Q1 2024 Pinterest Inc Earnings Call

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Operator: Hello everyone, and welcome to the Pinterest first quarter 2024 earnings conference call. My name is Harry, and I'll be your operator today. If you would like to enter the queue for questions, then you may do so by dialing star one on your telephone keypad. I will now hand you over to Andrew Somberg, Vice President of Investor Relations and Treasury at Pinterest, to begin. Please go ahead.

Harry: Hello, everyone and welcome to the Pinterest first quarter 2024 earnings Conference call. My name is Harry and I'll be your operator today.

Harry: If you'd like to enter the queue for questions that you may do so by dialing star one on your telephone keypad.

Harry: I'll now hand, you over to Andrew some back Vice President and Investor Relations and Treasury at Pinterest to begin. Please go ahead.

Good afternoon, and thank you for joining US welcome to Pinterest, earning call earnings call for the first quarter ended March 31st 2024.

Andrew Somberg: Good afternoon, and thank you for joining us. Welcome to Pinterest's earnings call for the first quarter ended March 31, 2024. My name is Andrew Somberg, and I'm vice president of investor relations and treasury for Pinterest. Joining me on today's call are Bill Ready, Pinterest CEO, and Julia Donnelly, our CFO. We are providing a slide presentation to accompany our commentary. This conference call is also being webcast; please refer to our investor relations website at investor.pinterestinc.com to find today's presentation, webcasts, and earnings press release.

Andrew Schlossberg: My name is Andrew Schlossberg, and I'm, Vice President of Investor Relations and Treasury for Pinterest joining.

Andrew Schlossberg: Joining me on today's call are bill ready interest CEO and Julia Donnelly our CFO.

Andrew Schlossberg: We're providing a slide presentation to accompany our commentary. This conference call is also being webcast.

Andrew Schlossberg: Please refer to our Investor relations website at Investor Dot interesting dot com to find today's presentation webcast and earnings press release.

Andrew Somberg: Some of the statements that we make today regarding our performance, operations, and outlook may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. In addition, our results, trends, and outlook for Q2 2024 and beyond are preliminary and 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 later unless required by law.

Andrew Schlossberg: 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.

Andrew Schlossberg: And uncertainties that could cause actual results to differ materially.

Andrew Schlossberg: In addition, our results trends and outlook for Q2, 2024, and beyond are preliminary and not an assurance of future performance.

Andrew Schlossberg: 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 update them later unless required by law.

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

Andrew Somberg: For more information about risks, uncertainties, and other factors that could affect our results, please refer to our most recent quarterly report on Form 10-Q or annual report on Form 10-K 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 are distributed and available to the public through our investor relations website. Lastly, all growth rates discussed in today's prepared remarks should be considered year over year unless otherwise specified. And now, I'll turn the call over to Bill.

Andrew Schlossberg: 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 are distributed and available to the public through our Investor Relations website.

Andrew Schlossberg: Lastly, all growth rates discussed in today's prepared remarks should be considered a year over year unless otherwise specified.

Andrew Schlossberg: And now I'll turn the call over to Bill.

Bill Ready: Thanks, Andrew. Good afternoon, and thank you for joining our First Quarter 2024 earnings call. In Q1, we accelerated our progress against our strategic priorities, growing users and engagement, creating value for our advertisers through our lower funnel solutions, and continuing to deliver profitable growth through operational efficiency. Investing in our core differentiators has led to our best product-market fit in years. Global MAUs surpassed $500 million for the first time, reaching another record of $518 million, growing 12% and accelerating for the seventh consecutive quarter.

Thanks, Andrew.

Bill Ready: And thank you for joining our first quarter 2024 earnings call.

Bill Ready: In Q1, we accelerated our progress against our strategic priorities growing users and engagement, creating value for our advertisers through our lower funnel solutions and continuing to deliver profitable growth through operational efficiency.

Bill Ready: Investing in our core differentiator, which has led to our best product market fit in years.

Bill Ready: Global <unk> surpassed 500 million for the first time, reaching another record of $518 million growing 12% and accelerating for the seventh consecutive quarter.

Bill Ready: Q1 revenue of $740 million grew 23%, nearly doubling our growth rate with an 11-point acceleration from just a quarter ago. To put these numbers in a broader perspective, not only are we seeing acceleration since last quarter; in fact, we are driving the highest user and revenue growth on the platform since 2021. We also continue to drive significant improvements in profitability, resulting in Q1 adjusted EBITDA of $113 million, or a 15% margin, up nearly 1,100 basis points from last year.

Bill Ready: Q1 revenue of $740 million grew 23% nearly doubling our growth rate with an 11 point acceleration from just a quarter ago.

Bill Ready: To put these numbers into broader perspective, not only are we seeing acceleration since last quarter. In fact, we are driving the highest user and revenue growth on the platform since 2021.

