really around whole page optimization, proving out that the users wanted to shop and would engage all the way through the lower funnel and the ability to bring in more demand rapidly and all those major unlocks.
Speaker 3: transcript
Speaker 3: And so, you know, the value creation of that has really been tremendous. We talked about 88% higher outbound click-through rate and 39% decrease in cost per outbound click. That's just really phenomenal value creation for the advertiser. And so, advert has been seeing that. The other thing to note.
Direct links and so the value creation of that has really been tremendous we talked about.
88% higher outbound click through rate and 39% decrease in cost per outbound click that just really phenomenal value creation for the advertiser and so advertiser been seeing that the other thing to note is that we are still in the beginning of capturing the value from that because we started rolling that out sort of in the back half of <unk>.
Speaker 3: transcript
Speaker 3: is that we are still in the beginnings of capturing the value from that because we started rolling that out sort of in the back half of Q3.
Bill Ready: We have progressed quite nicely on all those, but there's a lot more runway to go to get, you know, to get all the goodness out of that. That will be a multi-year journey, which is why I feel confident in our prospects as we look forward. And then on the other part of your question on Timo, you know, our strength and retail has been broad-based. So if you looked at our strength and retail, the largest advertisers, the larger, more sophisticated advertisers, they've been seeing really great results from our earliest product developments.
Speaker 3: transcript
Speaker 3: And I shared some comments as to how we're continuing to roll that out into Q4 and even into Q1. And we have our measurement progress that lets the advertisers measure all that goodness that they're seeing. So the shift of budgets that can result from that, I think, while we have really accelerated the value creation for the advertiser.
Q3.
Some comments as to how we're continuing to roll that out into Q4 and even into Q1.
And we have our measurement progress that lets the advertisers measure.
All of that all of that goodness that theyre seeing so the shift of budgets that can result from that I think while we have really accelerated the value creation for the advertiser.
Speaker 3: transcript
Speaker 3: and they're really pleased with what they're seeing, I'd say we're still early on in capturing the value from that. So I think there's a lot of tailwind to that deployment as we continue forward into Q4 and
And we're really pleased with what they're seeing I'd say, we're still early on in capturing the value from that so I think theres a lot of tailwind.
To that that deployment as we continue forward.
Bill Ready: And they have been leaning into the platform. Each of our largest, most sophisticated advertisers across retail have been growing faster than the growth rate of our revenue overall, so they're leaning in and contributing to growth. And then Timo has been a nice, well, not coming out any one specific, but just sort of Asian e-commerce exporters generally have been a nice contributor to that. But we don't feel particularly concentrated or exposed. They're given that our strength and retail have been very broad-based.
Into Q4 and into next year.
Operator: [inaudible] Thank you.
Thank you.
Speaker 2: transcript
Speaker 2: Third question- Is that???? what your Iã older table
Our next question comes from Mark Mahaney with Evercore ISI.
Operator: Thank you.
Speaker 8: transcript
Speaker 8: Thanks. Two questions please. The growth in MAUs is most pronounced in ROW and the rest of the world regions. Any particular markets there or countries you would call out there?
Thanks two questions. Please.
The.
Yeah.
Growth in EMEA use was most pronounced in our road up in the rest of the world regions. Any particular markets. There are countries you would call out there or is there something that suggests that that growth is there is there is a new new growth element in our O. W. And then secondly, I think two other companies have talked about seeing a little bit of a pause in ad spend.
Speaker 8: transcript
Speaker 8: that growth is there's a new growth element in ROW. And then secondly, I think two other companies have talked about seeing a little bit of a pause in ad spend due to geopolitical factors earlier in the quarter. You seeing anything like that?
Operator: [inaudible] Thank you.
Due to geopolitical factors earlier in the quarter.
Are you seeing anything like that thank you.
Speaker 3: transcript
Speaker 3: So I'll take the second part of your question first, Mark, and thanks for the questions.
So I'll take the second part of your question first Mark and thanks for the questions.
Speaker 3: transcript
Speaker 3: So before I get to that, actually, I want to just take a moment to acknowledge the tragic situation on the ground in Israel and Gaza. While Pinterest doesn't have employees there, our thoughts are definitely with all those that are affected truly beyond words, the situation there.
So before I get to that actually I wanted to take a moment to acknowledge the tragic situation on the ground in Israel in Gaza.
While Petrus doesn't have employees. There are thoughts are definitely with all those that are affected truly beyond words the situation there.
Speaker 3: transcript
Speaker 3: So with regard to the impact of the geopolitical situation, advertisers do react to major geopolitical situations. But spending on our platform has been relatively resilient so far in the quarter.
So with with regard to the impact of the geopolitical situation.
Advertisers do react tomato geopolitical situations, but spending on our platform has been relatively resilient so far in the quarter.
Speaker 3: transcript
Speaker 3: When the Middle East conflict broke out, some brand advertisers did temporarily pause spend, and this resulted in a minor short-term impact. But we've since seen those advertisers largely return.
We're in the Middle East conflict broke out some brand advertisers did temporarily pause spend and this resulted in a minor short term impact, but we've since seen those advertisers largely return.
Operator: Thank you.
