Q4 2023 Pinterest Inc Earnings Call

Kate: Thanks for watching! Good afternoon, and thank you for joining the Pinterest fourth quarter and full year 2023 earnings call. My name is Kate, and I will be the moderator for today's call. At this time, all lines are in a listen-only mode, and there will be an opportunity for questions and answers at the end. If you would like to ask a question, you may queue up by pressing a star followed by a one on your telephone keypad.

Okay.

Okay.

Kate: Good afternoon, and thank you for joining the <unk> fourth quarter and full year of 2023 earnings call. My name is Kate and I will be the moderator for today's call. At this time all lines are in a listen only mode and there will be an opportunity for questions and answers at the end. If you would like to ask a question you make you up by pressing star followed by one on your telephone.

Kate: Again, that is a star followed by a one on your telephone keypad. I would now like to pass the call over to your host, Neil Doshi, head of investor relations at Pinterest. You may proceed. Good afternoon, and thank you for joining us. Welcome to the Pinterest earnings call for the fourth quarter and full year ended December 31, 2023. I'm Neil Doshi, Vice President of Investor Relations for Pinterest. Joining me today on the call are Bill Ready, Pinterest CEO, and Julia Donnelly, our CFO. We are providing a slide presentation to accompany our commentary, and this conference call is also being webcast. Please refer to our Investor Relations website at investor.pinterestinc.com to find today's presentation, webcast, and earnings release. 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.

Kate: Don't keep up again that is star followed by a one on your telephone keypad I would now like to pass the call over to your host Neil Doshi head of Investor Relations at Suntrust. You May proceed.

Kate: Good afternoon, and thank you for joining US welcome to Pinterest earnings call for the fourth quarter and full year ended December 31, 2023, and Neil Doshi, Vice President of Investor Relations for Pinterest, joining me today on the call are bill ready Pinterest, CEO and Julia Donnelly, our CFO, we're providing a slide presentation to accompany our commentary this conference.

Kate: Call is also being webcast. Please refer to our Investor relations website at Investor deck interesting Dot com to find today's presentation webcast in earnings press release, 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.

Kate: In addition, our results trends and outlooks for Q1 2024 and beyond are preliminary and are not an insurance or future performance. We are making these forward looking statements based on information available to us as of today, and we expressly disclaim any duty to or obligation to update them unless required by law.

Neil A. Doshi: In addition, our results, trends, and outlooks for Q1 2024 and beyond are preliminary and are not an assurance of future performance. We are making these forward-looking statements based on information available to us as of today, and we expressly disclaim any duty or obligation to update them unless required by law. For more information about risks, uncertainties, and other factors that could affect our results, please refer to our most recent annual report, Form 10-K, and quarterly report, Form 10-Q, filed with the SEC and available on our investor relations website. During this call, we will present both GAAP and non-GAAP financial measures; a reconciliation of non-GAAP measures to the most directly comparable GAAP measures is included in today's earnings press release and presentation, which Lastly, all growth rates discussed in today's prepared remarks should be considered year-over-year unless otherwise specified. Now, we'll turn the call over to Bill.

Kate: For more information about risks uncertainties and other factors that could affect our results. Please refer to our most recent annual report Form 10-K, and quarterly report Form 10-Q filed with the SEC and available on our Investor Relations website.

Kate: During this call we will present, both GAAP and non-GAAP financial measures a reconciliation of non-GAAP measures to the.

Kate: To the most directly comparable 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.

Kate: All growth rates discussed in todays prepared remarks should be considered year over year, unless otherwise specified and now I'll turn the call over to bill.

William J. Ready: Thanks, Neil. Good afternoon, and thank you for joining our fourth quarter and full year 2023 earnings call. In Q4, our team executed well against our strategic priorities, growing user engagement, gaining further traction with our lower funnel advertising offerings, and delivering on operational efficiency. Our efforts to grow users and deepen engagement continue to yield strong results. Global MAUs hit another all-time record of 498 million, growing 11 percent, accelerating from last quarter, and growing sequentially in all of our geographic regions.

William J. Ready: Thanks, Neil Good afternoon, and thank you for joining our fourth quarter and full year 2023 earnings call.

William J. Ready: In Q4, our team executed well against our strategic priorities growing users and engagement gaining further traction with our lower funnel advertising offerings and delivering on operational efficiency.

William J. Ready: Our efforts to grow users and deepen engagement continued to yield strong results.

William J. Ready: Global Meus hit another all time record of 498 million growing 11% accelerating from last quarter and growing sequentially in all of our geographic regions.

William J. Ready: Q4 revenue of $981 million grew 12%, marking continued double-digit revenue growth in the second half of this year. And while growing revenue and engagement, we continue to demonstrate operational efficiency and disciplined expense management, resulting in Q4 adjusted EBITDA of $365 million, or a 37% margin, up more than 1,400 basis points from last year. Our strong product delivery in Q4 and throughout 2023, with investments focused on lower funnel offerings like mobile deep linking, shopping ads, API for conversions, and most recently, direct links, are delivering sustained ROI improvements for advertisers. This is leading to advertisers growing their budgets with us and has resulted in further acceleration so far in Q1, which is reflected in our guidance that Julia will describe in further detail later in the call. Before I discuss Q4, I'd like to reflect back on the progress we made over the past year. We entered 2023 with a backdrop of a challenging macroeconomic environment and a weak digital advertising market.

William J. Ready: Q4 revenue of $981 million grew 12%, marking continued double digit revenue growth in the second half of this year.

William J. Ready: And while growing revenue and engagement, we continue to demonstrate operational efficiency and disciplined expense management, resulting in Q4, adjusted EBITDA of $365 million or a 37% margin up more than 4500 basis points from last year.

William J. Ready: Our strong product delivery in Q4 and throughout 2023 with investments focused in lower funnel offerings like mobile deep linking shopping ads API for conversions and most recently direct links are delivering sustained ROI improvements for advertisers.

William J. Ready: This is leading to advertisers growing their budgets with us and has resulted in further acceleration. So far in Q1, which is reflected in our guidance that Julian will describe further in further detail later in the call.

Speaker Change: Before I discuss Q4 I'd like to reflect back on the progress we've made over the past year.

Speaker Change: We entered 2023 with a backdrop of a challenging macroeconomic environment and a weak digital ads market. However, we delivered strong execution against the strategic priorities, we laid out during the second half of 2022, which enabled us to grow through the downturn and get back to double digit revenue growth in the back half of 2023.

William J. Ready: However, we delivered strong execution against the strategic priorities we laid out during the second half of 2022, which enabled us to grow through the downturn and get back to double-digit revenue growth in the back half of 2023. During this period, we made significant investments in AI that drove improvements in our overall platform for users and advertisers. And we significantly accelerated product velocity across our most important priorities, propelling growth last year and laying the foundation for the future. We focus on helping users find new reasons to come back to Pinterest more often. We have also invested in the elements that made Pinterest so beloved and unique in the first place, like human curation through saving and organizing content.

Speaker Change: During this period, we made significant investments in AI. They drove improvements in our overall platform for users and advertisers and we significantly accelerated product velocity across our most important priorities propelling growth last year and laying the foundation for the future.

Speaker Change: We focused on helping users find new reasons to come back to <unk> more often.

Speaker Change: We also invested in the elements that made petrus, so beloved and unique in the first place like human curation through saving and organizing content.

William J. Ready: And as a result, MAUs are growing, and users are engaging more deeply with the platform than before. We also made significant advancements in the shopability of the platform. More than half of our users view Pinterest as a place to shop, but historically, it was not easy to click out and go to a merchant site to buy the product you found on Pinterest.

Speaker Change: And as a result may use our growing end users are engaging more deeply with the platform than before.

Speaker Change: We also made significant advancements on the shop ability of the platform.

Speaker Change: More than half of our users view <unk> as a place to shop, but historically it was not easy to click out and go to a merchant site to buy the product you found on Pinterest.

William J. Ready: Last year, we improved the shopping experience by bringing shopping content front and center into our home feed, search, and related services. As a result, we saw engagement with that shoppable content accelerate, as users clicked and saved that content at rates significantly higher than in the past. This was clear evidence to us that people come to Pinterest with intent and will take action when we make it easy for them to do so.

Speaker Change: Last year, we improved the shopping experience by bringing shopping content front and center into our home feed search and related services.

Speaker Change: As a result, we saw engagement with that shopping content accelerate as users clicked and save that content at rates significantly higher than in the past.

Speaker Change: This was clear evidence to us that people come to Pinterest with intent and we will take action when we make it easy for them to do so.

William J. Ready: On the monetization front, the teams innovated across the entire funnel, with particular emphasis on the lower funnel, as we made it more seamless for users to pivot from inspiration to action through increased shoppability. In fact, 2023 was one of our most productive years for ads innovation, as we accelerated product delivery and launched more ad formats, tools, and solutions than ever before, and continued to drive adoption of our lower funnel solutions for advertisers. These include seamless handoffs like mobile deep linking and direct links, new ad formats like Premier Spotlight, travel catalogs, and lead ads, and measurement solutions like our API for conversion and cleanroom integration. As a smaller player in the overall digital ads ecosystem, adding third-party demand to increase the comprehensiveness of our catalog and the relevance of our ads was a key priority for us.

Speaker Change: On the monetization front the teams innovated across the entire funnel with particular emphasis in the lower funnel as we made it more seamless for users to pivot from inspiration to action through increased profitability. In fact 2023 was one of our most productive years for ads innovation as we accelerated product delivery and launched more ad formats.

Speaker Change: And solutions than ever before and continue to drive adoption of our lower funnel solutions for advertisers.

Speaker Change: These include seamless handoffs like mobile deep linking and direct links new AD formats like Premier spotlight travel catalogs and lead ads and measurement solutions like our API for conversion and clean room integrations.

Speaker Change: As a smaller player in the overall digital ads ecosystem, adding third party demand to increase the comprehensiveness of our catalog and the relevance of our ads was a key priority for us.

William J. Ready: Last year, we announced and launched our first third-party ad partner, Amazon Ads, which is scaling well, and we will continue to advance our third-party demand efforts this year and beyond to bring relevant ads that can enhance the user shopping journey. Putting all this together, we were able to achieve year-over-year revenue growth in every quarter in 2023 and get back to double-digit growth in the second half, and we did this while controlling our costs and expanding margins. When we started the year, we laid out a plan to achieve around 200 basis points of adjusted EBITDA margin expansion for the full year.

Speaker Change: Last year, we announced and launched our first third party AD partner with Amazon ads, which is scaling well and we will continue to advance our third party demand efforts this year and beyond to bring relevant ads that can enhance the user shopping journey.

Speaker Change: Putting all this together we were able to achieve year over year revenue growth in every quarter in 2023 and get back to double digit growth in the second half and we did this while controlling our costs and expanding margins.

Speaker Change: When we started the year, we laid out a plan to achieve around 200 basis points of adjusted EBITDA margin expansion for the full year.

William J. Ready: With revenue growth, operational rigor, and cost optimization, we were able to deliver 660 basis points of adjusted EBITDA margin expansion for 2023. I believe that constraints breed creativity, and in this environment, our teams are able to deliver better experiences for our users and our advertisers with clarity, focus, and discipline. Lastly, with a strong executive team, many of whom joined in 2023, we have the right leadership and a strong foundation to execute against our strategic priorities in 2024 and beyond.

Speaker Change: With revenue growth operational rigor and cost optimization, we were able to deliver 660 basis points of adjusted EBITA margin expansion for 2023.

Speaker Change: I believe the constraints <unk> creativity and in this environment, our teams were able to deliver better experiences for our users and our advertisers with clarity focus and discipline.

Speaker Change: Lastly, with a strong executive team many of whom joined in 2023, we have the right leadership and a strong foundation to execute against our strategic priorities in 2024 and beyond.

Speaker Change: Now, let's take a closer look at the initiatives, we launched in Q4 to advance our strategic priorities.

William J. Ready: Now, let's take a closer look at the initiatives we launched in Q4 to advance our strategic priorities. During the quarter, we made key updates along the entire Inspiration to Action journey to grow our users and deepen engagement. These investments are paying off.

Speaker Change: During the quarter, we made key updates along the entire inspiration to action journey to grow our users and deepen engagement. These.

These investments are paying off we.