Bill Ready: We also continued to drive significant improvements in profitability, resulting in Q1, adjusted EBITDA of $113 million or a 15% margin up nearly 1100 basis points from last year.

Bill Ready: As many of you will remember we hosted our first Investor Day last fall, where we shared an in depth view of our strategy as well as our three to five year targets for revenue and margins.

Bill Ready: As many of you will remember, we hosted our first Investor Day last fall, where we shared an in-depth view of our strategy, as well as our three to five-year targets for revenue and margins. We laid out multiple ways to drive revenue and how we would achieve our goals. First, growing users and deepening engagement per user. Second, continuing to increase ad load driven by the synergies between our users' strong commercial intent and relevant ads.

Bill Ready: We laid out multiple ways to drive revenue and how we would achieve our goals.

First growing users and deepen engagement per user.

Bill Ready: Continuing to increase AD load driven by the synergies between our users strong commercial intent and relevant ads.

Bill Ready: Third, executing on our lower funnel revenue opportunity. And finally, driving demand through third party partners, resellers, and international markets as additional levers to growth. Our results in Q1 are a testament to how each of these initiatives is performing as we expected or better. And all four of these drivers contributed to the revenue acceleration we saw in the first quarter and the strong outlook we have for the second quarter. In summary, we have multiple ways to win, and we are not overly reliant on any single initiative to achieve our objectives, which gives us confidence to deliver on these long-range targets.

Bill Ready: Third executing on our lower funnel revenue opportunity and finally driving demand through third party partners resellers in international markets as additional levers to growth.

Bill Ready: Our results in Q1 are a testament to how each of these initiatives are performing as we expected or better and all four of these drivers contributed to the revenue acceleration we saw in the first quarter and the strong outlook, we have for the second quarter.

Bill Ready: In summary, we have multiple ways to win and we are not overly reliant on any single initiative to achieve our objectives, which gives us confidence to deliver on these long range targets.

Bill Ready: And we're driving strong momentum in our business, making it clear that we have shifted into a higher gear as we enter this next stage of growth.

Bill Ready: And we're driving strong momentum in our business, making it clear that we have shifted into a higher gear as we enter this next stage of growth. As we pass the 500 million MAU milestone, I'd like to take a step back and discuss some of the core initiatives over the past seven quarters that have driven much of the accelerating user growth and DPA engagement we're seeing today. We focus the company on what our users love most about Pinterest, with a particular emphasis on reinvigorating curation and satisfying commercial intent. We have leaned heavily into next-gen AI and relevancy improvements.

Bill Ready: As we passed the 500 million Mou milestone.

Bill Ready: I'd like to take a step back and discuss some of the core initiatives over the past seven quarters that have driven much of the accelerating user growth and deepen engagement, we're seeing today.

Bill Ready: We focused the company on what our users love most about pinterest with a particular emphasis on reinvigorating curation and satisfying commercial intent.

Bill Ready: We leaned heavily into nexgen, AI and relevancy improvements.

Bill Ready: We updated our content strategy to focus on content that satisfies purpose and intent rather than pure entertainment, and we made clear that our shopping strategy was to partner with retailers rather than compete with them. We're now clearly moving at full speed, leaning into the reasons we know users come to Pinterest and making them even better. In doing so, we're finding our best product-market fit in years. The drivers of user growth I'll discuss today are consistent with what I've laid out since joining Pinterest and that we elaborated on at our investor day. First, how we're using AI to drive relevance and personalization. Second, doubling down on curation through boards and collages. Third, driving actionability throughout our core surfaces.

Bill Ready: We updated our content strategy to focus on content that satisfies purpose and intent rather than pure entertainment and we made clear that our shopping strategy was to partner with retailers rather than compete with them.

Bill Ready: We're now clearly moving at full speed leading into the reasons, we know users come to pinterest and making them even better in doing so were finding our best product market fit in years.

Bill Ready: The drivers of user growth I will discuss today are consistent with what I've laid out since joining pinterest.

Bill Ready: And that we elaborated on at our Investor Day.

Bill Ready: First how we're using AI to drive relevance and personalization second doubling down on curation through boards and collages third driving action ability throughout our core surfaces, and lastly, creating a more positive alternative to traditional social media.

Bill Ready: And lastly, creating a more positive alternative to traditional social media. The results of these efforts can be seen in the accelerating growth rate of our monthly active users, the vast majority of whom come directly to our mobile app, deepening engagement per user with engagement growth and excess user growth, and how we are winning with Gen Z, which is now our largest and fastest growing demographic at more than 40% of our users.

Bill Ready: The results of these efforts are seen in the accelerating growth rate of our monthly active users the vast majority of whom come directly to our mobile app.

Bill Ready: Deepening engagement per user with engagement growth in excess of user growth and how we are winning with Gen Z, which is now our largest and fastest growing demographic at more than 40% of our users.