Speaker 3: transcript
Speaker 3: uh... and you know if the geopolitical uh... environment were to get materially worse
If the geopolitical environment were to get materially worse, we would expect that brand advertising to be more risk and performance ads will be more resilient. So platform skewed more to brand would be more impacted than we would be.
Speaker 3: transcript
Speaker 3: We'd expect that brand advertising would be more at risk and performance ads would be more resilient.
Speaker 3: transcript
Speaker 3: So platforms skewed more to brand would be more impacted than we would be Given the progress we've made in the lower funnel But if advertisers pull that spend a more meaningful way than what we've seen so far We're not going to be immune to that But taking taking into account everything we know today and what we've seen so far We feel good about our ability to execute in the quarter Bolster by our recent products improvements at the lower end of the funnel Which is factored into our our q4 guidance
Given the progress we've made and the lower funnel.
But if advertisers pullback spend a more meaningful way than what we've seen so far we're not going to be immune to that but taking taking into account everything we know today and what we've seen so far we feel good about our ability to execute in the quarter bolstered by our recent product improvements at the lower end of the funnel, which is factored into our Q4 guidance.
Operator: [inaudible] Thank you.
Speaker 3: transcript
Speaker 3: And then on the mouse side, it continues to be a story of mature markets.
And then on the mall side.
<unk>.
It continues to be a story of mature markets, where it's a story of deepening engagement in mature markets.
Speaker 3: transcript
Speaker 3: where it's a story of deep engagement in mature markets.
Speaker 3: transcript
Speaker 3: And then broad-based strength as you look to rest of the world is getting more and more relevant results. A lot of these things we're talking about in great improvement in relevancy, using next-gen AI technology. These are things we're just having global impact. In mature markets where we've seen a lot of the users that we need to see that manifest as deepening engagement per user. As you look to rest of the world you see even more malgrove happening in those markets.
And then broad based strength as you look to rest of world as we're getting more and more relevant results.
A lot of these things we're talking about in.
Great improvement and relevancy using Nextgen AI technology. These are the things, we're just having global impact and mature markets, where we've seen a lot of the users that we'd need to see that manifest as deepening engagement per user as you look to rest of world you see even more MAU growth happening.
In those markets.
Thank you.
Speaker 2: transcript
Speaker 2: Our next question is from Doug Anmuth s with JD Morgan. Please.
Our next question is from Doug Anmuth with Jpmorgan. Please proceed.
Speaker 9: transcript
Speaker 9: Thanks for taking the questions. At the end of the day, you talked about launching a fully automated ad tool in 2024, similar to some of the other large platforms, which we just hope you could provide an update on that. Perhaps any commentary just around how the build progress is going there. That's all. Thanks.
Thanks for taking the questions.
At the Analyst day, you talked about launching a fully automated AD tool in 2024 similar to some of the other large platforms, which was just hoping you could provide an update on that.
Perhaps any commentary just around how they build progress is going there.
That's all thank you.
Speaker 3: transcript
Speaker 3: Thanks, Doug. Appreciate the question. So we're really pleased with our progress on that front. If you think about sort of the fully automated tools out there, we have most of the components that you'd want to see in that. And we're now bringing those together into a more comprehensive solution. So if you looked at
Thanks, Doug appreciate the question so.
So we're really pleased with our progress on that front.
Do you think about sort of the.
The fully automated tools out there we have.
Most of the components that you would want to see in that and we're now bringing those together into a more comprehensive solution.
So if you looked at.
Speaker 3: transcript
Speaker 3: are bidding now. You know, we'd have a significant majority of our revenue. It would be using automated bidding today. As we look forward into 24, you know, as we progress through the year, you know, we're gonna be giving advertisers more ability to basically give us...
Our bidding now we'd have a significant majority of our revenue it will be using is using automated bidding today as we look forward into 'twenty four.
As we progress through the year.
We're going to be giving advertisers more ability to basically give us.
Speaker 3: You know, give us targets, give us creative, and then leave it to us to go drive campaign results for them. And so, we feel like we're making really great progress there. And so, we think that's another, you know, positive factor as we look forward into 24.
Give us targets give us creative and then leave it to US to go drive campaign results for them and so we feel like we're making really really great progress there.
And so we think thats another.
Operator: Thank you.
Positive factors, we look forward into 'twenty for them.
Operator: [inaudible] Thank you.
Mark Mahaney: Are there any questions from Mark Mahaney with other core ISI? Please proceed. Thanks.
Speaker 2: transcript
Speaker 2: Thank you. Our next question is from Anthony Post with Bank of America. Please proceed. Thank you.
Mark Mahaney: Two questions, please. The growth in MAU is most pronounced in ROW in the rest of the world regions. Any particular markets there are countries you would call out there. Is there something that suggests that growth is there's a new growth element in ROW.
Thank you.
Our next question is from Anthony Post with Bank of America. Please proceed.
Justin.
Line is open.
Bill Ready: And then secondly, I think two other companies that talked about seeing a little bit of a pause in ad spend due to geopolitical factors earlier in the quarter. Are you seeing anything like that? Thank you. So I'll take the second part of your question first, Mark. And thanks for the questions.