William J. Ready: We had our fastest global MAU growth since Q1 of 2021, and we're seeing our best product market fit in years, as evidenced by the strong growth in our Gen Z demographic and the fact that our most recent user cohorts are significantly more engaged than user cohorts from prior years, consistent with what we shared at our investor day. Starting with inspiration, we're enhancing the way users find inspiring content and hone in on exactly what they're looking for by making improvements to our core search capabilities. In Q4, we began testing generative AI-based search guides, which help users refine their understanding from broad queries like kitchen ideas into more structured avenues of exploration like rustic farmhouse kitchens or kitchen organization hacks.

Speaker Change: Our fastest global Mou growth since Q1 of 2021, and we're seeing our best product market fit in years as evidenced by the strong growth in our Gen Z demographic in the fact that our most recent user cohorts are significantly more engaged and user cohorts from prior years consistent with what we shared at our Investor day.

Speaker Change: Starting with inspiration we're enhancing the way users find inspiring content and hone in on exactly what theyre looking forward by making improvements to our core search capabilities.

Speaker Change: In Q4, we began testing generative AI based search gods, which help us refine our understanding from broad queries like kitchen ideas into more structured avenues of exploration like rustic farmhouse kitchen, where kitchen organization hacks.

William J. Ready: Helping users get closer to the point of action or purchase. Additionally, these generative search guides highlight the advancements we're making in AI on the platform in ways that are additive and authentic to the user and that we expect will lead to continued improvements in engagement and retention. After users search for and find the content they're looking for, we're developing new ways to help users curate that inspirational content. At our Investor Day, we introduced Collages, a new interactive pen format composed of cutouts that users can engage with. Users can tap on an image within a scene to cut out components of the image they love and combine them with other cutouts to create interactive collages of their favorite ideas, all in one place.

Speaker Change: <unk> users get closer to the point of action or purchase.

Speaker Change: Additionally, these generative search guys highlight the advancements we're making in AI on the platform in ways that are additive and authentic to the user and that we expect will lead to continued improvements in engagement and retention.

Speaker Change: After users search for and find the content. They are looking for we're developing new ways to help users curate that inspirational content.

Speaker Change: At our Investor Day, we introduced collages, a new interactive pen format composed of cutoffs that users can engage with us.

Speaker Change: Can you just can tap on an image within athene to cut out components of the image They love and combine them with other cutoffs to create interactive clauses of their favorite ideas all in one place.

William J. Ready: In addition, users can tap on a cutout within a collage to see its associated products, if available, or the source pen that the object was cut out of. This has the potential to create a flywheel of content creation and engagement, which we're excited about. In Q4, we rolled out the collage functionality to nearly all iOS users globally. I'm pleased that this feature is now broadly available for our users, as cutouts and collages are a new frontier of creation on Pinterest and allow users to express their creativity and taste in even more visually immersive ways.

Speaker Change: In addition, users can tap on it cut out within a collage to see its associated products if available or the source of the object was cut out of it.

Speaker Change: And this has the potential to create a flywheel of content creation and engagement, which we're excited about in.

Speaker Change: In Q4, we rolled out the collage functionality to nearly all iOS users globally I'm pleased that this feature is now broadly available for our users as cutouts and collage as our new frontier of creation on Pinterest and allow users to express their creativity and taste and even more visually immersive ways.

Speaker Change: It also provides us with great first party signals on what users are interested in part its associations emerging trends and how we can surface more content and products that are aligned with users evolving tastes.

William J. Ready: It also provides us with great first-party signals on what users are interested in, product associations, emerging trends, and how we can surface more content and products that are aligned with users' evolving tastes. And we're seeing strong early results and positive feedback from our users. They're finding collages highly engaging, with users three times more likely to save collage pens versus other pens on Pinterest. And a majority of collages are created by users who have not previously created a pen.

Speaker Change: And we're seeing strong early results and positive feedback from our users, they're finding collages highly engaging with users three times more likely to save collage pens versus other pins on pinterest and the majority of clauses are created by users who had not previously created a pen.

Speaker Change: Clauses also skew heavily towards shop more content with approximately 75% of collages utilizing a product Penn showing the intent are usually bring when creating an engaging with content on Penn trusts.

William J. Ready: Collages also skew heavily towards shoppable content, with approximately 75% of collages utilizing a product pen, showing the intent our users bring when creating and engaging with content on Pinterest. Moving further down the inspiration to action journey, we're enhancing our board functionality to help users better understand and organize their taste. Boards are an essential part of the curation flywheel on Pinterest and provide us with important signals on user tastes and preferences, which feeds into our recommendation algorithm and further augments our ability to serve relevant content back to our users.

Speaker Change: Moving further down the inspiration to action journey, we're enhancing our board functionality to help users better understand and organize their tastes.

Speaker Change: Boards are and a central part of the curation flywheel on Pinterest and provide us with important signals on user tastes and preferences, which feeds into our recommendation algorithm and further augments our ability to sort of relevant content to our users.

William J. Ready: In Q4, we launched our first auto-organization feature. This feature leverages AI to simplify the board creation process by automatically grouping similar pins into suggested boards based on what users have saved in the past. For users who generally don't curate on a platform, this feature resulted in a nearly 30% lift in boards created, highlighting how auto organization can unlock the magic of Pinterest for more users. Finally, we're making it easier for users to shift from inspiration to action and shop products they discover on Pinterest. Over the past few quarters, we've launched shopping modules that help us further capitalize on our audience who come to Pinterest with intent and improve the shopability of our platform. Last quarter, we discussed a few of these efforts for women's fashion and home decor categories, including Shop the Look and guided shopping modules, which surface shoppable product pins based on past saving and clicking history. In Q4, we launched Shop Similar for mobile in the same categories. Whereas Shop the Look is activated when a user clicks on a lifestyle image, such as a celebrity wearing the latest outfit trends or a beautifully curated living room, Shop Similar is activated when a user clicks on a shoppable product image from a merchant catalog.

Speaker Change: In Q4, we launched our first auto organization feature this feature Leverages AI to simplify the board creation process by automatically grouping similar pins into suggested boards based on what users have saved in the past.

Speaker Change: For users, who generally don't carry on the platform. This feature resulted in a nearly 30% lift in boards created highlighting how auto organization can unlock the magic of Pinterest for more users.

Speaker Change: Finally, we're making it easier for users to shift from inspiration to action and shop products. They discover on Penn Trust over the past few quarters, we've launched shopping modules that help us further capitalize on our audience, who come to pinterest with intent and improve the shop ability of our platform.

Speaker Change: Last quarter, we discussed a few of these efforts for women's fashion and home decor categories, including shop, the look and guided shopping modules, which surface solvable product pins based on past saving and clicking history.

Speaker Change: In Q4, we launched shop similar for mobile in the same categories. While shop. The look is activated when a user clicks on a lifestyle image such as a celebrity wearing our latest outfit trends or a beautifully curated living room shop similar is activated when a user clicks on a solvable product pin from a merchant catalog.

William J. Ready: It then showcases a carousel of similar products pens across a variety of other brands and price points, complementing the feed of related pens below. We're in the early stages of ramping up, and in our experiments, Shop Similar drove double-digit lifts in both outbound clicks and checkout. I've spent the last few minutes discussing the key product updates we've made across the funnel to help users find the content that inspires them most and take action on it. The billions of intent signals we get from this on-platform search, click, and curation behavior give us the unique ability to see trends in real time and predict consumer trends for the upcoming year through our annual Pinterest Predicts report. We've had an 80% success rate in predicting future trends for four years in a row.

Speaker Change: And then showcases a carousel of similar product pins across a variety of other brands and price points complimenting the feet of related pens below.

Speaker Change: We're in the early stages of ramping and in our experiments shop, similar drove double digit lift in both outbound clicks and checkouts.

Speaker Change: I've spent the last few moments discussing the key product updates we've made across the funnel to help users find the content that inspires the most and take action on it.

Speaker Change: The one billions of intent signals, we get from this on platform search click and curation behavior gives us the unique ability to see trends in real time and predict consumer trends for the upcoming year through our annual Petrus predicts report, we've had an 80% success rate in predicting future trends for years in a row.

William J. Ready: Some of our 2024 predictions are already making their way into the cultural conversation through publications like Vogue and Glamour UK, as celebrities and users embrace Pinterest Predicts trends like eclectic grandpa fashion looks or Western Gothic home design. Blue Beauty, which predicts Gen Z and millennials will embrace blue hues in their makeup routine, is taking off on Pinterest right now, with searches related to this trend growing 125% since the report was launched.

Speaker Change: Some of our 2024 predictions are already making their way into the cultural conversation through publications like Vogue and glamour UK as celebrities and users embraced petrus predict trends like eclectic grandpa fashion looks or western Gothic home design.

Speaker Change: Blue beauty, which predicts Gen Z and millennials will embrace blue hues in their makeup routine is taking off on <unk> right now with searches related to this trend growing 125% since the report was launched.

Speaker Change: This year, we're incorporating pendulous predicts activations for both consumers and advertisers.

William J. Ready: This year, we're incorporating Pinterest Predicts activations for both consumers and advertisers. In December, for the first time, we took our Predicts trends to real life, opening the doors to our first ever Predicts pop-up shop in New York, showcasing immersive displays and shoppable items inspired by the trends.

Speaker Change: In December for the first time, we took our predict trends to real life.

Opening the doors to our first ever predict pop up shop in New York, showcasing immersive displays and shovel items inspired by the trends.

William J. Ready: Our predictions allow advertisers to plan ahead for new consumer interests, ensuring their products and ads are ready to meet ramping demand. Advertisers can also sponsor co-branded Pinterest Predicts content on our platform to reach targeted audiences. Pinterest Predict is a great example of our ability to harness user behavior to show compelling trends and content that drive user engagement and provide advertisers with actionable insights they can't find anywhere else.

Speaker Change: Our predictions allow advertisers to plan ahead for new consumer interests and sharing their products and adds are ready to meet ramping demand.

Speaker Change: Advertisers can also sponsor Cobranded pentrust predicts content on our platform to reach targeted audiences.

Speaker Change: Petrus predicts is a great example of our ability to harness user behavior to show compelling trends in content that drive user engagement and provide advertisers with actionable insights they cant find anywhere else.

Speaker Change: With that I'd like to turn to our second strategic priority improving monetization per user and discuss how we are driving success for advertisers.

William J. Ready: With that, I'd like to turn to our second strategic priority, improving monetization per user, and discuss how we're driving success for advertising. Throughout 2023, we've been focused on driving performance for advertisers by rolling out our lower funnel tools, which include mobile deep linking, the API for conversions and clean rooms, and most recently, direct links, which launched at the end of Q3 and ramped up in Q4. The percentage of revenue from advertisers who have adopted at least three of these tools increased from 2% at the beginning of 2023 to 13% at our investor day in September to 23% by the end of the year, marking strong progress toward our goal to be a meaningful performance player in the digital ads market. One of the key product enhancements we've rolled out within the lower funnel suite is direct links, which creates a more seamless handoff for advertisers.

Speaker Change: Throughout 2023, we've been focused on driving performance for advertisers by rolling out our lower funnel tools, which include mobile deep linking the API for conversions in clean rooms, and most recently direct links which launched at the end of Q3 and ramped in Q4.

Speaker Change: The percentage of revenue from advertisers, who have adopted at least three of these tools increased from 2% at the beginning of 2023% to 13% at our Investor day in September to 23% by the end of the year, marking strong progress toward our goal to be a meaningful performance player in the digital ads market.

Speaker Change: One of the key product enhancements, we've rolled out within the lower funnel suite has direct links which creates a more seamless handoff for advertisers.

Speaker Change: Direct links take users to an advertiser's product page and just one quick significantly reducing friction and improving the ability to take action.

Speaker Change: Direct links also require little to no work by the advertiser to adopt and now cover 80% of our lower funnel revenue up from 60% in October we expect coverage to continue to increase over the course of Q1.

William J. Ready: Direct links take users to an advertiser's product page in just one click, significantly reducing friction and improving the ability to take action. Direct links also require little to no work by the advertiser to adopt and now cover 80% of our lower funnel revenue, up from 60% in October. We expect coverage to continue to increase over the course of Q1. The increased performance and value we were able to drive for advertisers in Q4 were particularly impressive. We more than doubled the amount of clicks we drove to advertisers year over year, a substantial increase during a retailer's most important time of year, and we were able to do so while driving high-quality engagement. Retailers are finding significant performance improvement with this format. For example, Urban Outfitters saw a 132% increase in outbound clicks and a 57% decrease in cost per click with a direct links enabled campaign.

Speaker Change: The increased performance and value we were able to drive for advertisers in Q4 was particularly impressive we more than doubled the amount of clicks, we drove to advertisers' year over year, a substantial increase during our retailers. Most important time of year and we were able to do so while driving high quality engagement.