Bill Ready: It's important to note that our MAU growth acceleration is a result of months and quarters of compounding effects from these initiatives I just described, and we see much more opportunity ahead as we continue improving our core user experience and lean further into the unique and highly differentiated aspects of our platform. Let's start with our investments in AI to drive personalization and relevance. In the second half of 2022, we moved aggressively to implement LLMs and next-gen AI to improve our user experience. We transitioned from CPU to GPU serving, which allowed us to serve models that were 100 times larger in size.

Bill Ready: It is important to note that our Mou growth acceleration as a result of months and quarters of compounding effects of these initiatives I just described and we see much more opportunity ahead as we continue improving our core user experience and lean further into the unique and highly differentiated aspects of our platform.

Bill Ready: Let's start with our investments in AI to drive personalization and relevance.

Bill Ready: In the second half of 2022, we moved aggressively to implement <unk> and nexgen AI to improve our user experiences.

Bill Ready: We transitioned from CPU to GPU, serving which allowed us to serve models that were 100 times larger in size. This.

Bill Ready: This was the first step to unlocking a better product experience by improving our ability to surface more personalized content for our users. With GPU serving capabilities, we are developing and deploying even more complex models to drive further gains in relevancy and personalization. For example, our recommendation models were previously focused on serving content to drive greater view time in that immediate moment. However, as we've advanced our AI and sharpened our focus on user intent, we've incorporated more proprietary signals into our recommendation models to optimize for depth of engagement and satisfaction of intent, including driving more actual outcomes like saves, clicks, and conversions to help users progress further through their inspiration to action journey.

Bill Ready: And this was the first step to unlocking a better product experience by improving our ability to surface more personalized content for our users with.

Bill Ready: With GPU, serving capabilities, we are developing and deploying even more complex models to drive further gains in relevancy and personalization.

Bill Ready: For example, our recommendation models were previously focused on serving content to drive greater view time in that immediate moment. However, as we've advanced our AI and sharpened our focus on user intent, we've incorporated more proprietary signals into a recommendation models to optimize for depth of engagement and satisfaction.

Action of intent, including driving more actual outcomes like saves clicks and conversions to help users progress further through their inspiration to action journey.

Bill Ready: Among these signals are the billions of acts of curation that happen on our platform in a manner that is highly distinct from the rest of social media. This gives us unique insight into user preferences, allowing us to tailor content to suit their needs and help them find their next use case. In summary, not only does our AI keep advancing, but there's also a flywheel effect that takes place.

Bill Ready: Among these signals are the billions of acts of curation that happened on our platform in a manner that is highly distinct from the rest of social media.

Bill Ready: This gives us unique insight into user preferences, allowing us to tailor content to suit their needs and help them find their next use case.

Bill Ready: In summary, not only does our AI keep advancing but theres also a flywheel effect that takes place as we train our models on more user signals, we're driving even further relevance and our content recommendations, which then further improves the user signals are a I can act upon.

Bill Ready: As we train our models on more user signals, we're driving even further relevance in our content recommendations, which then further improves the user signals our AI can act upon. As I mentioned, a key source of user signals is the human curation which takes place on our platform at scale, and we're improving this experience for our users. Our work on curation has been another driver of our user growth and is an integral step in the Inspiration to Action journey. To help remove the friction for users to begin creating boards, we've added additional board functionality, including auto-organization features.

Bill Ready: As I mentioned, a key source of user signals as the human curation, which takes place on our platform at scale.

Bill Ready: And we are improving this experience for our users our work on curation has been another driver of our user growth and is an integral step in the inspiration to action journey.

Bill Ready: To help remove the friction for users to begin trading boards, we've added additional board functionality, including auto organization features.

Bill Ready: And for those who generally don't organize their saves, this feature resulted in an annual 30% lift in boards created, highlighting how auto-organization can unlock the magic of Pinterest for more users. We're also significantly advancing what it means to curate on Pinterest with collages. Powered by our AI and advanced computer vision technology, collages are a powerful curation tool to cut out images and components from a pen and piece together new, inspiring content

And for those who generally don't organize their saves this feature resulted in a nearly 30% lift in boards created highlighting how auto organization can unlock the magic of Pinterest for more users.

Bill Ready: We're also significantly advancing what it means to carry on pinterest with collages.

Powered by our AI and advanced computer vision technology co.

Bill Ready: Rogers are a powerful curation tool to cut out images and components from a pen and piece together new inspiring content.

Bill Ready: This greater granularity allows users to express their styles, tastes, and preferences in much more specific and creative ways. This is an entirely new, highly engaging, and highly shoppable content format; users are roughly three times more likely to save collage pins versus other pins on Pinterest, and a significant portion contain clickable products. We're also continuing to see collages gain traction with Gen Z, who are nearly 70% of collage creators.

This greater granularity allows users to express their style tastes and preferences and much more specific in creative ways. This isn't entirely new highly engaging and highly shopper ball content format.

User roughly three times more likely to save collage pens versus other pins on pinterest and a significant portion contained clickable products.