Speaker 2: transcript
Speaker 2: Anthony has dropped from the call. So our next question will be from Ron Joseph with city. Please proceed.
Anthony has dropped from the call. So our next question will be from Ron Josey with Citi. Please proceed.
Speaker 8: transcript
Speaker 8: Great, thanks for taking the question. I have two, please. Bill, you talked about when talking about engagement and newer use cases, improvements in users picking up where they left off in prior sessions.
Great. Thanks for taking my question I have two please bill you talked about when you talk about engagement and newer use cases improvements in users picking up where they left off from prior recessions just talk to us more about how that connected search improves overall engagement rates and just the impact overall use cases, and then with mobile deep linking fully launched in July we'd love to see.
Bill Ready: So before I get to that, actually, I want to just take a moment to acknowledge the tragic situation on the ground in Israel and Gaza. While Pinterest doesn't have employees there, our thoughts are definitely with all those that are affected truly beyond words, the situation there. So with regard to the impact of the geopolitical situation, you know, advertisers do react to major geopolitical situations, but spending on a platform has been relatively resilient so far in the quarter.
Speaker 8: transcript
Speaker 8: impact overall use cases. And then with mobile deep linking fully launched in July , I'd love to hear just more insights on overall adoption now that we're GA. And particularly, I think I heard you say we launched direct links in 3Q, but there's more to go. So any insights on that?
We're just more insights on overall adoption now that we're in particularly I think I heard you say, we launch direct links.
<unk>, but there's more to go so any insights on on NPL and direct links would be helpful. Thank you.
Speaker 3: transcript
Speaker 3: Yeah, so on, you know, on this sort of picking up on journeys, you know, that are multi-session, you know, one of the things I think people may not fully appreciate is that a significant portion of commercial journeys are, in fact, multi-session.
Yes, so on <unk>.
Bill Ready: When the Middle East conflict broke out, some brand advertisers did temporarily pause spend. And this resulted in a minor short-term impact. But we've seen those advertisers largely return. And if the geopolitical environment were to get materially worse, we'd expect that brand advertising would be more risk and performance ads would be more resilient. So platforms skewed more to brand would be more impacted than we would be given the progress we've made in the lower funnel.
On this sort of picking up on journeys.
There are multi session one of things I think.
You may not fully appreciate is that.
A significant portion of commercial journeys are in fact multi session.
Speaker 3: transcript
Speaker 3: And if you were to look over the shoulder of a user that's shopping, the way this would manifest is you'd see 30 or 40 browser tabs open at a time oftentimes, which is reflective of how users think about these shopping sessions as multi-session experiences. This is a real core strength of Pinterest, like that pain point of having 30 or 40 browser tabs open at once, that's sort of a core pain point that Pinterest solves.
And if you were to look over the shoulder user theyre shopping the way this would manifest as you'd see.
30, or 40 browser types open at a time.
Oftentimes, which is reflective of how users.
Bill Ready: But if advertisers pull that spend a more meaningful way than what we've seen so far, we're not going to be immune to that. But taking into account everything we know today and what we've seen so far, we feel good about our ability to execute in the quarter bolstered by our recent product improvements at the lower end of the funnel, which is factored into our Q4 guidance.
Think about these shopping sessions as multi session and multi session experiences. This is a real core strength of Petrus like that pain point of having 30 or 40 browser tabs open once that sort of a core pain point that Petra soles.
Speaker 3: transcript
Speaker 3: And so as users are saving on our platform at an increasing rate, we talked about our most recent cohorts, you know, being approximately twice as engaged as past cohorts and saving being a core element of that, as we're making that experience.
So as users are saving on our platform at an increasing rate we talked about our most recent cohorts.
Bill Ready: And then on the mouse side, you know, it continues to be a story of mature markets where, you know, it's a story of deep engagement in mature markets. And then, you know, broad-based strength as you look to rest of the world is we're getting more and more relevant results. You know, a lot of these things we're talking about in, you know, great improvement in relevancy using next-gen AI technology. These are things just having global impact in mature markets where we've seen a lot of the users that we need to see that manifests as deep engagement per user. As you look to rest of the world, you see, you know, even more malgrove happening in those markets. Thank you.
Being approximately twice as engaged as past cohorts and saving being a core element of that as we're making that experience easier and better for the users to go save those journeys with us come back and pick up where they left off and get great recommendations like taking the example, I gave us.
Speaker 3: transcript
Speaker 3: easier and better for the users to go save those journeys with us.
Speaker 3: transcript
Speaker 3: Come back and pick up where they left off and get great recommendations like
The jacket and the shoes that you saved, but then coming back and not only do you get more recommendations about that but things that could go with it are things are relevant to your style, where youre seeing that really play well with users and give you more reasons to come back to Pinterest more frequently.
Speaker 3: transcript
Speaker 3: saved, but then coming back and not only do you get more recommendations about that, but things that could go with it or things that are relevant to your style, we're just seeing that really play well with users and give users more reasons to come back to Pinterest more frequently for their shopping needs. And so we feel really excited about the results there, but we still have a lot more that we can go forward with. But it's a core strength of Pinterest, and it's really unique to our platform, fundamentally different than what users would do on other platforms. And so as we're leaning into that, we're seeing that differentiation shine through more and more. And then on mobile deep links and direct...