Speaker Change: Retailers are finding significant performance improvement with this format.

Speaker Change: For example, urban Outfitters saw a 132% increase in outbound clicks and a 57% decrease in cost per click with a direct links enabled campaign.

Speaker Change: This is strong tangible evidence that we are creating significant real value for advertisers.

Speaker Change: This value creation comes in the form of increased clicks lowered cpc's and therefore higher return on AD spend from our lower funnel products.

Speaker Change: Each time, we have launched products that created meaningful advertiser value, we've seen budget shift in our direction in the months and quarters that followed as advertisers are able to see and measure sustained performance.

Speaker Change: Given that we launched these products throughout the year with direct links rolling out most recently during the holiday shopping period much of the value capture from these new products is still in front of us given the lag between value creation and value capture.

William J. Ready: This is strong, tangible evidence that we are creating significant, real value for advertisers. This value creation comes in the form of increased clicks, lowered CPCs, and, therefore, higher return on ad spend from our lower funnel product. Each time we have launched products that created meaningful advertiser value, we have seen budgets shift in our direction in the months and quarters that followed as advertisers were able to see and measure sustained performance. Given that we launch these products throughout the year, with direct links rolling out most recently during the holiday shopping period, much of the value capture from these new products is still in front of us, given the lag between value creation and value capture. We've seen the same value creation versus value capture adoption curve play out in our business already, with larger, more sophisticated retailers taking advantage of products like mobile deep linking and API for conversion and subsequently growing their spend with us.

Speaker Change: We've seen the same value creation versus value capture adoption curve play out in our business already with larger more sophisticated retailers, taking advantage of products like mobile deep linking and API for conversion and subsequently growing their spend with us.

Speaker Change: The cumulative effect of the significant improvement in Pentrust, lower funnel and performance out of capability over the last 18 months is that we are increasingly moving from advertisers experimental and social budgets to their performance budgets, which tend to be larger and more resilient.

Speaker Change: With our improved lower funnel solutions, we know, we're driving more clicks and conversions, but performance is only as good as in advertisers' ability to measure. It. Moreover, as the industry goes through additional privacy centric changes this year with the expectation that a major browser will be deprecating third party cookies, there is heightened urgency from agencies and advertisers.

Speaker Change: To drive adoption of future proofing measurement tools.

William J. Ready: The cumulative effect of the significant improvement in Pinterest's lower funnel and performance ads capability over the last 18 months is that we are increasingly moving from advertisers' experimental and social budgets to their performance budgets, which tend to be larger and more resilient. With our improved lower funnel solutions, we know we're driving more clicks and conversions, but performance is only as good as an advertiser's ability to measure it. Moreover, as the industry goes through additional privacy-centric changes this year, with the expectation that a major browser will be deprecating third-party cookies, there is heightened urgency from agencies and advertisers to drive the adoption of future-proofing measurement tools.

Speaker Change: From a targeting perspective, we believe we are well positioned relative to others due to the first party signals, we capture through user intent expressed directly on our platform.

Speaker Change: We are a lean forward platform and relevant ads are content to our users.

Speaker Change: From a conversion visibility and measurement standpoint, we have a broad suite of solutions, which are becoming indispensable for performance advertisers to measure and optimize the value of their spend.

Speaker Change: This is why we've been heavily focused on adoption of our API for conversions and clean room solutions and providing more third party measurement solutions for advertisers.

Speaker Change: An API for conversions, we've laid the groundwork for more adoption in 2024, including reducing the setup time for advertisers through interface updates, while integrating with 24 partners like live ramp Adobe and Salesforce. Additionally.

William J. Ready: From a targeting perspective, we believe we are well-positioned relative to others due to the first-party signals we capture through user intent expressed directly on our platform. We are a lean-forward platform, and relevant ads are content to our users. From a conversion visibility and measurement standpoint, we have a broad suite of solutions that are becoming indispensable for performance advertisers to measure and optimize the value of their spend. This is why we've been heavily focused on the adoption of our API for conversions and clean room solutions and providing more third-party measurement solutions for advertisers. On API for conversions, we've laid the groundwork for more adoption in 2024, including reducing the setup time for advertisers through interface updates while integrating with 24 partners like LiveRamp, Adobe, and Salesforce. Additionally, sophisticated advertisers are seeing the value of investing in clean rooms to measure campaign performance on Pinterest.

Speaker Change: Additionally, sophisticated advertisers are seeing the value of investing in clean rooms to measure campaign performance on Pinterest.

Speaker Change: Recently, a large CPG partner enabled measurement through clean rooms, and found that their Petrus campaign drove a 16 point lift in incremental sales.

Speaker Change: We also offer a suite of first party and third party measurement tools to plug into advertisers measurement system of truth, whether its brand and conversion lift studies platform metrics and insights or highly sophisticated media mix modeling and multi touch attribution studies.

Speaker Change: As we've discussed on previous earnings calls, we're going through a critical shift in the industry and a top priority for our company is growing the adoption of these alternative measurement solutions this year.

Speaker Change: To do so we've implemented new adoption goals into our sales force compensation structure to encourage further advertiser penetration.

Speaker Change: We're growing our performance optimization team, who can help with technical selling and we're continuing to explore deeper partnerships with agencies and integrations with additional partners.

William J. Ready: Recently, a large CPG partner enabled measurement through clean rooms and found that their Pinterest campaign drove a 16-point lift in incremental sales. We also offer a suite of first-party and third-party measurement tools to plug into advertisers' measurement systems of truth, whether it's brand and conversion list studies, platform metrics and insights, or highly sophisticated media mix modeling and multi-touch attribution studies. As we've discussed on previous earnings calls, we're going through a critical shift in the industry, and a top priority for our company is growing the adoption of these alternative measurement solutions this year. To do so, we've implemented new adoption goals into our Salesforce compensation structure to encourage further advertiser penetration. We're growing our performance optimization team, which can help with technical selling, and we're continuing to explore deeper partnerships with agencies and integrations with additional partners. In addition to format and measurement innovations, we remain focused on bringing AI-based automation to the forefront of our campaign creation experience. We have many of the components in place for a fully automated ad system, including automatic Bidding, Campaign Budget Optimization, and Whole Page Optimization, which enables us to surface more relevant and performant ads when a user expresses commercial intent.

Speaker Change: In addition to format and measurement innovations, we remain focused on bringing AI based automation to the forefront of our campaign creation experience. We have many of the components in place for a fully automated AD system, including automatic bidding campaign budget optimization and whole page optimization, which enabled us to surface more relevant and performance ads when it <unk>.

Speaker Change: Expresses commercial intent.

These tools drive better results in aggregate for our advertisers for example, automatic bidding covers 85% of our revenue and homepage optimization is resulting in greater efficiencies across our full funnel.

Speaker Change: Reducing the time and effort for advertisers on campaign setup, while improving ROI is top of mind moving forward and we will see a steady progression of increased automation and easier AD platform functionality throughout this year as we continue to build out these products.

Speaker Change: Next I want to provide an update on our third party demand efforts consistent.

Speaker Change: Consistent with the timeline, we laid out at our Investor day, Amazon ads in the U S is live on search and related surfaces and as of this quarter. We are testing it on the home feed. In addition, we always said we would have multiple partners and our third party partners would be an important component of our overall international expansion today I am pleased to announce our next.

Speaker Change: Third party ads integration with Google.

Speaker Change: This partnership will focus on monetizing several of our currently Unmonitored international markets by enabling ads to be served on Pinterest via Google's AD manager.

William J. Ready: These tools drive better results in aggregate for our advertisers. For example, automatic bidding covers 85% of our revenue, and whole page optimization is resulting in greater efficiency across our full funnel. Reducing the time and effort for advertisers on campaign set-up while improving ROI is top of mind moving forward, and we'll see a steady progression of increased automation and easier ad platform functionality throughout this year as we continue to build out these profits. Next, I want to provide an update on our third-party demand efforts. Consistent with the timeline we laid out at our Investor Day, Amazon Ads in the U.S. are live on search and related surfaces, and as of this quarter, we are testing it on the home feed.

Speaker Change: We went live a couple of weeks ago and this is starting to ramp.

Speaker Change: Third party AD demand is scaling as we anticipated and while it was not a significant revenue contributor in Q4, we are now seeing and contribute more meaningfully to our growth this quarter and we expect that to continue going forward.

Speaker Change: Our third strategic priority is continued focus on operational rigor and discipline.

Speaker Change: As I mentioned before I am proud of our team's execution here as our operating expenses declined year over year, and we grew our EBITDA margins by over 1400 basis points.

Speaker Change: Julia will provide more details on our future profitability outlook later in the call.

Speaker Change: Lastly, I want to spend a few moments discussing a topic that's of utmost importance to this company and to me personally.

William J. Ready: In addition, we always said we would have multiple partners and that third-party partners would be an important component of our overall international expansion. Today, I'm pleased to announce our next third-party ads integration with Google. This partnership will focus on monetizing several of our currently unmonetized international markets by enabling ads to be served on Pinterest via Google's Ad Manager.

Speaker Change: Since joining pinterest I've talked extensively about Pinterest is a positive place online and how maintaining this positivity as a pivotal component of our ethos of the company.

Speaker Change: It's also a meaningful differentiator for our platform and a core part of our strategy for growing users and advertisers users, especially Gen Z often crave respite from social media and see <unk> as a positive alternative.

William J. Ready: We went live a couple weeks ago, and third-party ad demand is scaling as we anticipated, and while it was not a significant revenue contributor in Q4, we are now seeing it contribute more meaningfully to our growth this quarter, and we expect that to continue going forward. Our third strategic priority is continued focus on operational rigor and discipline.

Speaker Change: Advertisers for their part we want to be present in a positive brand safe environment that can also deliver performance.

Speaker Change: I recently had the opportunity to speak alongside key thought leaders at the inaugural youth online safety summit hosted by common sense media, a leading advocacy organization working to ensure that the internet is healthy safe and empowering for young people it.

William J. Ready: As I mentioned before, I'm proud of our team's execution here, as our operating expenses declined year over year and we grew our EBITDA margins by over 1,400 basis points. Julia will provide more details on our future profitability outlook later in the call. Lastly, I want to spend a few moments discussing a topic that's of utmost importance to this company and to me personally. Since joining Pinterest, I've talked extensively about Pinterest as a positive place online and how maintaining this positivity is a pivotal component of our ethos as a company. It's also a meaningful differentiator for our platform and a core part of our strategy for growing users and advertisers. Users, especially Gen Z, often crave respite from social media and see Pinterest as a positive alternative.

Speaker Change: It was an honor to be able to speak alongside the surgeon General Vivek Murthy about how <unk> is working to build an alternative social media business model. One that is focused on positivity.

Speaker Change: We're not perfect and we don't have all the answers like the rest of the industry. We have a long way to go but it is my intention to make pinterest, a safe place for everyone, especially on people.

Speaker Change: We're one of the few places online there is about focusing on your own life versus just absorbing the lives of others about making plans for what you intend to do.

Speaker Change: We've taken a radically different stance on our competitors and we're seeing it pay off in the emotional well being of our users and in our business outcomes.

Speaker Change: These principles are at the heart of our technology, our AI and our policies and we're being accountable and transparent about how we're doing and sharing our learnings across the industry.

William J. Ready: Advertisers, for their part, want to be present in a positive, brand-safe environment that can also deliver performance. I recently had the opportunity to speak alongside key thought leaders at the inaugural Youth Online Safety Summit hosted by Common Sense Media, a leading advocacy organization working to ensure that the Internet is healthy, safe, and empowering for young people. It was an honor to speak alongside the Surgeon General, Vivek Murthy, about how Pinterest is working to build an alternative social media business model, one that is focused on positivity. We're not perfect, and we don't have all the answers.

Our company mission is to bring everyone. The inspiration to create a life they love and our work to make Pinterest a positive corner of the Internet is an integral part of how we embody our mission every day.

Speaker Change: Now I'll turn the call over to Julia to share more about our financial performance.

Julia Brau Donnelly: Thanks, Bill and good afternoon, everyone today I'll be discussing our full year and fourth quarter 2023 financial results and provide an update on our preliminary first quarter 2020 for outlook.

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.

William J. Ready: Like the rest of the industry, we have a long way to go, but it is my intention to make Pinterest a safe place for everyone, especially young people. We're one of the few places online that is about focusing on your own life versus just observing the lives of others, about making plans for what you intend to do. We've taken a radically different stance than our competitors, and we're seeing a payoff in the emotional well-being of our users and in our business outcomes. These principles are at the heart of our technology, our AI, and our policies, and we are being accountable and transparent about how we're doing and sharing our learnings across the industry. Our company mission is to bring everyone inspiration to create a life they love, and our work to make Pinterest a positive corner of the Internet is an integral part of how we embody our mission every day.