Bill Ready: We're also continuing to see collages gained traction with Gen Z, who are nearly 70% of collage creators.

Bill Ready: Furthermore, and proving the action ability of pins is another core tenets of improving user satisfaction deepening engagement and growing EMEA use.

Bill Ready: Furthermore, improving the actionability of PIMS is another core tenet of improving user satisfaction, deepening engagement, and growing MAUs. We know users come to Pinterest to shop, and we've been working to ensure our high intent audience can find and easily take action on the content they see on Pinterest. We've integrated more shoppable content into our core surfaces, including home feed, search, and related items. For example, our guided shopping modules help users pick up where they left off on prior shopping journeys by resurfacing product pins based on past browsing and click history, while our visual shopping modules, Shop Similar and Shop to Look allow users to shop the items they see within lifestyle images right when they discover them.

Bill Ready: We know users come to Pinterest to shop, and we've been working to ensure our high intent audience confined and easily take action on the content they see on Pinterest we've.

Bill Ready: We've integrated more shopper will content into our core surfaces, including home feed search and related items.

Bill Ready: For example, our guided shopping modules help users pick up where they left off on prior shopping journeys by resurfacing product pins based on past browsing and click history, while our visual shopping modules such.

Bill Ready: Such as shop similar in shop, the look allow users to shop the items, they see within lifestyle images right when they discover them.

Bill Ready: In Q1, we brought shoppable video to Pinterest as we expanded Shop the Look to video pins. Now, when a user clicks on a video pin, a carousel will appear with shoppable pins that match items in the video.

Bill Ready: In Q1, we brought shuttle video to Pinterest as we expanded shop. The look to video pens now when a user clicks on a video pen at Carousel will appear with shovel pins that match items and the video.

Bill Ready: This allows the user to easily shop the items that bring them inspiration in the videos they were already watching. Through these and other efforts to improve the actionability of the platform, we've made it easier and more seamless to shop content on Pinterest, a top priority for our users. And we're seeing users take advantage of the improved actionability as outbound clicks to advertisers accelerated from last quarter, more than doubling year over year yet again.

Bill Ready: This allows the user to easily shop, the items that bring them inspiration in the videos they were already watching.

Bill Ready: Through these and other efforts to improve the action ability of the platform, we've made it easier and more seamless to shop content on Pinterest.

Bill Ready: A top priority for our users.

Bill Ready: And we're seeing users take advantage of the improved action ability as outbound clicks to advertisers accelerated from last quarter more than doubling year over year, yet again.

As a part of our efforts to grow users and deepen engagement. We're also building a more positive alternative to traditional social media.

Bill Ready: As a part of our efforts to grow users and deepen engagement, we're also building a more positive alternative to traditional social media, and we firmly believe that inspiration starts with inclusion. Building on past successes in inclusive product design, like skin tone and hair pattern search, in 2023, we added to our suite of inclusive products with our body type ranges. We're also using the inclusive AI that powers these products to increase representation in the content that we show to users by default. And throughout 2023, we refined and implemented this technology across more surfaces so more people can see themselves reflected on Pinterest.

Bill Ready: And we firmly believe that inspiration starts with inclusion built.

Bill Ready: Building on past successes and inclusive product design like skin tone and hair pattern search in 2023, we added to our suite of inclusive products with our body type ranges.

We're also using the inclusive AI that powers these products to increase representation in the content that we show to users by default.

Bill Ready: Throughout 2023, we refined and implemented this technology across more surfaces. So more people can see themselves reflected on pinterest.

Bill Ready: Our users love and use these products. For example, the number of users searching for skin tone ranges doubled in the past year, which speaks to the affinity our users have for inclusive products and the work our team is doing to provide a more inspirational experience for everyone. Finally, as I mentioned earlier, we're continuing to win with Gen Z.

Bill Ready: Our users love and use these products for example, the number of users searching with skin tone ranges doubled in the past year, which speaks to the affinity our users have for inclusive products and the work our team is doing to provide a more inspirational experience for everyone.

Bill Ready: They are more than 40% of the users on the platform and our largest and fastest growing demographic. Gen Z comes to our platform to get inspired and to shop. They save more than other demographics and also find value in new content formats like collages, and they see Pinterest as a distinct and separate destination from other social media apps, one where they can invest in themselves and refine their interests in smaller forums with closer connections and without the pressures and toxicity that often accompany their time on other social apps.

Bill Ready: Finally, as I mentioned earlier, we're continuing to win with Gen Z. They are more than 40% of the users on the platform and our largest and fastest growing demographic.

Gen Z comes to our platform to get inspired into shop.

Bill Ready: They save more than other demographics and also find value in new content formats like collages.

Bill Ready: And they see <unk> as a distinct and separate destination from other social media apps, one where they can invest in themselves and refine their interests and smaller forums with closer connections and without the pressures and toxicity. The orphanage often accompany their time on other social apps.