For their shopping needs and so we feel really excited about the results there, but we still have a lot more that we can go forward with but it's a core strength of pinterest and its really unique to our platform are fundamentally different and what's what users would do on other platforms and so as we're leaning into that we're seeing that differentiation shine through.
Doug Anmuth: Our next question is from Doug and Moons with JP Morgan. Please proceed. Thanks for taking the questions.
Speaker 3: transcript
Speaker 3: more and more and then you know on mobile deep links and
More and more.
Bill Ready: At the end of the day, you talked about launching a fully automated ad tool in 2024, similar to some of the other large platforms, which we just hope you could provide an update on that. Perhaps any commentary just around how the build progress is going there. That's all. Thank you. Thanks, Doug. I appreciate the question. So we're really pleased with our progress on that front. If you think about sort of the fully automated tools out there, we have most of the components that you'd want to see in that.
And then on mobile deep links and direct links.
Speaker 3: transcript
Speaker 3: The great news with direct links is that we've been able to deploy that more easily for retailers without them having to do work on their end. They still need to do work to measure and then to reallocate budgets.
The great news with direct links is that.
We've been able to deploy that more easily for retailers without them, having to do work on there and they still need to do work to measure and then to reallocate budgets, but our ability to go deliver them more clicks. We then we'll do that without work.
Speaker 3: transcript
Speaker 3: but our ability to go deliver them more quick.
Speaker 3: transcript
Speaker 3: We then will do that without work by the advertisers, particularly with retailers as we're getting into shopping.
By the by the advertisers, particularly with retailers as we're getting into shopping and.
Speaker 3: And so, you know, that, you know, 88% lift and clicks that we noted is a tremendous value creation for the advertisers. And as we look forward and they're getting that, they're seeing that come through in their measurement models and they're thinking about budget, you know, we see a lot of that value capture is still in front of us, even though we're moving very rapidly on the value creation for the advertiser.
So that 88% lift in clicks that we noted.
Is a tremendous value creation for the advertisers and as we look forward and they are getting that they are seeing that come through in their measurement models and theyre thinking about budget.
Bill Ready: And we're now bringing those together into a more comprehensive solution. So if you looked at our bidding now, we'd have a significant majority of our revenue. It would be using automated bidding today. As we look forward into 2024, as we progress through the year, we're going to be giving advertisers more ability to basically give us targets, give us creative, and then leave it to us to go drive campaign results for them. And so we feel like we're making really, really great progress there. And so we think that's another positive factor as we look forward into 2024. Thank you.
We see a lot of that value capture is still in front of us even though we're moving very rapidly on the value creation for the advertiser.
Thank you Bill.
Okay.
Thank you.
Speaker 2: transcript
Speaker 2: Our next question is from Colin Sebastian with Beard. He may press.
Our next question is from Colin Sebastian with Baird You May proceed.
Speaker 10: transcript
Speaker 10: Hey, thanks guys, good afternoon. A couple for me as well. I guess.
Hey, Thanks, guys good afternoon.
For me as well I guess first off when you look at the incremental revenues on the platform I'm curious how much of that growth is from new advertisers versus just higher budget allocation from from existing advertisers and then secondly.
Speaker 10: transcript
Speaker 10: When you look at the incremental revenues on the platform, I'm curious how much of that growth is from new...
Bill Ready: Our next question is from Anthony Post with Bank of America. Please proceed. Justin, Anthony has dropped from the call, so our next question will be from Ron Josey. Please proceed. Great, thanks for taking the question. I have two please. Bill, you talked about when talking about engagement in newer use cases, improvements in users taking up what they left off in prior sessions. Just talk to us more about how that connected search improves overall engagement rates and just the impact overall use cases.
Speaker 10: transcript
Speaker 10: And secondly, apologies if I missed this, but did you provide an update?
Apologies if I missed this but did you provide an update for Q4 to date, an API for conversions.
The penetration rate across revenues on the platform. Thank you.
Speaker 3: transcript
Speaker 3: So on your first question, we've seen certainly a nice mix of new advertisers coming in as well as our team compelling results. But as I noted in my prior comments, our strength, particularly in retail, has been broad-based. And we've actually seen the larger, more sophisticated advertisers have been, at the core of that. And so seeing those most sophisticated advertisers are seeing great performance from us.
Yeah. So on your first question.
We've seen certainly a nice mix of new advertisers coming in as well as seeing compelling results.
As I noted in my prior comments, our strength, particularly in retail has been broad based.
And we've actually seen the larger more sophisticated advertisers.
Have been at the core of that and so seeing those most sophisticated advertisers are seeing great performance from us.
Speaker 3: transcript
Speaker 3: They're, you know, as a cohort growing faster than our revenue overall, in fact, across all of our large sophisticated.
Bill Ready: And then with mobile be blinking, fully launched in July, we'd love to hear just more insights on overall adoption now that we're GA and particularly I think I heard you say we launched direct links in three key, but there's more to go. So any insights on MD Allen, direct links to be helpful. Thank you. Yeah, so on, you know, on this sort of picking up on journeys, you know, their multi session, you know, one of the things I think people may not fully appreciate is that a significant portion of commercial journeys are in fact multi session.