Speaker Change: Before I dive into the details of the quarter I want to Echo bills sentiments about the progress we made in 2023 and how far we've come in a short period of time.

Speaker Change: Last year, we generated $3 $1 billion in revenue growing 9% with revenue accelerating to double digit growth in the back half of the year.

Speaker Change: We've been strategic with our investments that enabled us to invest in high ROI projects, such as AI for content recommendation and ads and accelerating the pace of innovation across the board.

Speaker Change: Did this while driving efficiencies with our infrastructure spend and keeping our total non-GAAP expenses in 2023, roughly flat compared to 2022.

Julia Brau Donnelly: Now, I'll turn the call over to Julia to share more about our financial performance. Thanks, Bill, and good afternoon, everyone. Today, I'll be discussing our full year and fourth quarter 2023 financial results and providing an update on our preliminary first quarter 2024 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

Speaker Change: This allowed us to deliver $683 million of adjusted EBITDA grew 22% adjusted EBITDA margin, representing 660 basis points of year over year margin expansion well above our initial goal at the start of 2023 of 200 basis points.

Speaker Change: Finally at our recent Investor day in September we shared our long term outlook with a revenue CAGR in the mid to high teens and EBITDA margins expanding to the low 30% range in the next three to five years, our recent results and our focus on executing against our strategic priorities sets us up well to achieve these targets over this.

Julia Brau Donnelly: Before I dive into the details of the quarter, I want to echo Bill's sentiments about the progress we made in 2023 and how far we've come in a short period of time. Last year, we generated $3.1 billion in revenue, growing 9%, with revenue re-accelerating to double-digit growth in the back half of the year. We've been strategic with our investments, which enabled us to invest in high ROI projects such as AI for content recommendation and ads and accelerate the pace of innovation across the board. We did this while driving efficiencies with our infrastructure spend and keeping our total non-GAAP expenses in 2023 roughly flat compared to 2022.

Speaker Change: Timeframe.

Speaker Change: Now I'll discuss our fourth quarter results. We ended the year with $498 million global monthly active users representing 11% growth. This is the strongest growth. We've seen since Q1 2021 with Mou growth accelerating versus last quarter and growing sequentially in all of our geographic regions.

Speaker Change: We believe that our continued investments to help users find their next use case and quickly pivot from inspiration to action and shopping are paying off as we've been able to drive deeper engagement with our users.

Julia Brau Donnelly: This allowed us to deliver $683 million of adjusted EBITDA, or a 22% adjusted EBITDA margin, representing 660 basis points of year-over-year margin expansion, well above our initial goal at the start of 2023 of 200 basis points. Finally, at our recent Investor Day in September, we shared our long-term outlook, with revenue CAGR in the mid-to-high teens and EBITDA margins expanding to the low-30s percent range in the next three to five years. Our recent results and our focus on executing against our strategic priorities set us up well to achieve these targets over this time frame. Now, I'll discuss our fourth quarter results. We ended the year with 498 million global monthly active users, representing 11% growth.

In the U S and Canada, we had $97 million is growing 2% up from 1% growth last quarter, and adding $1 million sequentially for the second quarter in a row.

Speaker Change: In Europe, we had $135 million in May is growing 8% an acceleration from last quarter.

Speaker Change: In our rest of World markets, we had $266 million in May is growing 15% continuing the trend of acceleration throughout 2023.

Speaker Change: In Q4, our global revenue with $981 million up 12% or 11% on a constant currency basis.

Speaker Change: Our fastest growing objective with our lowest funnel conversion objective buoyed by strength in the retail vertical including our shopping ads format.

Julia Brau Donnelly: This is the strongest growth we've seen since Q1 2021, with MAU growth accelerating versus last quarter and growing sequentially in all of our geographic regions. We believe that our continued investments to help users find their next use case and quickly pivot from inspiration to action and shopping are paying off as we've been able to drive deeper engagement with our users. In the U.S. and Canada, we had 97 million MAUs, growing 2 percent, up from 1 percent growth last quarter, and adding 1 million MAUs sequentially for the second quarter in a row.

Speaker Change: This is a testament to the innovative work we are doing to drive more clicks and conversions for performance advertisers and demonstrates that our business is evolving as we are deploying more lower funnel products and getting access to more performance budgets.

Speaker Change: Our awareness objective was also relatively resilient with strength from new formats like Premier spotlight. As this was the first holiday season with this offering.

Speaker Change: This growth was partially offset by headwinds from the food and beverage category as these advertisers pulled back spending towards the end of the quarter due to challenges from macro headwinds, we estimate that the underperformance in the food and beverage category created roughly one percentage point of headwind to total revenue growth in Q4.

Julia Brau Donnelly: In Europe, we had 135 million MAUs, growing 8%, an acceleration from last quarter. In our rest of world markets, we had 266 million MAUs, growing 15%, continuing the trend of acceleration throughout 2023. In Q4, our global revenue was $981 million, up 12% or 11% on a constant currency basis.

Speaker Change: Turning to our geographical breakouts in the U S and Canada, we generated $778 million in revenue growing 8% strength came from retailers and from emerging categories, including financial services.

Speaker Change: In Europe revenue was $162 million growing 32% on a reported basis or 25% on a constant currency basis strength in Europe came from retail and CPG categories.

Julia Brau Donnelly: Our fastest-growing objective was our lowest-funnel conversion objective, buoyed by strength from the retail vertical, including our shopping ads format. This is a testament to the innovative work we are doing to drive more clicks and conversions for performance advertisers and demonstrates that our business is evolving as we are deploying more lower-funnel products and getting access to more performance budgets. Our awareness objective was also relatively resilient, with strength from new formats like Premier Spotlight, as this was the first holiday season with this offering. However, this growth was partially offset by headwinds from the food and beverage category as these advertisers pulled back spending towards the end of the quarter due to challenges from macro headwinds.

Speaker Change: Revenue from rest of world with $41 million growing 27% on a reported basis or 25% on a constant currency basis.

Speaker Change: In Q4 AD impressions, which is composed of AD load and total impressions, including both organic and paid impressions accelerated to 33% growth driven both by increases in total impressions and increases in ad load.

Speaker Change: This marks the sixth quarter in a row.

Speaker Change: <unk> been able to grow both total impressions and AD load demonstrating that ads can grow in tandem with engagement, especially when those ads are relevant to users.

Julia Brau Donnelly: We estimate that the underperformance in the food and beverage category created roughly one percentage point of headwind to total revenue growth in Q4. Turning to our geographical breakouts, in the U.S. and Canada, we generated $778 million in revenue, growing 8%. Strength came from retailers and from emerging categories, including financial services. In Europe, revenue was $162 million, growing 32% on a reported basis or 25% on a constant currency basis.

Speaker Change: During the holiday season, our continued investments in whole page optimization to dynamically flex up AD load when users express commercial intent enabled us to open up more AD supply, especially when users where leaned into shop during the holiday season.

Speaker Change: Offsetting the growth in AD impressions was a 16% decline in AD pricing due to our continued work to drive greater platform efficiency for lower final advertisers, which lowered prices and improved return on AD spend for those advertisers.

Julia Brau Donnelly: Strength in Europe came from retail and CPG categories. Revenue from the rest of the world was $41 million, growing 27% on a reported basis or 25% on a constant currency basis. In Q4, ad impressions, which are composed of ad load and total impressions, including both organic and paid impressions, accelerated to 33% growth, driven both by increases in total impressions and increases in ad load. This marks the sixth quarter in a row where we've been able to grow both total impressions and ad load, demonstrating that ads can grow in tandem with engagement, especially when those ads are relevant to users During the holiday season, our continued investments in whole page optimization to dynamically flex up ad load when users express commercial intent enabled us to open up more ad supply, especially when users were leaning in to shop during the holiday season.

Speaker Change: Now I'd like to turn to expenses, while our Q4 revenue grew double digits. Our operating expenses declined double digits as we continue to control our expenses diligently and balance investments for future growth.

Cost of revenue in Q4 was $174 million down 2% due to continued cost optimization work on the infrastructure side, even while M. A used reach an all time high and engagement continued to grow.

Speaker Change: Our non-GAAP operating expense was $446 million down 12%, our heightened focus on driving operational efficiencies throughout the business showed trail again this quarter.

Speaker Change: All of our operating expense line items declined year over year led by sales and marketing, which declined 18% as we lapped our large brand marketing campaign from Q4 of 2022.

Julia Brau Donnelly: Offsetting the growth in ad impressions was a 16% decline in ad pricing due to our continued work to drive greater platform efficiency for lower funnel advertisers, which lowered prices and improved return on ad spend for those advertisers. Now, I'd like to turn to expenses. While our Q4 revenue grew double digits, our operating expenses declined double digits as we continued to control our expenses diligently and balance investments for future growth. Cost of revenue in Q4 was $174 million, down 2% due to continued cost optimization work on the infrastructure side, even while MAUs reached an all-time high and engagement continued to grow. Our non-GAAP operating expense was $446 million, down 12%.

These efforts led to another strong quarter of adjusted EBITDA coming in at $365 million, an all time high.

Speaker Change: Q4, adjusted EBITDA margin was 37% up 1400 basis points year over year.

Speaker Change: Finally, we ended the year with cash cash equivalents and marketable securities of $2 5 billion.

Speaker Change: Now I will discuss our preliminary guidance for the first quarter.

Speaker Change: We expect Q1 2020 for revenue to be in the range of $690 million to $705 million, representing 15% to 17% growth and a meaningful acceleration from our Q4 'twenty three revenue growth.

Julia Brau Donnelly: Our heightened focus on driving operational efficiencies throughout the business showed through again this quarter. All of our operating expense line items declined year over year, led by sales and marketing, which declined 18% as we lapped our large brand marketing campaign from Q4 2022. These efforts led to another strong quarter of adjusted EBITDA coming in at $365 million, an all-time high. Q4 adjusted EBITDA margin was 37%, up 1400 basis points year over year. Finally, we ended the year with cash, cash equivalents, and marketable securities of $2.5 billion.

Speaker Change: It's also worth noting that our guide implies up to a 500 basis point acceleration on top of the stable comp from last year since revenue growth from Q4, 'twenty to Q1, 'twenty three was relatively consistent.

Speaker Change: I'd like to provide some additional color and context behind this guide for Q1.

Speaker Change: First we're in the midst of an adoption curve of our lower funnel advertising products in 2023, many of our largest and most sophisticated advertisers took advantage of lower final AD products like mobile deep linking shopping ads are API for conversions. These advertisers have seen sustained performance gains with these formats and are growing their budgets with us.

Julia Brau Donnelly: Now we'll discuss our preliminary guidance for the first quarter. We expect Q1 2024 revenue to be in the range of $690 to $705 million, representing 15 to 17 percent growth and a meaningful acceleration from our Q4 2023 revenue growth. It's also worth noting that our guide implies up to a 500 basis point acceleration on top of a stable comp from last year since revenue growth from Q4'22 to Q1'23 was relatively consistent. I'd like to provide some additional color and context behind this guidance for Q1.

Speaker Change: The benefits of which we've seen throughout the course of the year and accelerating into Q1, which is off to a strong start as bill mentioned we.

Speaker Change: We've seen multiple of our large sophisticated retail advertisers allocating more of their performance budgets to us after seeing a longer track record of return on ad spend.

Julia Brau Donnelly: First, we're in the midst of an adoption curve for our lower funnel advertising products. In 2023, many of our largest and most sophisticated advertisers took advantage of lower funnel ad products like mobile deep linking, shopping ads, or API for conversions. These advertisers have seen sustained performance gains with these formats and are growing their budgets with us, the benefits of which we've seen throughout the course of the year and accelerating into Q1, which is off to a strong start, as Bill mentioned. We've seen multiple of our large, sophisticated retail advertisers allocating more of their performance budgets to us after seeing a longer track record of return on ad spend. As a result, we are beginning to garner more meaningful shares of their overall ad budgets, and we see more of this adoption curve yet to play out with many of our retailers. Second, we launched direct links in late Q3 and early Q4 to help drive more clicks and conversions for all of the other advertisers who may not have as much mobile app penetration and were not good candidates for mobile deep linking.

Speaker Change: As a result, we are beginning to garner more meaningful shares of their overall AD budgets and we see more of this adoption curve yet to play out with many of our retailers.