Bill Ready: In fact, Gen Z rates Pinterest higher on promoting and preserving well-being metrics like self-worth, belonging, and purpose compared to other traditional social media platforms. As a result, Pinterest is aging less, a rarity in consumer internet applications, which typically age up as they mature.

In fact, Gen Z rates pinterest higher on promoting and preserving wellbeing metrics like sell forth belonging and purpose compared to other traditional social media platforms.

Bill Ready: As a result <unk>.

Bill Ready: As aging down a rarity in consumer Internet applications, which typically age up as they mature.

Bill Ready: We're also continuing to break through with Gen Z by connecting through culturally relevant moments. For example, we recently hosted an immersive activation at Coachella Music Festival, one of the biggest Gen Z moments of the year, to deepen their connection to Pinterest. Inspired by our festival trends report, we created the Pinterest Manifestation, which invited festival goers to turn their favorite festival fashion and beauty dreams into reality with the help of expert makeup artists and stylists.

We're also continuing to break through with Gen Z by connecting through culturally relevant moments. For example, we recently hosted an immersive activation at Coachella Music Festival, one of the biggest Gen Z moments of the year to deepen their connection to Pinterest inspired by our festival trends report, we created the <unk> manifestation.

Bill Ready: Which invited festival goers to turn their favorite festival fashion and beauty dreams to reality with the help of expert makeup artists and stylists.

Bill Ready: Bringing this together.

Bill Ready: We've been moving fast and executing with tremendous clarity and focus over the past two years across the themes I've just discussed, which have all compounded to drive our acceleration and user growth. I'm proud of our team for all they've been able to accomplish thus far and look forward to continuing to innovate on behalf of our users. Next, I'd like to discuss how we are improving monetization by making Pinterest more valuable and profitable for advertisers. We know that people come to Pinterest with intent.

We have been moving fast and executing with tremendous clarity and focus over the past two years across the themes I've just discussed which have all compounded to drive our acceleration in user growth.

Bill Ready: I am proud of our team for all they've been able to accomplish thus far and look forward to continuing to innovate on behalf of our users.

Bill Ready: Next I'd like to discuss how we are improving monetization by making pinterest more valuable and performance for advertisers.

Bill Ready: We know that people come to pinterest with intent.

Bill Ready: Our platform uniquely empowers users to have dynamic, multi-session journeys that take them from inspiration to action. For a long time, Pinterest excelled in upper-funnel discovery in connection with the early stages of a user's inspiration-to-action journey, but it provided very little ability to take action on the items that users found. Now, we're solving for that actionability in the lower funnel through seamless connections to retailers like mobile deep linking and direct links, enhanced ad platform capabilities like whole page optimization, and improved adoption of our foundational measurement capabilities like the API for conversions and clean rooms.

Bill Ready: Our platform uniquely empowers users to have dynamic multi session journeys that take them from inspiration to action.

Bill Ready: For a long time Petrus excelled in upper funnel discovery in connection with the early stages of a user's inspiration to action journey.

Bill Ready: But <unk> provided very little ability to take action on the items that you just found.

Now we are solving for that action ability and the lower funnel.

Through seamless connections to retailers like mobile deep linking and direct links enhanced AD platform capabilities like whole page optimization.

Bill Ready: And improve adoption of our foundational and measurement capabilities like the API for conversions and clean rooms.

Bill Ready: We've made substantial improvements in executing on our lower funnel roadmap to deliver value for our users and our advertisers. We're seeing the direct impact of increased actionability play out, and the results we delivered this quarter prove this.

Bill Ready: We've made substantial improvements and executing on our lower funnel roadmap to deliver value for our users and our advertisers.

We're seeing the direct impact of increased action ability to play out in the results. We delivered this quarter prove this we've accelerated clicks to advertisers again this quarter, even after more than doubling clicks year on year in Q4, and our revenue growth rate nearly doubled from Q4, driven by lower funnel revenue.

Bill Ready: We've accelerated clicks to advertisers again this quarter, even after more than doubling clicks year-on-year in Q4, and our revenue growth rate nearly doubled from Q4, driven by lower funnel revenue acceleration. Turning to some of the most notable achievements from the quarter, adoption of our lower funnel formats and tools has been a critical part of our monetization strategy. In Q1, we completed our rollout of direct links to our lower funnel ad formats, which now covers 97% of our lower funnel revenue, up from 80% last quarter.

Bill Ready: Acceleration.

Bill Ready: Turning to some of the most notable achievements from the quarter adoption of our lower funnel formats and tools has been a critical part of our monetization strategy and.

Bill Ready: In Q1, we completed our rollout of direct links to our lower funnel AD formats, which now covers 97% of our lower funnel revenue up from 80% last quarter.