As a cohort growing faster than our revenue overall, it's actually across all of our large sophisticated.
Speaker 3: transcript
Speaker 3: advertisers, particularly in retail, we're seeing them growing faster than our revenue growth rate overall. So I think that bodes really well for just how our lower-final performance-oriented solutions are driving value for advertisers.
Advertisers, particularly in retail, we're seeing them growing faster than our revenue growth rate overall, so I think that bodes really well for just how our lower funnel performance oriented solutions are driving value for advertisers.
Bill Ready: And you know, if you were to look over the shoulder, you know, a user that's shopping, the way this would manifest is you'd see, you know, 30 or 40 browser tabs open at a time oftentimes, which is reflective of how users think about these shopping sessions as multi session multi session experiences. This is a real core strength of Pinterest, like that pain point of having 30 or 40 browser tabs open at once, that's sort of a core pain point that Pinterest solves.
Speaker 3: transcript
Speaker 3: And that's working well with large retailers. It's also helping to bring in emerging categories as well. I've commented on some of those emerging categories like travel and financial services and others.
And thats working well with with large retailers and it's also helping to bring in emerging categories as well as comment on some of those emerging categories like travel and financial services and others.
Speaker 3: transcript
Speaker 3: And so there are new advertisers coming on to the platform as well. But retail has been the largest contributor to our growth.
So there are new advertisers coming onto the platform as well, but retail has been the largest contributor to our growth.
Speaker 3: transcript
Speaker 3: and driven particularly by larger sophisticated advertisers, which we always say if you can make them happy, you can make just about anybody happy and so we expect that that trend of...
And driven particularly by larger sophisticated advertisers, which we always say if you can make them happy you can make just about anybody happy and so we expect that that trend of other advertisers coming in or leaning more into the platform.
Speaker 3: other advertisers coming in or leaning more into the platform, you know.
And we continue and then Colin to your second question about the sort of penetration update on API for conversion. So we did not update that is that simply because we just gave it to you all last month at Investor Day. So just a reminder, there at that time, we said that as of August 28% of total revenue has adopted the API for conversions App, which is up.
Speaker 4: transcript
Speaker 4: And then, Colin, to your second question about the sort of penetration update on API for conversions. So we did not update that stat simply because we just gave it to you all last month at Investor Day. So just a reminder there, at that time we said that as of August , 28 percent of total revenue has adopted the API for conversions app, which is up from 14 percent at the start of the year. So it's continuing to see nice progress there. Thank you. Thank you.
Bill Ready: And so as users are saving on our platform at an increasing rate, we talked about our most recent cohorts, you know, being approximately twice as engaged as past cohorts and saving being a core element of that. As we're making that experience easier and better for the users to go save those journeys with us, come back and pick up where they left off and get great recommendations like taking the, you know, the example I gave of, you know, taking the jacket and the shoes that you saved, but then coming back and not only do you get more recommendations about that.
From 14% at the start of the year.
So it's continuing to see nice progress there.
Okay.
Thank you Eric next question.
Our next question is from Mark Kelley with Piper Paul You May proceed.
Bill Ready: But things that you go with and the things are relevant to your style, we're seeing that really play well with users and give users more reasons to come back to Pinterest more frequently for their shopping needs.
Yes.
Speaker 11: transcript
Speaker 11: Great, thanks very much. I had two quick ones. The first one is just on
Great. Thanks very much.
Two quick ones. The first one is just on.
Speaker 11: transcript
Speaker 11: Just the importance of whether it's Amazon or other third parties.
Just the importance of whether it's Amazon or other third party demand partners that you bring on overtime I guess how important.
Bill Ready: And so we feel really excited about the results there, but we still have a lot more that we can go forward with. But it's a core strength of Pinterest and it's really unique to our platform, fundamentally different than what users would do on other platforms. And so as we're leaning into that, we're seeing a differentiation sign through more and more. And then, you know, on mobile deep links and direct links, you know, the great news with direct links is that, you know, we've been able to deploy that more easily for retailers without them having to do work on their end.
Speaker 11: transcript
Speaker 11: bring out over time, I guess, how important are those partnerships to international expansion? Does that make it easier, you know, partnering with a tech provider that's kind of widely adopted? That's the first one. And then the second one, just to follow-up.
Those partnerships to international expansion does that make it easy.
Easier partnering with a provider that's kind of a widely adopted.
The first one and then the second one just to follow up on API for conversions.
Speaker 11: transcript
Speaker 11: Is that something that you expect to kind of slowly increase in terms of adoption and then kind of a rush at the last minute, you know, when cookies are deprecated on Chrome, or I guess what's the path forward bigger.
Is that something that you expect to kind of slowly increase in terms of adoption and then kind of a rush at the last minute.
Morning, cookies are deprecated on chrome or I guess, what's the path forward.
Bigger picture.
Speaker 3: transcript
Speaker 3: Thanks for the questions, Mark. So on your first question there.
Thanks for the questions Marc So on your first question there.