Speaker Change: Second we launched direct links in late Q3, and early Q4 to help drive more clicks and conversions for all of the other advertisers.

Speaker Change: May not have as much mobile app penetration and were not good candidates for mobile deep linking.

Speaker Change: We created value for those advertisers by doubling the clicks we drove for advertisers in Q4. However, we believe the value capture from direct links will come over the course of 2024 and beyond as those advertisers use their own analytics to measure attribution from interest and incrementally increase their budgets with us as a result.

Speaker Change: Third our Q1 revenue guidance includes an emerging contribution from third party AD demand. We're pleased with how this is tracking and we will continue to learn iterate optimize and ramp over the course of this year and beyond.

Speaker Change: Finally, our guidance takes into account modest impacts from foreign exchange rates.

Speaker Change: Turning to our Q1 expense guidance.

Julia Brau Donnelly: We created value for those advertisers by doubling the clicks we drove for advertisers in Q4. However, we believe the value capture from direct links will come over the course of 2024 and beyond, as those advertisers use their own analytics to measure attribution from Pinterest and incrementally increase their budgets with us as a result. And third, our Q1 Revenue Guidance includes an emerging contribution from third-party ad demand. We are pleased with how this is tracking and will continue to learn, iterate, optimize, and ramp this over the course of this year and beyond. Finally, our guidance takes into account a modest impact from foreign exchange rates. Turning to our Q1 Expense Guidance. We expect non-GAAP operating expenses of $450 to $465 million, growing 9 to 13 percent. Our operating expense guidance does not include cost of revenue.

Speaker Change: We expect non-GAAP operating expenses of $450 million to $465 million growing 9% to 13%.

Speaker Change: Our operating expense guidance does not include cost of revenue. However, we plan to continue our infrastructure optimization efforts and therefore, we anticipate non-GAAP cost of revenue expense to be relatively consistent with Q4.

Speaker Change: The increase in non-GAAP operating expense year over year is driven by investment increases in R&D, where we are investing in head count for AI talent across our business and in sales and marketing, where we will be investing in <unk> marketing to advertisers.

Speaker Change: As we said during Investor day, we plan to have a steady ramp to the low 30% adjusted EBITDA margin range in the next three to five years consistent with that we are anticipating margin expansion again in 2024, but at a more modest level than the 660 basis point expansion, we delivered in 2023 as we balance investing in <unk>.

Julia Brau Donnelly: However, we plan to continue our infrastructure optimization efforts, and therefore, we anticipate non-GAAP cost of revenue expense to be relatively consistent with Q4. The increase in non-GAAP operating expense year over year is driven by investment increases in R&D, where we are investing in headcount for AI talent across our business, and in sales and marketing, where we will be investing in B2B marketing to advertisers. As we said during Investor Day, we plan to have a steady ramp to the low 30s% adjusted EBITDA margin range in the next three to five years. Consistent with that, we are anticipating margin expansion again in 2024, but at a more modest level than the 660 basis point expansion we delivered in 2023, as we balance investing in growth and flowing profitability through to the bottom line. As a reminder, the pacing of that margin expansion in 2024 is likely to be more front loaded in the first quarter due to the strengthening adjusted EBITDA margin we saw as we progressed through the quarters of 2023.

Speaker Change: Growth and flowing profitability through to the bottom line.

Speaker Change: As a reminder, the pacing of that margin expansion in 2024 is likely to be more frontloaded in the first quarter due to the strengthening adjusted EBITA margin, we saw as we progress through the quarters of 2023.

Speaker Change: In summary, 2023 with an instrumental year as we've built the foundation for our future growth and return to double digit double digit revenue growth in the second half of the year. Our Q1 guidance implies further acceleration, which shows that we are making good progress towards our long term goals.

Speaker Change: As we look to this year, we plan to build on that momentum and continue executing against our key strategic priorities now I'll turn the call over to Bill.

William J. Ready: Thanks Julien.

William J. Ready: I'm proud of all we were able to achieve in the last year and I'm, even more excited for the year ahead I want 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.

Julia Brau Donnelly: In summary, 2023 was an instrumental year as we built the foundation for our future growth and returned to double-digit revenue growth in the second half of the year. Our Q1 guidance implies further acceleration, which shows that we are making good progress toward our long-term goals. As we look to this year, we plan to build on that momentum and continue executing against our key strategic priorities. Now, I'll turn the call over to Bill.

Speaker Change: Thank you Bill we will now begin the question and answer session. If you would like to ask a question you may do so by pressing star followed by a one on your telephone keypad. If for any reason you would like to remove your question you may do so by pressing star followed by Hai assay.

Speaker Change: As a reminder, if you were using a speaker phone. Please remember to pick up your handset before asking your question again to ask a question. It is star followed by a one on your telephone keypad.

William J. Ready: Thanks, Julia. I'm proud of all we were able to achieve in the last year. And I'm even more excited for the year ahead. I want 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. Thank you, Bill. We will now begin the question and answer session. If you would like to ask a question, you may do so by pressing star followed by A1 on your telephone keypad. If, for any reason, you would like to remove your question, you may do so by pressing the star followed by A2.

Speaker Change: The first question will be from the line of Eric Sheridan with Goldman Sachs. Your line is now open.

Eric Sheridan: Thanks, So much for taking my question and thanks for all the details.

Eric Sheridan: Third remarks.

Eric Sheridan: Go back to some of the comments more broadly on the advertising environment, because I think generally investors and analysts have heard a variety of messages about the health of brand advertising or direct response advertising a certain geographic exposure over the last sort of two weeks can you just go into a little bit more detail of what you saw in Q4 and how you feel it's such you up for.

Kate: As a reminder, if you were using a speakerphone, please remember to pick up your handset before asking your question. Again, to ask a question, it is star followed by A1 on your telephone keypad. The first question will be from the line of Eric Sheridan with Goldman Sachs. Your line is now open. Thanks so much for taking the question and thanks for all the details in the prepared remarks. I want to go back to some of the comments more broadly on the advertising environment because I think, generally, investors and analysts have heard a variety of messages about the health of brand advertising and direct response advertising and certain geographic exposure over the last sort of two weeks. Can you just go into a little bit more detail of what you saw in Q4 and how you feel it sets you up for cumulative advertising budget conversations for Q1 and the remainder of 2024? Thanks so much.

Eric Sheridan: Cumulative advertising budget conversations into Q1 and through the remainder of 2012 before thanks so much.

Speaker Change: Yeah. Thanks, Eric.

So we also see the broader AD market as stable to improving for US retail was the fastest growing segment and we're seeing across the entire AD industry performance matters more than ever.

Speaker Change: And we're winning on that front, we're driving more performance to advertisers than ever before.

Speaker Change: As I mentioned in my remarks large advertisers are opening up their performance budgets for us.

Speaker Change: Doubling our clicks.

Speaker Change: Sinter advertisers' year on year, a strong indicator of not only the value that we have already created but of how much more value capture is still left in front of us on that so.

Speaker Change: So we also see that improvement, but performance is the name of the game and we've made a major progression on performance over the last 18 months.

William J. Ready: Yeah, thanks, Eric. You know, we also see the broader ad market as stable and improving. For us, retail was the fastest-growing segment, and, you know, we're seeing across the entire ad industry that performance matters more than ever, and we're winning on that front. We're driving more performance to advertisers than ever before. We are, as I mentioned in my remarks, large advertisers are opening up their performance budgets for us, doubling our clicks sent to advertisers year on year, a strong indicator of not only the value that we have already created but of how much more value capture is still left in front of us on that. So we also see that improvement, but performance is the name of the game, and, you know, we've made a major progression on performance over the last 18

Speaker Change: And so.

Speaker Change: The comments I'd make.

Speaker Change: Offered a installation without any more on some of the other things that we saw.

Speaker Change: And the market there I'd say the only other thing and we called this out in the script Eric is we did see.

Speaker Change: Not a significant impact from the middle East if we talked about on the prior earnings calls so that was a very temporary.

Impact to us it was fully recovered by the time, we got on the last call. So that to US was not a major had been given the fact that we are making this transition to more performance budgets as bill alluded to we do.

Speaker Change: Did see a little bit of tail.

Speaker Change: Tail off in December from the food and beverage category, which is consistent with the public commentary that we've seen elsewhere, we're seeing that headwind continue.

Speaker Change: Q1, but in general in General Q1 is off to a really really good start and we feel very confident in the acceleration that we're seeing in guiding to in Q1, which is a result of a lot of the lower funnel investments that bill was alluding to earlier.

William J. Ready: And so, you know, the comments I'd make, you know, I'll offer them to Julia if she wants to add any more on some of the other things that we saw in the market there. I'd say the only other thing, and we called this out in the script, Eric, is that we did see, you know, not a significant impact from the Middle East, as we talked about on the prior earnings call. So that was a very temporary impact on us. It was fully recovered by the time we got on the last call.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Speaker Change: The next question will be from the line of Ross Sandler with Barclays. Your line is now open.

Ross Sandler: Thanks, guys question on the Google partnerships, so everybody can see that the <unk> gap between.

Julia Brau Donnelly: So that, to us, was not a major headwind, given the fact that we are making this transition to more performance budgets, as Bill alluded to. We did see a little bit of a tail off in December from the food and beverage category, which is consistent with the public commentary that we've seen elsewhere. We're seeing that headwind continue into Q1, but in general, Q1 is off to a really, really good start, and we feel very confident in the acceleration that we're seeing and guiding to in Q1, which is a result of a lot of the lower funnel investments that Bill was alluding to earlier. Great, thank you.

Ross Sandler: Europe and U S. For you guys is about twice as big as matter.

Ross Sandler: So can you talk about I guess the difference between the Google partnership and what you have going with Amazon right now.

Ross Sandler: Is the mix of categories outside of retail that Google brings to the table going too.

Ross Sandler: Could you could that would be more meaningful in terms of your <unk> improvement and are you allowed to use any of those non retail categories in the U S from Google or not thanks a lot.

Ross Sandler: Yes.

Speaker Change: Thanks, Ross Great question, and as we've talked about on the international front.

Julia Brau Donnelly: Thank you. The next question will be from the line of Ross Sandler with Barclays. Your line is now open.

Speaker Change: We see petrositis significant under monetize across the board, but the most under monetized internationally, we have approximately 80% of our users outside the U S, but only 20% of our revenue.

William J. Ready: Thanks, guys. A question on the Google partnership. So, Bill, everybody can see that the ARPU gap between Europe and the U.S. for you guys is about twice as big as Meta.

Speaker Change: So as we shared at our Investor Day, we think that's a meaningful opportunity for us to increase that are internationally at Investor day, we talked about how we would leverage both <unk> as.

William J. Ready: So, can you talk about, I guess, the difference between the Google partnership and what you have going with Amazon right now? And is the mix of categories outside of retail that Google brings to the table going to, you know, could that be more meaningful in terms of your ARPU improvement? And are you allowed to use any of those non-retail categories in the U.S. from Google or not? Thanks a lot. Thanks, Ross. Great question.

Speaker Change: As well as resellers and other partnerships to help us advance there. So we're quite excited about the partnership with Google as particularly for those and monetize markets.

Speaker Change: Thank you that can help us too.

Speaker Change: Accelerate their <unk> journey for those markets and bringing more relevant content and actual content to users in those markets as we've demonstrated that our users have a commercial intent on our platform.

William J. Ready: And, you know, as we've talked about on the international front, we see Pinterest as significantly under-monetized across the board, but the most under-monetized internationally. We have approximately 80% of our users outside the U.S., but only 20% of our revenue. So, as we shared with our investor today, we think that's a meaningful opportunity for us to increase that ARPU internationally. At Investor Day, we talked about how we would leverage both 3P as well as resellers and other partnerships to help us advance there. So, we're quite excited about the partnership with Google as, particularly for those un-monetized markets, we think it can help us to accelerate that ARPU journey for those markets and bring more relevant content and actionable content to users in those markets.

Speaker Change: Ads can be great content, you've seen that in our increase of impressions.

Speaker Change: Adam Oppressions, while also increasing engagement demonstrating that the ads can be great content when they're used in a commercial context. We think it will also be additive from that perspective as well.

Speaker Change: Your question on Amazon, we feel really good about the way the Amazon partnership with scaling also.

Speaker Change: And.

Speaker Change: There are international markets that can be in play there as well so as we've talked about the <unk> strategy. Overall, we think about <unk> as a way to fill in gaps in our auction and bring more relevant content to our users.