Bill Ready: Direct links take users to an advertiser's product or purchase page in just one click, significantly reducing friction and improving the ability to take action. The value creation for advertisers has been outstanding, with clicks to advertisers more than doubling year over year. The underlying value DirectLynx creates has been clear to us since it launched at the end of Q3.

Direct links take users to an advertiser's product or a purchase paid in just one click significantly reducing friction and improving the ability to take action.

Bill Ready: The value creation to advertisers has been outstanding with clicks to advertisers more than doubling year over year.

Bill Ready: The underlying value direct links creates has been clear to us since it launched at the end of Q3, but for advertisers. It takes time to see and measure the results with their own source of truth, there measurement models.

Bill Ready: But for advertisers, it takes time to see and measure the results with their own source of truth, their measurement models. However, we're now seeing value captured from direct links through increased ad spend, especially from some of the largest, most sophisticated advertisers. Similar to past new product launches like Mobile Deep Links, advertisers who have seen sustained performance gains from direct links and are able to measure the results have started to increase their share of wallet with Pinterest.

Bill Ready: We're now seeing the value capture from direct links through increased AD spend, especially from some of the largest and most sophisticated advertisers.

Bill Ready: Similar to past new product launches like mobile deep links advertisers, who have seen sustained performance gains from direct links and are able to measure. The results have started to increase their share of wallet with pinterest.

Bill Ready: With some of our most sophisticated advertisers, we are reaching 5% or more of their total ad budget, implying an even deeper penetration of their digital ad spend. However, much more of the value capture from direct links remains ahead of us.

With some of our most sophisticated advertisers, we are reaching 5% or more of total AD budget, implying an even deeper penetration of their digital ad spend.

Bill Ready: However, much more of the value capture from direct links remains ahead of us.

Bill Ready: Many of our advertisers either recently got access to direct links or don't yet have the correct tools to understand their improved Pinterest performance, a process which can take months or quarters. As a result, we expect value capture from these advertisers to continue throughout the year as more of them begin to measure and react to the benefits from direct links. In order to facilitate advertiser adoption of our lower funnel solutions, which drive additional value capture, we've made a number of changes within our sales and go-to-market functions.

Bill Ready: Many of our advertisers either recently got access to direct links are don't yet have the correct tools to understand their improved <unk> performance of <unk>.

Bill Ready: <unk>, which can take months or quarters.

Bill Ready: As a result, we expect value capture from these advertisers to continue throughout the year as more of them begin to measure and react to the benefits from direct links.

Bill Ready: In order to facilitate advertiser adoption of our lower funnel solutions, which drive additional value capture we've made a number of changes within our sales and go to market functions.

Bill Ready: For example, we're providing a scaled approach for our global sales force to educate on and implement lower funnel best practices with more technical support to help advertisers meet their specific goals and maximize performance. Turning to measurement,

Bill Ready: For example, we're providing a scaled approach for our global sales force to educate on and implement lower funnel best practices with more technical support to help advertisers meet their specific goals and maximize performance.

Bill Ready: Thanks to our improved lower funnel solutions, we're driving more clicks and conversions to advertisers. And through our measurement tools, we're proving this value to advertisers. Our suite of measurement tools starts with advertisers adopting our privacy-centric tools to preserve conversion visibility, which provides them with data to feed their individual models and measure their specific goals. One of our most important initiatives began in earnest in 2023 with our efforts to increase adoption of the API for conversions, which provides a server-to-server connection for advertisers to measure and attribute conversions.

Bill Ready: Turning to measurement.

Bill Ready: To our improved lower funnel solutions, we're driving more clicks and conversions to advertisers and through our measurement tools. We're proving this value to advertisers our suite of measurement tools starts with advertisers adopting our privacy centric tools to preserve conversion visibility, which provides them with data to feed their individual models and measure their specific.

Bill Ready: <unk>.

Bill Ready: One of our most important initiatives began in earnest in 2023 with our efforts to increase adoption of the API for conversions, which provides a server to server connection for advertisers to measure and attribute conversions.

Bill Ready: I'm pleased to report that we've grown the adoption of the API to nearly 40% of total revenue, up from 28% of total revenue at our investor day last September. As I've mentioned previously, revenue from retail advertisers who've adopted the API for conversions tends to grow significantly faster than revenue from those who have not yet adopted it. This trend continued to hold in Q1 and underscores our desire to drive more privacy-centric measurement, particularly to lower funnel advertisers where it's most impactful. We're seeing a reinforcing effect take place.

Bill Ready: Pleased to report that we've grown the adoption of the API to nearly 40% of total revenue up from 28% of total revenue at our Investor Day last September.

Bill Ready: As I've mentioned previously revenue from retail advertisers, who have adopted the API for conversions tends to grow significantly faster than revenue from those who have not yet adopted.

This trend continued to hold in Q1 and underscores our desire to drive more privacy centric measurement, particularly to lower funnel advertisers, where it's most impactful.