Bill Ready: They still need to do work to measure and then to reallocate budgets. But our ability to go deliver them more clicks, we then will do that without work by the advertisers, particularly with retailers that we're getting into shopping. And so, you know, that, you know, 88% lift and clicks that we noted is a tremendous value creation for the advertisers. And as we look forward and they're seeing that come through in their measurement models and they're thinking about budget, you know, we see a lot of that value capture is still in front of us, even though we're moving very rapidly on the value creation for the advertisers. Thank you, Bill.
Speaker 3: transcript
Speaker 3: We've not talked about, there's no specific new announcement around third party for international anything like that, but we have talked about how we are significantly undermonitized internationally and that as we look forward.
We've not talked about.
Operator: Thank you.
No specific new announcements around third party for international anything like that but we have talked about how we are.
Significantly under monetize internationally.
And that as we look forward.
Speaker 3: transcript
Speaker 3: and think about how 3P could help with our business overall. International is definitely a place that we think third-party demand can be particularly helpful. We had some comments on this in Investor Day, both around third parties, around working with resellers internationally, all of which can help accelerate our progress.
And think about how <unk> could help with our business overall international is definitely a place that we think third party demand can be particularly.
Particularly helpful. We had some comments on this in Investor day.
Both round third parties around working with resellers internationally, all of which can help accelerate our progress internationally, that's definitely something that were.
Speaker 3: transcript
Speaker 3: International. So that's definitely something that we're, you know, folks on as we go into next year is driving greater R Poo internationally, given our undermonidization there. And, you know, we see, you know, third party as they contribute to that along with other efforts like resellers and other things that can bring relevant demand onto the platform.
Focusing on as we go into next year is driving greater ARPA internationally, given our under monetization there and we see third party as a contributor to that along with other efforts like resellers and.
Colin Sebastian: Our next question is from Colin Sebastian with Baird. You may proceed. Hey, thanks, guys. Good afternoon. A couple from you as well.
Other things that can bring relevant demand onto the platform.
Nationally.
Speaker 3: transcript
Speaker 3: And then on Kathy, you know, to your point, as we go into 24.
And then on copy to your point as we go into 'twenty four.
Bill Ready: I guess first off, when you look at the incremental revenues on the platform, I'm curious how much of that growth is from new advertisers versus just higher budget allocation from existing advertisers. And then secondly, apologies if I missed this, but did you provide an update for Q4 to date on API for conversions, the penetration rate across revenues on the platform? Thank you. Yeah. So on your first question, you know, we've seen certainly a nice mix of new advertisers coming in as well as are seeing compelling results.
Speaker 3: transcript
Speaker 3: I think we've seen as we look backward the larger more sophisticated advertisers.
I think we've seen.
As we look backward the larger more sophisticated advertisers.
Speaker 3: transcript
Speaker 3: You know, have been at the earlier end of the adoption curve on these things.
Have been at the earlier end of the adoption curve on these things.
Speaker 3: transcript
Speaker 3: But as we look into 24 and you know there there'll be you can or there has been stated
But as we look into 'twenty four.
And there will be.
There has been stated.
Our desire.
Speaker 3: transcript
Speaker 3: desire to make further progress by, you know, browser, you know, major browser providers in deprecating cookies. I think that will create more forcing function for the industry as we go into 24. So, you know, I don't have a better crystal ball than anybody else, but I do think as we move toward that coochless future, that will create some forcing function for advertisers.
Desire to make further progress by browser major browser providers and.
In deprecating cookies, I think that will create more forcing function for the industry as we go into 'twenty four.
Bill Ready: But as I noted in my prior comments, our strength, particularly in retail has been broad based. And we've actually seen the larger more sophisticated advertisers have been at the core of that. And so seeing those most sophisticated advertisers are seeing great performance from us. As a cohort growing faster than our revenue overall, in fact, across all of our large sophisticated advertisers, particularly in retail, we're seeing them growing faster than our revenue growth rate overall.
I don't have a better crystal ball than anybody else, but I do think as we.
We move towards that particular future that will create some forcing function for advertisers to implement privacy safe measurement.
Speaker 3: transcript
Speaker 3: to implement privacy-safe measurement. And then I think the other thing just as we face.
And then I think the other thing just as we face a tokyo's future we've talked about this.
Speaker 3: transcript
Speaker 3: a coculus future we've talked about this. You know, we think the industry broadly isn't a similar boat around the need to implement privacy safe measurement.
We think the industry broadly as a <unk>.
Similar boat around needing to implement privacy safe measurement tools, but we think platforms are in very different boats as it pertains to being able to sort of relevant ads to users.
Speaker 3: transcript
Speaker 3: but we think platforms are in very different boats as it pertains to being able to sort of relevant ads to users. And stated very simply, Pinterest doesn't need to follow users around the internet to know what they're interested in. Users come on Pinterest and tell us what they're interested in. So our ability to sort of great relevant ads to users is driven by what users do on...
And stated very simply Petrus doesn't need to follow uses around the internet to know what they're interested in users come on Pinterest and tell us what they're interested in so our ability to serve great relevant ads to users is driven by what users do on Earth.