William J. Ready: As we've demonstrated that our users have a commercial intent on our platform, the ads can be great content. You've seen that in our increase in impressions, ad impressions, while also increasing engagement, demonstrating that the ads can be great content when used in a commercial context. We think it'll also be additive from that perspective as well. Your question on Amazon, you know? We feel really good about the way the Amazon partnership is scaling. And, you know, there are international markets that could be in play there as well.

Speaker Change: And so we're quite pleased with the way the Amazon partnership is progressing.

Speaker Change: And the Google partnership with the focus on our on monetize or under monetize international markets, We think will be quite additive as well.

Speaker Change: Thank you.

Speaker Change: The next question will be from the line of rich Greenfield with light shed partners. Your line is now open.

Hi, Thanks for taking the question I'm seeing more and more video AD units when I'm on Pinterest just scrolling through the feed I guess the question Bill is when you talked about AI and machine learning I guess, how should we think about how your algorithms.

William J. Ready: So, as we've talked about the 3P strategy overall, we think about 3P as a way to fill in gaps in our auction and bring more relevant content to our users. And so, we're quite pleased with the way the Amazon partnership is progressing, and the Google partnership, with the focus on our un-monetized or under-monetized international markets, we think will be quite additive as well. Thank you. The next question will be from the line of Rich Greenfield with Light Shed Partners. Your line is now open.

Rich Greenfield: It systems are figuring out whether to deliver a static image ad or a video AD for each available AD opportunity and then just any comments on sort of conversion or ROE as that youre seeing for video ads versus the static ads any trends or any color you can give us would be really helpful. Thank you.

Speaker Change: Sure thing thanks rich.

William J. Ready: Hi, thanks for taking the question. You know, I'm seeing more and more video ad units when I'm on Pinterest, just scrolling through the feed. I guess the question, Bill, is, you know, when you talk about AI and machine learning, I guess how should we think about how your algorithm and systems are figuring out whether to deliver a static image ad or a video ad for each available ad opportunity. And then just any comments on sort of the conversion or ROAS that you're seeing for video ads versus the static ads, any trends or any color you can give us would be Sure thing.

Speaker Change: So.

Speaker Change: Video.

Speaker Change: Remains more than 30% of our revenue has been a bright spot for us on a platform that we are driving really great monetization on video and we've talked about how much AI as a core competency for us and how much that has driven increases in relevancy on the organic side as.

Speaker Change: As well as improvements on the AD side as well our model is being 100 times larger than they were a year ago as we talked about last quarter.

Speaker Change: And so one of the things we're seeing from that AI driven improvement in relevancy is a really good ability to discern what's relevant for which user at the right moment in time and that includes both.

William J. Ready: Thanks, Rich. So, you know, video remains more than 30% of our revenue. It's been a bright spot for us on the platform that we are driving really great monetization on video. And, you know, we've talked about how much AI is a core competency for us and how much that has driven increases in relevancy on the organic side, as well as improvements on the ad side as well, our models being 100 times larger than they were a year ago, as we talked about last quarter. And so one of the things we're seeing from that AI-driven improvement in relevancy is a really good ability to discern what's relevant for which user at the right moment in time, and that includes both video and still images. And so, you know, we're seeing that work quite well in our feed, the balance between video and still imagery, and I think you see that reflected quite well in our progress with users, that we just put up our best user of 21.

Speaker Change: Video and still images.

Speaker Change: So we're seeing that work quite well in our fee the balance between video and still imagery.

Speaker Change: And I think you see it reflected quite well and our progress with users.

Speaker Change: We just put up our our best user growth quarter since Q1 of 'twenty one.

Speaker Change: We're deepening engagement per user Gen. Z is now our largest fastest growing demographic, they're very video centric as well we are winning with Gen. Z. So I think those are all the things I would point to that say, we're really getting the right balance of still imagery versus video with really good multimodal capabilities and our AI driven relevancy on those things.

Speaker Change: Yes.

Speaker Change: And when I look at Gen Z is it fair to say that Theyre seeing an even higher percentage of video then.

William J. Ready: We're deepening engagement per user. Gen Z is now our largest, fastest growing demographic, and they're very video-centric as well.

Speaker Change: Gen Z Gen Z other demographic tends to be more video centric.

Speaker Change: And as we've talked about we.

Speaker Change: Are performing quite well with Gen Z.

William J. Ready: We are winning with Gen Z. So I think those are all the things I'd point to that say we're really getting the right balance of still imagery versus video with really good multimodal capabilities and our AI-driven relevancy on those things. And when I look at Gen Z, is it fair to say that they're seeing an even higher percentage of video then? Gen Z as a demographic tends to be, you know, more video-centric, and, as we've talked about, we are performing quite well with Gen Z. But interestingly, it's not just video. You know, when we see things like, I talked about collages in my comments. You know, we are creating entirely new content types on Pinterest, like collages, where users can curate, and they've done that historically on boards.

Speaker Change: But interestingly, it's not just video.

Speaker Change: When we see things like I talked about collages and my comments.

Speaker Change: We are creating entirely new content types on Pinterest Lite collages, where users can.

Speaker Change: Cure rate and they've done that historically on boards, but clauses now make that an even deeper level of granularity where people can put together outfits and room designs at much greater granularity.

Driven by AI.

Speaker Change: Our recommendations on those things and so we're seeing Gen Z really engaged deeply with that as well and as I mentioned in my remarks, not only that driving engagement is driving shopping behaviors, while 75% plus of those clauses that are created.

William J. Ready: But collages now make that, you know, an even deeper level of granularity, where people can put together outfits and room designs and much greater granularity, driven by AI, you know, recommendations on those things. And so we're seeing Gen Z really engage deeply with that as well. And as I mentioned in my remarks, not only is that driving engagement, it's driving shopping behavior as well. 75% plus of those collages that are created contain shoppable products.

Speaker Change: Contained solvable products.

Speaker Change: So quite pleased with how our our team.

Speaker Change: Leveraging AI is finding great ways to bring new content types to the right users at the right moment in time, particularly around commercial intent.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: The next question will be from the line of Doug Anmuth with Jpmorgan. Your line is now open.

William J. Ready: And so, you know, quite pleased with how our team, leveraging AI, is finding great ways to bring new content types to the right users at the right moment in time, particularly around commercial intent. Thank you. Thank you. Thank you. The next question will be from the line of Doug Anmuth with JP Morgan. Your line is now open. Thanks for taking the questions. I have two.

Doug Anmuth: Thanks for taking the questions I have two you talked about doubling down on momentum in 'twenty four.

Doug Anmuth: Can you talk about any key priorities for the year that really stand out and is there any change to how youre thinking about profitability in 'twenty four and then just quickly on China advertisers spending any color on exposure levels and perhaps how it trended in <unk>. Thank you.

Julia Brau Donnelly: You talked about doubling down on momentum in 24. I was just curious if you could talk about any key priorities for the year that really stand out. And is there any change to how you're thinking about profitability in 24? And then, just quickly, on China advertisers spending any color on exposure levels and perhaps how it trended in 4Q. Thanks. Sure. Thanks for the question, Doug. I'll take that one.

Speaker Change: Sure. Thanks for the question, Doug I'll I'll take that one.

Speaker Change: And so overall, we're feeling really good about the progress that we're making on our three to five year outlook and we talked about at Investor day, having a steady ramp to that low 30%.

Julia Brau Donnelly: And so overall, you know, we're feeling really good about the progress that we're making on our three to five-year outlook. And we talked about at Investor Day having a steady ramp to that low 30s percent EBITDA margin range in the next three to five years. As I said in my prepared remarks, we do intend to expand margin again in 2024, but at a more modest level than the 660 basis points that we delivered in 2023.

Speaker Change: EBITDA margin range in the next three to five years.

Said in my prepared remarks, we do intend to expand margin again in 2024, but at a more modest level than the 660 basis points that we delivered in 2023. So we are planning to drive more margin expansion and see operating leverage in the business in 2024.

William J. Ready: So we are planning to drive more margin expansion and see operating leverage in the business in 2024. On an absolute dollar basis in terms of where we're increasing our levels of investment, we plan to focus on our R&D area, tying to headcount additions primarily in AI, both to benefit our users and our advertisers. On the sales and marketing front, we also anticipate adding to our sales organization with a focus on enhanced technical selling capabilities and also expansion of some frontline sellers in our international markets as well. To your question about China-based e-commerce retailers, we are seeing some benefit from that category of advertiser in Q4 that is a nice contributor for us, but it is by no means the only contributor. We are seeing strong growth in the retail category that is broad-based, including several other major retailers aside from those categories in China. And so we think we're a great retailer, we're fit for those retailers, and I don't think we're as exposed there as some of our other peers. I got it.

Speaker Change: On an absolute dollar basis in terms of where are the areas, where we're increasing our levels of investment we plan to focus in our R&D area tying to head count additions primarily in AI, both for it to benefit our users and our advertisers on the sales and marketing line. We also anticipate adding to our sales organization with us.

Speaker Change: Focus on enhanced technical selling capabilities and also expansion of some frontline sellers in our international markets as well.

Speaker Change: To your question about China based e-commerce retailers.

Speaker Change: We are seeing some benefit from that category of advertiser in Q4 that is a nice contributor for us but it is by no means the only contributor we are seeing strong growth in our retail category that is broad based including several other major retailers aside from from those categories in China.

Speaker Change: And so we think we're a great retailer we're fit for those retailers and I don't think whereas exposed there as some of our other peers maybe.

Julia Brau Donnelly: Thank you, Julia. Thank you. The next question will be from the line of Mark Mahaney with Evercore. Your line is now open.

Speaker Change: Got it thank you Julia.

Julia Brau Donnelly: Thank you.

Julia Brau Donnelly: The next question will be from the line of Mark Mahaney with Evercore. Your line is now open.

William J. Ready: Thanks. I want to ask you about the Q1 outlook. And is there a way to peel back the different drivers of this acceleration between kind of the core product improvements, then the Amazon, maybe the Google contribution coming in? And then I guess other things like the extra day in the quarter. Like if you were to peel apart those, maybe you can't quantify, but directionally, which of those has the biggest impact on driving the acceleration, which is second, which is third? How would you triage those?

Mark Mahaney: Thanks, I wanted to ask about the Q1 outlook and is there a way to Peel back the different drivers of this acceleration between kind of the core product improvements than the.

Mark Mahaney: Amazon, maybe the Google contribution coming in and then I guess other things like the extra day in the quarter like if you were to Peel apart those maybe you can't quantify it but directionally, which of those has the biggest impact on driving the acceleration, which is second which is third how would you triage those thank you.

William J. Ready: Thank you. Thanks for the question, Mark. You know, as we talked about at our investor day, you know, we've got multiple ways to win here. You know, we've talked about driving better lower funnel performance, and we are, we are driving forward on that, performing quite well on that front. We talked about international in 3P; we see those contributing quite nicely, as well. And so it is very much a multi-prong approach.

Speaker Change: Thanks for the question Mark.

Speaker Change: As we talked about at our Investor day.

Speaker Change: We've got multiple ways to win here.

Speaker Change: We've talked about driving better lower funnel performance.

Speaker Change: We are driving forward on that performed quite well on that front, we've talked about international and <unk>.

<unk>, we see those contributing quite nicely.

Speaker Change: Well.

Speaker Change: And so it is very much a multi pronged approach and we see really solid.

William J. Ready: And we see really solid performance across each of those, very much in line with the plans we laid out at our investor day. So, in the same way that we talked about multiple ways to win at investor day, we see progress on every single one of those fronts. And we see it as a balanced approach, and we continue to see it that way as we look into Q1 and next year. Thank you, Bill.

Speaker Change: Performance across each of those very much in line with the plans we laid out at our Investor day. So in the same way that we've talked about multiple ways to win at Investor Day, We see progress on every single one of those fronts and we see it as a balanced approach and we continue to see that way as we look into Q1 in next year.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yeah.

Julia Brau Donnelly: Thank you. The next question will be from the line of Ron Josie with Citigroup. Your line is now open.

Speaker Change: Thank you Bill.

William J. Ready: Thank you. Thank you.

William J. Ready: The next question will be from the line of Ron Josey with Citigroup. Your line is now open.

Ron Josey: Great. Thanks for taking the question Bill I wanted to ask maybe a bigger picture you talked about larger retail advertising just allocate advertisers allocating more performance budgets to the Pinterest as you evolved from experimental just talk to us about the process here to get to more performance AD budgets to be that line item and how this fits in your commentary on working with agencies.