Bill Ready: As advertisers adopt and see the benefits of shopping ads, mobile deep linking, or direct links, they are more incentivized to adopt our privacy-centric measurement. To that point, we also see that advertisers who have adopted our full lower funnel toolset, including shopping ads, mobile deep linking, or direct links, and our API for conversions are also growing much faster than those who have no lower funnel solution adoption. As we look ahead to more industry changes, which will affect an advertiser's ability to measure conversions, we are strongly promoting API for conversions adoption to our lower funnel advertisers in our selling efforts and increasing the amount of variable compensation attached to it.

Bill Ready: We're seeing a reinforcing effect take place as advertisers adopt and see the benefits of shopping ads mobile deep linking or direct links they are more incentivized to adopt our privacy centric measurement to that point. We also see that advertisers who have adopted our full lower funnel toolset, including shopping ads mobile deep linking or direct.

Bill Ready: Inks and our API for conversions are also growing much faster than those who have no lower funnel solution adoption.

Bill Ready: As we look ahead to more industry changes, which will affect in advertisers' ability to measure conversions. We are strongly promoting API for conversions adoption to our lower funnel advertisers and our selling efforts and increasing the amount of variable compensation attached to adoption.

Bill Ready: We are also focused on meeting advertisers where they are by integrating into their measurement tools of choice, such as CleanRooms and over 20 measurement platform integrations. In addition to format and measurement innovations, we remain committed to bringing AI-based automation to the forefront of our campaign creation experience and ad offering to drive performance for our advertisers. In fact, 2023 was a strong year for advertising innovation, as we accelerated our product delivery and launched more ad formats, tools, and solutions than in any year in our history.

Bill Ready: We are also focused on meeting advertisers, where they are by integrating into their measurement tools of choice such as clean rooms, and over 20 measurement platform integrations.

Bill Ready: In addition to format and measurement innovations, we remain committed to bringing AI based automation to the forefront of our campaign creation experience and ads offering to drive performance for our advertisers. In fact 2023 was a strong year for ads innovation as we accelerated our product delivery and launched more ad formats.

Bill Ready: Tools and solutions than in any year in our history.

Bill Ready: We've seen a lot of success with our current automation tools, and we're investing to build out this suite in order to give advertisers an array of tools to build, optimize, manage, and measure campaigns on Pinterest. Today, our automated suite of performance features includes tools such as automated bidding, expanded targeting, and flexible daily budget. Each of these automation offerings helps to drive more efficient campaigns on Pinterest.

Bill Ready: We've seen a lot of success with our current automation tools and we're investing to build out this suite in order to give advertisers an array of tools to build optimize manage and measure campaigns on pinterest.

Bill Ready: Today, our automated suite of performance features includes tools, such as automated bidding expanded targeting and flexible daily budgets. Each of these automation offerings helps to drive more efficient campaigns on pinterest.

Bill Ready: As of Q1, we continue to see revenue coverage above 80% for automated bidding, while over half of our revenue utilizes either expanded targeting or flexible daily budgets. However, there's still significant room for us to go and drive further revenue coverage for our entire automation suite, which, when adopted, results in compounding positive impacts on campaign performance. To drive further uptake, we plan to launch a campaign creation tool that simplifies setup for our automated offerings and removes friction for advertisers to leverage these tools.

Bill Ready: As of Q1, we continue to see revenue coverage about 80% for automated bidding while over half of our revenue utilizes either expanded targeting or flexible daily budgets.

Bill Ready: However, there is still significant room for us to go and driving further revenue coverage of our entire automation suite, which when adopted results and compounding positive impacts on campaign performance.

Bill Ready: To drive further uptake we plan to launch a campaign creation tool that simplifies setup for our automated offerings and removes friction for advertisers to leverage these tools.

Bill Ready: We're also building out additional automation components to drive greater campaign efficiency for advertisers. We will release these features in stages, and as with other new launches, they will go through a typical product ramp as we develop, test, and scale.

Bill Ready: We're also building out additional automation components to drive greater campaign efficiency for advertisers.

Bill Ready: We will release these features in stages and as with other new launches. They will go through a typical product ramp as we develop test and scale.

Bill Ready: Ultimately, creating a more robust suite of automation tools to improve advertiser performance. Let me touch on a couple of the new offerings we're expecting to roll out over the coming quarters. First, we're launching our dynamic creative optimization solution set, which will allow advertisers to use generative AI to optimize the creative for their ads. Over time, we'll personalize this technology using signals that are unique to Pinterest, such that the imagery users see will be tailored to their own interests and aesthetics.

Bill Ready: Ultimately, creating a more robust suite of automation tools to improve advertiser performance.

Speaker Change: Let me touch on a couple of the new offerings, we are expecting to rollout over the coming quarters.

Speaker Change: First we're launching our dynamic creative optimization solution set which will allow advertisers to use generative AI to optimize the creative for their ads.

Speaker Change: Over time, we will personalize this technology using signals that are unique to pinterest such that the imagery user C will be tailored to their own interests anesthetics.