Bill Ready: So I think that bodes really well for just how our lower funnel performance oriented solutions are driving value for advertisers. And that's working well with large retailers. It's also helping to bring in emerging categories as well. We've come in on some of those emerging categories like travel and financial services and others. And so there are new advertisers coming on to the platform as well. But retail has been the largest contributor to our growth and driven particularly by larger sophisticated advertisers, which we always say if you can make them happy, you can make just about anybody happy. And so we expect that that trend of other advertisers coming in or leaning more into the platform. We'll only continue.
By our first party signal and so we think we're positioned quite well.
Speaker 3: transcript
Speaker 3: So we think we're positioned quite well as it pertains to delivering great relevant ads for users even as we move into a coquilist future. And then on the measurement side, yes, the industry, I suspect will continue to accelerate the adoption.
As it pertains to delivering great relevant ads for users, even as we move into a <unk> future.
And then on the measurement side, yes, the industry.
I suspect we will continue to accelerate the adoption those prices as measurement tools as we go into 'twenty four.
Thank you.
Speaker 2: transcript
Our next question is from Tom Champion with Piper Sandler. You may proceed.
Julia Donnelly: And then Colin, to your second question about the sort of penetration update on API for conversions. So we did not update that simply because we just gave it to you all last month at investor day. So just a reminder there at that time we said that as of August 28% of total revenue has adopted the API for conversions app, which is up from 14% at the start of the year. So continuing to see nice progress there. Thank you. Thanks for your question.
Our next question is from Tom Champion with Piper Sandler You May proceed.
Okay.
Speaker 6: transcript
Good afternoon. Bill on Amazon, is there any sensitivity to managing the existing 1P advertiser base when layering on a major partner?
Good afternoon, Bill and Amazon is there any sensitivity to managing the existing <unk> Advertiser base win layering on.
A major partner or.
Speaker 11: transcript
additional partners in the future. Is there any impact to existing advertiser price or ROI or any trade-off there to keep in mind? And then Julia, maybe for you, just curious if you could discuss the very strong revenue growth in Europe and in 3Q, any call outs there, anything to monitor on the regulatory front there as well. Thank you.
Additional.
Partners in the future or is there any impact to existing <unk>.
Advertiser price or ROI or any trade off there too to keep in mind and then Julie.
Julian maybe for you just curious if you could discuss the very strong revenue growth in Europe and <unk>.
Mark Kelley: Our next question is from Mark Kelly with type all you may proceed. Great. Thanks very much. I have two quick ones. The first one is just on. Just the importance of whether it's Amazon or other third party demand partners that you bring out over time. I guess how important are those partnerships to international expansion? Does that make it easier? We're partnering with a tech provider that's kind of widely adopted. That's the first one.
Any callouts there anything to monitor on the regulatory front there as well thank you.
Yep.
It takes time for the questions.
Speaker 3: transcript
You know, sort of your point on one P versus three P, I think you're sort of getting out like, is there a channel conflict kind of issue there? And we've not really seen that surface. So what we've really seen surface and I think this is evidenced by the meaningful increase in relevance.
To your point on <unk> versus <unk>, I think youre sort of getting out like is there a channel conflicts kind of issue there.
Not really seen that surface, where we've really seen surface and I think this is evidenced by.
Mark Kelley: And then the second one just to follow up on API for conversions. Is that something that you expect to kind of slowly increase in terms of adoption and then kind of a rush at the last minute, you know, when cookies are deprecated on chrome or I guess what's the past forward? or a picture?
The meaningful increase in relevance is it we're really seeing a lot of new demand that's coming through that.
Speaker 3: transcript
is that we're really seeing a lot of new demand coming through that. You would have the relevancy increases if you weren't seeing new demand that wasn't already on the platform. So that's really been the highlight.
The relevancy increases if you werent seeing new demand that wasn't already on the platform. So that's really been the highlight so far is it is making it so that.
Speaker 3: transcript
so far is that it's making it so that there's new relevant demand showing up on our platform, which is why it's been, you know, so engaged and positive.
There is new relevant demand showing up on our platform, which is why it's been.
Bill Ready: Thanks for questions, Mark. So on your first question there, you know, we've not talked about, you know, there's no specific new announcements around third party for international and anything like that, but we have talked about how we are significantly undermonitized internationally and that as we look forward and think about how 3P could help with our business overall, international is definitely a place that we think third party domain can be particularly helpful.
So engagement positive for users. So we've not seen any particular concern there.
Speaker 3: transcript
for users. So we've not seen a particular concern there. Certainly something that we would watch for and pay attention to. We actually think these things are quite synergistic with one another.
We would watch for and pay attention to we actually think these things are quite synergistic with one another.
Speaker 4: transcript
And then I'll give it over to Julie. Yeah, so Tom, on your question on sort of European growth in Q3 specifically, so we did see some strong growth there from CPG and also from emerging verticals, such as technology and the auto vertical. But this was also amplified by strong growth with agencies. As we've talked about historically, agencies play a differential role in the European market specifically.
And then I'll give it over to.