William J. Ready: Great. Thanks for taking the question. Bill, I wanted to ask you about maybe bigger pictures.

William J. Ready: You talked about larger retail advertising, just advertisers allocating more performance budgets to Pinterest as you evolve from experimental. Just talk to us about the process here to get to more performance ad budgets, to be that line item, and how this fits in your commentary on working with agencies and incentives. And then, quick follow-up on just Mark's call, Mark's question just there, Julia. Any insights on just Easter being earlier this year and or the extra day in the quarter?

Speaker Change: And incentives and then quick follow up on just March call. Just <unk> question, just there Julia.

Speaker Change: Any insights on just Easter, adding extra with Easter being earlier, this year and or the extra day in the quarter. Thank you.

William J. Ready: Thanks for the question, Ron. So, you know, as we've talked about before, we've been through a major transformation from, you know, a primarily brand ad-driven platform a couple of years ago to a performance-driven platform today. And, you know, we shared with an investor today that two-thirds of our revenue is now coming from the lower funnel, so we are well down that path on that transformation. At the same time, you know, we are continuing to launch major improvements to our performance ad product, and we're on an adoption curve there. So, for example, we launched Mobile Deep Links to GA in the middle of the year last year, and we are still seeing more and more retailers not only adopt that but then shift budget to us as a result of that. With Direct Links, we launched that when we were right into the holiday shopping season when, you know, most retailers were sort of hunkered down and not really making major shifts, but we were able to deliver that without the advertiser doing any work, and we doubled the number of clicks we sent to advertisers year on year.

Yeah.

Speaker Change: Thanks for the question Ron.

Speaker Change: So.

Julia Brau Donnelly: As we've talked about before we've been on a major transformation from.

A primarily brand AD driven platform a couple of years ago to a performance driven platform today and we shared at Investor day, two thirds of our revenue now coming from the lower funnel. So we are well down that path.

Julia Brau Donnelly: That transformation at the same time, we are continuing to launch major improvements to our performance ad product.

Julia Brau Donnelly: And we're on an adoption curve there. So for example.

Julia Brau Donnelly: We launched mobile deep links to Georgia for a middle of the year last year and then we are still seeing more and more retailers not only adopt up but then ship budget to us as a result of that with direct links we launched that as we were right into the holiday shopping season.

Julia Brau Donnelly: Most of the retailers are sort of hunker down.

Julia Brau Donnelly: Not really making major shifts, but we are able to deliver that without the advertiser doing work and we doubled the number of clicks, we sent the advertisers' year on year and as we're going into Q1, we're seeing that now start to show up in budget allocations moving to us, but we think we have a lot more of that to go and to give you a little bit more sense of.

William J. Ready: And as we're going to Q1, we're seeing that now start to show up in budget allocations moving to us, but we think we have a lot more of that to go. And to give you a little bit more sense of this, if you looked at our lower funnel performance tools, things like Conversion API, Mobile Deep Links, Direct Links, and Clean Rooms, at the start of last year, we had roughly 2% of our revenue coming from those who had at least three of those lower funnel tools. By Investor Day, that was 13% of our revenue coming from those that had at least three of those lower funnel tools. By the end of the year, 23% of our revenue came from those who had at least three of those lower funnel tools.

Julia Brau Donnelly: If you looked at our lower funnel performance tools.

Julia Brau Donnelly: Things like conversion API mobile deep links direct links clean rooms.

Julia Brau Donnelly: At the start of last year.

Julia Brau Donnelly: We had roughly 2% of our revenue coming from from those who had at least three of those lower funnel tools by Investor day that was 13% of our revenue coming from those that had at least three of those lower funnel tools by the end of the year. It was 23% of our revenue coming from those who had at least three.

Julia Brau Donnelly: Of those lower funnel tools. So that gives you a sense for how we're making strong progress, but also to my comments around how there is a lot more of the value capture still in front of us from products that we have already launched that we know are performing well and of course, we are continuing to innovate there as well so a lot more to come on that.

William J. Ready: So, that gives you a sense of how we're making strong progress, but also to my comments around how there's a lot more value capture still in front of us from products that we have already launched that we know are performing well. And, of course, we are continuing to innovate there as well. A lot more to come on that.

William J. Ready: And maybe I'll just add to that, as Bill was talking about, we're seeing nice growth from retail, in particular, and that's really kind of already capturing some of the value from some of the investments that we made over the course of 2023. One additional stat I'll share, and this is an updated version of a stat that we had last year, which is that those who have adopted our API for conversions are actually seeing year-over-year growth in the 30% range compared to non-adopters of our API for conversions, who are declining mid-single digits. So another data point to support the growth that we're seeing in the, you know, budgets that are coming our way as we're delivering sustained ROAS performance.

Speaker Change: And then maybe I'll just add to that and as Bill was talking about we're seeing nice growth from retail in particular, and that's really kind of already capturing some of the value from some of the investments that we made over the course of 2023, one additional stat I'll share misses when an updated version of a stat that we had last year, which is that those who have adopted.

Speaker Change: At our API for conversions are actually seeing retailers, who adopt our API for conversions are actually seeing year over year growth.

Speaker Change: In the 30% range compared to non adopters of our API for conversion into our declining mid single digits. So another further data point to support the growth that we're seeing in there.

Speaker Change: Budgets that are coming our way as we're delivering sustained realized performance.

William J. Ready: To your question on Q1 and kind of puts and takes in Q1, just a reminder again that the acceleration that we're guiding to in Q1 is off the back of a stable comp from last year. There are kind of small puts and takes and a small tailwind from, you know, the timing of Easter or the addition of Leap Day this year, but those are by no means the major driver.

Speaker Change: To your question on Q1, and kind of puts and takes in Q1.

Speaker Change: As a reminder, again that that's our acceleration that we're guiding to in Q1 is off the back of a stable comp from last year. There are kind of small puts and takes in a small tailwind from timing of Easter or the addition of leap day. This year, but those are by no means the major driver of the major drivers are.

Julia Brau Donnelly: The major drivers are the strength that we're seeing in the retail category tied to large advertisers, the emerging contribution from 3P, and some of the other factors that we discussed today on the call. So overall, you know, this is us doing what we said we would do at Investor Day and delivering on some acceleration and capturing value from all of the investments that we've made over the last year. And we feel really good about the growth that we're seeing, the sustainability of that growth, and the progress that we're making against those goals. Thank you, Julia.

Speaker Change: The strength that we're seeing in the retail category tied to large advertisers the emerging contribution from <unk> and some of the other factors that we've discussed today on the call. So so overall this is us doing what we said we would do at Investor day, and delivering on some acceleration.

Speaker Change: Capturing value from all of the investments that we've made over the last year and we feel really good about the growth that we're seeing the sustainability of that growth and the progress that we're making against those goals.

Speaker Change: Thank you Julia Thank you Bill.

William J. Ready: Thank you, Bill. Thank you, thank you. The next question will be from the line of Dan Salmon with New Street Research. Your line is now open.

Speaker Change: Thank you. Thank you.

Speaker Change: The next question will be from the line of.

Speaker Change: Dan Salmon with New Street Research. Your line is now open.

William J. Ready: Great. Thanks. Good afternoon, everyone.

Dan Salmon: Great. Thanks, good afternoon, everyone.

William J. Ready: So maybe we could draw a dig in a little bit more on your accelerating monthly active user growth this quarter. You talked about success with Gen Z. Any additional quantification you could put around that would be great. And then maybe any color around other demographics, like, for example, men, and then we can see the growth by region, obviously, but any particular countries that you would call out where you're seeing particular strength and malgrowth. Thank you. Certainly, you know, about Gen Z, we've talked about; it's more than 40% of our user base now. And, you know, there are multiple factors driving the improvement in users and engagement. At its core, you know, we're helping users find more of what they're interested in on Pinterest, helping them take action on it, and, you know, delivering a positive environment for them that they see as an oasis away from the toxicity of much of the rest of social media.

Dan Salmon: So maybe could we get.

Dan Salmon: To get a little bit more.

Dan Salmon: You're accelerating monthly active user growth this quarter U K.

Dan Salmon: About success with Gen Z.

Dan Salmon: Additional quantification you can put around that would be great and then maybe.

Dan Salmon: Any color around other demographics.

Dan Salmon: For example men.

Dan Salmon: And then we can see the growth by region, obviously, but any particular countries that you would call out for where you're seeing particular strength in MAU growth. Thank you.

Dan Salmon: Certainly on Gen Z, we've talked about it's more than 40% of our user base now.

Dan Salmon: And there is multiple factors driving.

Dan Salmon: The improvement in users and engagement at its core.

Dan Salmon: We're helping we're helping users find more of what they are interested in on pinterest, helping them take action on it.

Dan Salmon: And.

Dan Salmon: Delivering a positive environment for them that they see as an oasis away from the toxicity of much of the rest of social media. This gets decided us directly, particularly biogen Gen Z users.

William J. Ready: This gets cited to us directly, particularly by Gen Z users. And so, we are carving out a unique space for ourselves that is quite different from the rest of social media, that is more about users investing in themselves, things that are additive to their lives versus sort of viewing the lives of others or that where they feel like they have to perform for others.

Dan Salmon: So we are carving out a unique space for ourselves that is quite different from the rest of social media.

Dan Salmon: It's more about users investing in themselves things are additive to their lives versus sort of viewing the lives of others or that where they feel like they have to perform for others.

William J. Ready: And so, it is a really unique and ownable space, and we're seeing that really cut through with users and, again, with advertisers as well to see it as a brand-safe environment. On geographies, as you mentioned, you can see the geographic growth there. The couple things I'd mention are just, you know, on You Can. We saw, again, another really nice growth quarter there. In our mature markets, I've been saying this for the last six quarters, our mature market is much more about driving depth of engagement. And we feel really good about the depth of engagement that we're driving, particularly as we bring actionability onto the platform. You can see that reflected in the increasing number of clicks where users are taking action on our platform. It was a big question 18 months ago.

Dan Salmon: So it is a really unique and <unk> space and we're seeing that really cut through with users and again with advertisers as well to see it as a brand safe environment.

Dan Salmon: Geographies as you mentioned you can see that the geographic growth there.

Dan Salmon: A couple of things I'd mention or just.

Dan Salmon: You can.

We saw again, another nice really nice growth quarter there.

Dan Salmon: In our mature markets I've been saying this for the last.

Dan Salmon: Six quarters.

Dan Salmon: Sure market is much more about driving depth of engagement and we feel really good about the depth of engagement that we're driving particularly as we bring action ability onto the platform you see that reflected in the increasing clicks where users are taking action on our platform is a big question 18 months ago users not only come here with intent that they are taking action and internationally. The big question there.

William J. Ready: Users not only come here with intent, but they are taking action. And internationally, the big question there has always been monetization. And we have nice momentum there, but we have a lot more that we can do.

Dan Salmon: As always been.

Dan Salmon: The monetization and we have nice momentum there, but we have a lot more that we can do and we're quite excited.

William J. Ready: And we're quite excited about our first-party selling efforts, the things we can do with reseller partners and agencies. We're making progress on those fronts and then bringing 3P into the mix there with Google, particularly for those unmonetized and under-monetized markets. We think there's a lot we can do that not only drives monetization per user but again drives that actionability for the user that we think can help further enhance user engagement for users in those international markets.

Dan Salmon: About our first party selling efforts the things, we can do with reseller partners and agencies were.

Dan Salmon: We're making progress on those fronts, and then bringing <unk> into the mix there.

Dan Salmon: With Google, particularly for those on monetizing under monetize markets. We think there's a lot. We can do that not only drives the monetization per user, but again drive that action ability for the user that we think can help further enhance the user engagement for users in those international markets.

William J. Ready: Only other thing I'd add, Dan, to your question on sort of the acceleration that we've seen in MAU growth, which we're quite proud of, as Bill mentioned, it is also carrying through in terms of depth of engagement. And so we're continuing to see our mobile app MAU growth accelerate even faster than our total MAU growth. And as we look at total impressions, which is one of the drivers of ad impressions, but total impressions that continue to grow even faster than our MAU growth as well. So we continue to see nice trends there consistent with some of the longer-term trends we shared at InvestorGate. Very helpful; thank you.

Dan Salmon: The other thing I would add Dan to your question on sort of the acceleration that we've seen in Mou growth, which we're quite proud of as Bill mentioned. It is also carrying through in terms of depth of engagement and so we're continuing to see our mobile app Mou growth accelerate even faster than our total Mou growth.