Yes, so Tom on your question on sort of European growth in Q3, specifically, so we did see some strong growth there from CPG and also from emerging verticals, such as technology and the auto vertical but this was also amplified by strong growth with agencies as we've talked about historically agencies play a differential.
Bill Ready: We had some comments on this in investor day, both around third parties, around working with resellers internationally, all of which can help accelerate our progress internationally. So that's definitely something that we're, you know, focusing on as we go into next year is driving greater RPU internationally given our undermonitization there. And, you know, we see, you know, third party as a contributor to that, along with other efforts like resellers and other things that can bring relevant demand onto the platform internationally.
<unk> role in the European markets specifically.
Speaker 4: transcript
Some of it was also, to be fair, a little bit of an easier comp in Q3 of last year, both on a reported and a constant currency basis. And so I think that's something also that's worth calling out and no major impact that we see today in our business or expect on the regulatory front either.
Some of it was also to be fair, a little bit of an easier comp in Q3 of last year, both on a reported and a constant currency basis and so.
I think that's something also that it's worth calling out and no major impact that we see today in our business are expect on the regulatory front either.
Bill Ready: And then on Kathy, you know, to your point, as we go into 24, I think we've seen, you know, as we look back where the larger, more sophisticated advertisers, you know, have been, you know, at the earlier end of the adoption curve on these things, but as we look into 24, and, you know, there will be, you know, there has been stated, desired to make further progress by, you know, browser, you know, major browser providers and deprecating cookies, I think that will create more forcing function for the industry as we go into 24. So, you know, I don't have a better crystal ball than anybody else, but I do think as we move toward that calculus future, that will create some forcing function for advertisers to implement privacy-safe measurement.
Thank you.
Speaker 2: transcript
This was the last question for today's call, so I will now hand the call over to Bill Ready for closing remarks.
This was the last question for today's call I will now hand, the call over to Bill ready for closing remarks.
Speaker 3: transcript
Thanks again to all of you for joining the call and for your questions. We look forward to keeping this dialogue going and we hope you all enjoy the rest of your day.
Thanks again to all of you for joining the call and for your questions. We look forward to keeping this dialogue going and we hope you all enjoy the rest of your day.
Yeah.
Speaker 1: transcript
That concludes today's Pinterest third quarter 2023 earnings conference call. Thank you for your participation. You may now disconnect to our line.
That concludes today's Pinterest third quarter 2023 earnings conference call. Thank you for your participation you may now disconnect your lines.
Bill Ready: And then I think the other thing just as we face a calculus future, we've talked about this, you know, we think the industry broadly is in a similar boat around needing to implement privacy-safe measurement tools. But we think platforms are in very different boats as it pertains to being able to sort of relevant ads to users. And stated very simply, Pinterest doesn't need to follow users around the internet to know what they're interested in.
Bill Ready: Users come on Pinterest and tell us what they're interested in. So, our ability to sort of great relevant ads to users is driven by what users do on our first 40 signal. And so, we think we're positioned quite well as it pertains to delivering great relevant ads for users even as we move into a calculus future. And then, you know, on the measurement side, yes, the industry, you know, I suspect we'll continue to accelerate the adoption of those privacy-safe measurement tools as we go into 24.
Operator: Thank you.
Tom Champion: Our next question is from Tom Champian with Piper Famler. You may proceed.
Bill Ready: Good afternoon. Bill, on Amazon, is there any sensitivity to managing the existing 1P advertiser base when layering on a major partner or additional partners in the future? Is there any impact to existing advertiser price or ROI or any trade-off there to keep in mind? And then, Julia, maybe for you, just curious if you could discuss the very strong revenue growth in Europe and in 3Q, any call out there or anything to monitor on the regulatory front there as well.
Julia Donnelly: Thank you. Thanks Tom for the questions. Your point on one P versus three P, I think you're sort of getting out like is there a channel conflict kind of issue there? And we've not really seen that surface, so what we've really seen surface and I think this is evidenced by the meaningful increase in relevance, is there really seeing a lot of new demand coming through that. The relevance increases if you weren't seeing a new demand that wasn't already on the platform.
Julia Donnelly: So that's really been the highlight. So far, is it is making it so that there's new relevant demand showing up on our platform, which is why it's been so engaged and positive for users. So we've not seen a particular concern there. Certainly something that we would watch for and pay attention to. We actually think these things are quite synergistic with one another.
Julia Donnelly: And then I'll give it over to Tom on your question on sort of European growth in Q3 specifically. So we did see some strong growth there from CPG and also from emerging verticals such as technology and the auto vertical. But this was also amplified by strong growth with agencies as we've talked about historically agencies play a differential role in the European market specifically. Some of it was also to be fair a little bit of an easier comp in Q3 of last year, both on a reported and a constant currency basis. And so I think that's something also that's worth calling out and no major impact that we see today in our business or expect on the regulatory front either.
Operator: Thank you.
Bill Ready: This was the last question for today's call. So I will now hand the call over to Bill ready for closing remarks. Thanks again to all of you for joining the call and for your questions. We look forward to keeping this dialogue going and we hope you all enjoy the rest of your day. That concludes today's Pinterest third quarter 2023 earnings conference call. Thank you for your participation.
Operator: You may now disconnect your line.