Dan Salmon: As we look at total impressions, which is one of the drivers of AD impressions, but total impressions that continues to grow even faster than our <unk> growth as well so continuing to see nice trends there consistent with some of the longer term trends, we shared at Investor day.

Speaker Change: Very helpful. Thank you.

Thank you. Thank you.

Julia Brau Donnelly: Thank you. Thank you. The next question will be from the line of Ken Galrelski with Wells Fargo. Your line is now open.

Speaker Change: The next question will be from deadline of.

Speaker Change: Ken <unk> with Wells Fargo. Your line is now open.

Ken: Thank you very much just two if I may real quickly first.

Julia Brau Donnelly: Thank you very much. Just two, if I may, real quick. First, on revenue mix and thinking about 4Q versus 1Q, you talked about the headwinds from the food and beverage category in 4Q continuing into 1Q. But yet, you did guide to an acceleration. Should we think about that as a – is there a mixed component to that, meaning heavier brand ads or a heavier brand in 4Q versus 1Q, or is that all just DR acceleration and the 3P kicking in? And then second, please, I just hope you could walk us through a little bit – and you talked about this, Bill, about the value capture versus value creation, looking at those impressions, plus 33 in the fourth As you think about throughout 24 – not a 1Q question, but throughout 24, do you see that – your Pinterest ability to close that gap over time in terms of advertising revenue relative to impression growth? And what are the key kind of steps you're going to take to get that done?

Ken: On on revenue mix and thinking about <unk> versus <unk>, you talked about the the headwinds from the food and beverage category and <unk> continuing into <unk>.

Ken: But yet.

Ken: You did guide to an acceleration should we think about that as.

Ken: Is there a mix component to that meaning heavier brand ads or every brand in <unk> versus <unk> or is that all just all Dr acceleration and the <unk> kick in and then second please.

Speaker Change: I'm, just hoping maybe you could walk us through a little bit.

Speaker Change: You talked about this bill about the value capture versus value creation looking at those impressions plus 33 in the fourth quarter, which was really impressive.

Speaker Change: As you think about throughout 'twenty four not a <unk> question, but.

Speaker Change: Throughout 2004, you see do you see that your petrus ability to to close that gap over time in terms of.

Speaker Change: See advertising revenue relative to those impression growth and what are the key kind of steps you're going to take to get.

Speaker Change: That does thank you.

William J. Ready: Thank you. Okay, maybe I'll take the first part of your question, Ken. So it is not mixed.

Speaker Change: Okay, maybe I'll take the first part of your question Ken.

Speaker Change: So it is not mix it is more acceleration and ongoing acceleration from retail and an emerging contribution from three P. So we do see continuing had been from food and beverage, but it is more than it's being even more offset by other positive growth factors that are driving our Q1 acceleration.

Julia Brau Donnelly: It is more acceleration and ongoing acceleration from retail and an emerging contribution from 3P. So we do see continuing headwinds from food and beverage, but it is more that it's being, you know, even more offset by other positive growth factors that are driving our Q1 acceleration. Yeah.

William J. Ready: And, you know, on your question about value capture versus value create, you know, there's always a lag between these things. You know, advertisers need to see the performance sustain. They need to see it flow through into their models and their measurement. And so, you know, the thing that we feel really great about is that value creation is the hardest part and has to happen first.

Speaker Change: And on your question on the value capture versus value create.

Speaker Change: Theres always a lag between these things.

Speaker Change: Advertisers need to see the performance sustain and you'll see it flow through into their models and their measurement.

Speaker Change: And so.

Speaker Change: The thing that we feel really great about is that that value. The value create is the hardest part and has to happen first and we're seeing that as we drive more users with more intent to those advertisers. So that's really fantastic raw material raw material for us and we've only really just started the value capture on that end.

William J. Ready: And we're seeing that as we drive more users with more intent to those advertisers. So that's really fantastic raw material for us. And we've only really just started to capture the value of that. And, you know, what comes ahead in that is some of that is just, you know, advertisers, you know, bake that into their own models of performance. Some of that is about getting advertisers on to privacy-safe measurement. Julia talked about, and we started talking about this Q1, late Q1, I believe, of last year around adopters of API for conversions as a cohort growing at 30%, approximately 30%, those that had not yet adopted being mid-single-digit decliners. That trend continues as we drive that adoption. So, you know, as I mentioned in my comments, performance doesn't matter to advertisers if they can't see it through their measurement.

What comes ahead of that is some of that is just advertisers see that bake into their own models of performance. Some of that is about getting advertisers onto privacy safe measurement.

Speaker Change: Julia talked about.

Speaker Change: And we started talking about this Q1 late Q1 I believe it was last year around adopters of API for conversions as a cohort growing at 30%.

Speaker Change: Approximately 30% those who had not yet it ought to be a mid single digit decliners that trend continues as we drive that adoption. So as I mentioned in my comments.

Speaker Change: The performance of them.

Speaker Change: Matter to the advertisers if they can't see it through their measurement, so driving that adoption curve on on on measurement matters quite a lot as well, but we're seeing again, we're seeing that budget shift toward us.

William J. Ready: So driving that adoption curve on measurement matters quite a lot as well. But, you know, we're seeing, again, that budget shift toward us continue. We saw that through the year this past year, doubling our growth rate from the beginning of the year to the end of the year. We see further acceleration as we look into Q1, as reflected in our guide, and we think there's a lot more of that to go as we continue to drive through that adoption curve. Hope that that helps. Thank you both.

Speaker Change: Continue we saw that through the year this past year doubling our growth rate from the beginning of the year to the end of the year. We see further acceleration as we look into Q1 as reflected in our guide.

Speaker Change: And we think Theres a lot more of that to go as we continue to drive through that adoption curve.

Speaker Change: That helps.

Speaker Change: Thank you both.

William J. Ready: Thank you. The next question will be from the line of Colin Sebastian with Baird. Your line is now open. Thanks, and good afternoon. A couple, I guess, for me as well.

Speaker Change: Thank you.

Speaker Change: The next question will be from the line of Colin Sebastian with Baird. Your line is now open.

Colin Sebastian: Thanks, and good afternoon, a couple I guess for me as well.

William J. Ready: Bill, maybe a follow-up on the MAUs. Are you saying that there's a faster conversion of maybe those occasional users, maybe quarterly or semiannual, or are you seeing... users who are new to the platform overall? And then secondly, you know, in highlighting the improvements you've made in relevancy and recommendation. I know there's a lot of work with machine learning behind all of that. So, I guess I'm just curious, you know. How far along do you think you are in really optimizing? Foundation, and

Colin Sebastian: Maybe a follow up on the <unk> are you, saying that that there is a faster conversion of maybe those occasional users maybe quarterly or semiannual users to monthly users or are you seeing just users who are.

Colin Sebastian: New to the platform overall.

Colin Sebastian: And then secondly in the <unk>.

Colin Sebastian: Highlighting the improvements you've made in relevancy and recommendations.

Colin Sebastian: And content in the platform I know Theres a lot of work with machine learning behind all of that and using signals from users. So I guess I'm just curious.

Colin Sebastian: How far along do you think you are and really optimizing that level of personalization and hitting those key advertiser objectives like conversion rates. Thank you.

William J. Ready: Yeah, thanks for the questions, Colin. So, you know, on your first question around MAUs, we are seeing progress both in bringing new users to the platform, and we talked about Gen Z, where we are winning with Gen Z, and they are finding Pinterest quite compelling and unique and different from the rest of social media. So we are bringing new users to the platform, like our Gen Z examples. But it's also the case that we are deepening engagement with existing users, giving them more reasons to come back to Pinterest more frequently. And I'd say there are two large drivers of that.

Speaker Change: Yes, thanks for the questions Colin.

Speaker Change: So.

Speaker Change: And your first question around <unk>.

Speaker Change: We are seeing progress both in bringing new users to the platform, we talked about Gen Z, where we are winning with Gen Z.

Speaker Change: They are finding pinterest quite compelling and unique and different from the rest of social media. So we are bringing new users on the platform like our Gen Z. Examples but it is also the case that we are deepening engagement with existing users, giving them more reasons to come back to <unk> more frequently.

Speaker Change: And I'd say, there's two large drivers and that one is.

William J. Ready: One is, as we make better and better recommendations, that gives them more reasons to come back and gives them, you know, more suggested use cases, helping them to broaden out what they think they can do on Pinterest, showing them adjacent use cases. So that's working quite well. And then there's the actionability. As I've said many times before, you know, Pinterest had previously solved digital window shopping, but all the stores were closed, and actionability was hard. How good was digital window shopping? So good that people would keep coming back, even though all the stores were closed.

Speaker Change: As we make better and better recommendations that gives them more reasons to come back.

Speaker Change: And giving them more suggested use cases, helping them to broaden out what they think they can do on petrus showing them adjacent use cases, so that's working quite well and then it's the action ability.

Speaker Change: As I've said many times before <unk>.

Speaker Change: <unk> had previously solve digital window shopping, but all the stores were closed action ability was hard how good was the digital window shopping so good that people will keep coming back even though all the stores were closed but as we open those stores people have good reason to come back more and more frequently so the Mou acceleration and the growth there is broad based and it.

William J. Ready: But as we open those stores, people have a good reason to come back more and more frequently. So the MAU acceleration and the growth there is broad-based, and it is both bringing new users to the platform, winning with Gen Z, as well as driving depth of engagement with new adjacent use cases and better actionability to cause users to come back more frequently. On your second question on relevancy, you know, this is where we just get really amazing first-party signals that feed our AI. AI is only as good as the signal upon which it's acting, and we get really amazing signals on what users are interested in. I talked about how Pinterest predicts, and our ability to predict there and see trends that are coming is because users plan for the future on Pinterest. We see users on their shopping journeys long before that intent has been expressed on other platforms. And so that's really rich signal. As we're leveraging next-gen AI with models that are 100 times larger than they were before, we're seeing a really fantastic ability to take that completely unique signal to Pinterest and convert that into great, relevant recommendations for users.

Speaker Change: Both bringing new users onto the platform winning with Gen Z as well as driving depth of engagement with new adjacent use cases, and better action ability to cause either scaling back more frequently on your second question.

Speaker Change: On relevancy.

Speaker Change: This is where we just get really amazing first party signal.

Speaker Change: Feeds our AI AI is only as good as a signal of home, which is acting and we get really amazing signal on what users are interested and I've talked about.

Speaker Change: Petrus predicts and our ability to predict there and see trends that are coming because users plan for the future on Pinterest, we see users in their shopping journeys long before that intent has been expressed on other platforms and so thats really rich signal as we are leveraging nexgen AI with models that are 100 times larger than they were before.

Speaker Change: Seeing really fantastic ability to take that completely unique signal to pinterest and convert that and a great relevant recommendations for us as I shared on our last call.

William J. Ready: I shared on our last call that we saw approximately a 10-percentage-point improvement in relevancy when we moved to our large language models. And that flywheel between the user coming in and curating, giving a signal of what they're interested in, and then us being able to give better and better recommendations to users, we see that flywheel accelerating, particularly to bring in more actionability. So, again, AI is a core competency for us. And importantly, we have completely unique signals that you wouldn't find elsewhere around user curation, particularly around their commercial intents. And we see that really just continuing to drive that flywheel as we go forward.

Speaker Change: We saw approximately a 10 percentage point improvement in relevancy, when we move to our large language models.

Speaker Change: And that flywheel between the user coming in and Curating, giving us signal of what they're interested in.

Speaker Change: And then also be able to give better and better recommendations to users, we see that flywheel accelerating, particularly as we're bringing more action ability. So.

Speaker Change: Again, AI as a core competency for us.

Speaker Change: Importantly, we have completely unique signal that you wouldn't find elsewhere around the user curation.

Speaker Change: Particularly around their commercial intents.

Speaker Change: And we see that.

Speaker Change: Really just continuing to drive that flywheel as we go forward hopefully that helps.

William J. Ready: Hopefully, that helps. Thank you. That is all the time that we have for questions today, and with that, I will turn the call back over to Bill for some final closing remarks. Thanks again to all of you for joining the call and for your questions. We look forward to keeping this dialogue going as always. We hope you enjoy the rest of your day. That concludes today's call. Thank you all for your participation, and you may now disconnect your lines.

Speaker Change: Thank you.

Speaker Change: All the time that we have for questions today, and with that I will turn the call back over to Bill for some final closing remarks.

William J. Ready: Thanks again to all of you for joining the call and for your questions. We look forward to keeping this dialogue going as always we hope you enjoy the rest of your day.

Speaker Change: That concludes today's call. Thank you all for your participation and you may now disconnect your lines.