Bill Ready: We'll also be introducing ROAS bidding. This solution will seek to increase advertiser return on ad spend by automatically optimizing campaigns in real time to prioritize users or products that drive the highest ROI. This rollout is a continuation of automation features we've already been delivering, so that ultimately, advertisers will be able to provide us with a budget, a goal, and their seed creative, and we'll do the rest; we will manage bidding, targeting, and dynamic creative at scale, all in service of delivering the best possible performance for our advertisers.

Speaker Change: We'll also be introducing rollout is bidding.

Speaker Change: This solution will seek to increase advertising return on AD spend by automatically optimizing campaigns in real time to prioritize users of our products that drive the highest ROI.

Speaker Change: This rollout is a continuation of automation features we've been we've already been delivering so that ultimately advertisers will be able to provide us with a budget a goal in their seed creative and we will do the rest.

Speaker Change: We'll manage bidding targeting and dynamic creative of scale all in service of delivering the best possible performance for our advertisers.

Bill Ready: Next, I want to provide an update on our third-party demand effort. Consistent with our commentary from the start, our goal in developing these partnerships is to complement our first-party demand and round out demand gaps in our auction. We are currently scaling third-party demand with two partners, Amazon Ads in the U.S., and Google Ads Manager, which recently went live in February in unmonetized international markets. Our Amazon partnership is live on all of our main surfaces in the U.S., and we are continuing to optimize our respective systems to improve relevance and drive performance for advertisers. Additionally, our Google partnership, while early, is also progressing nicely.

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

Speaker Change: Consistent with our commentary from the start our goal in developing these partnerships is to complement our first party demands and round out demand gaps in our auction.

Speaker Change: We are currently scaling third party demand with two partners Amazon ads in the U S and Google Ads manager, which recently went live in February and Unmonitored as international markets.

Speaker Change: Our Amazon partnership is live on all of our main surfaces in the U S and we are continuing to optimize our respective systems to improve relevance and drive performance for advertisers.

Speaker Change: Additionally, our Google partnership while early is also progressing nicely.

Bill Ready: In Q1, as expected, we saw an emerging contribution to revenue from third-party demand, and we anticipate this will be the base from which further third-party revenue will grow throughout the year. We continue to see opportunities to expand our current partnerships to multiple geographies and for multiple partners to exist within the same market, consistent with what we laid out at our investor day. We also have an opportunity to grow our revenue in international markets and are employing a multi-pronged strategy to do so.

Speaker Change: In Q1 as expected we saw an emerging contribution to revenue from third party demand and we anticipate this will be the base from which further third party revenue will grow throughout the year.

We continue to see opportunities to expand our current partnerships to multiple geographies and for multiple partners to exist within the same market.

Speaker Change: Consistent with what we laid out at our Investor Day, We also have an opportunity to grow our revenue in international markets and are employing a multi pronged strategy to do so.

Bill Ready: In our largest international markets, we are using first-party selling efforts to strategically capture advertiser demand. We're also deepening our partnership with agencies to grow within these markets. And smaller markets where we previously had not monetized or are under-monetized, we are introducing additional sources of demand to fill in gaps in our auction. In addition to third-party demand from Google, this quarter we will begin working with resellers to bring in local ad demand, primarily in the rest of world markets.

Speaker Change: In our largest international markets, we are using first party selling efforts to strategically capture advertiser demand.

Speaker Change: We're also deepening our partnership with agencies to grow within these markets.

And smaller markets, where we previously had not monetize or are under monetized. We are introducing additional sources of demand to filling gaps in an auction.

Speaker Change: In addition to third party demand from Google This quarter, we will begin working with resellers to bring in local AD demand primarily in rest of world markets.

Bill Ready: Resellers provide a scaled approach to drive demand in markets where we don't currently have a sales presence and can bring relevant ad content for users in those markets. Like any new selling effort, demand from resellers will take time to grow in these markets, and therefore, we expect this initiative to ramp up over the course of the year. Our third strategic priority has been a continued focus on operational rigor and discipline. As I mentioned before, I'm extremely proud of our team's continued strong execution, as evidenced by our ability to expand adjusted EBITDA margins by nearly 1100 basis points in Q1, while also accelerating product innovation and product market fit. Now, I'll turn the call over to Julia to share more details about our financial performance.

Speaker Change: Retailers provide a scaled approach to drive demand in markets, where we don't currently have a sales presence and can bring relevant AD content for users in those markets.

Speaker Change: Like any new selling effort demand from retailers will take time to grow in these markets and therefore, we expect this initiative to ramp over the course of the year.

Speaker Change: Our third strategic priority has been a continued focus on operational rigor and discipline.

Speaker Change: As I mentioned before I'm extremely proud of our team's continued strong execution as evidenced by our ability to expand adjusted EBITDA margins by nearly 1100 basis points in Q1, while also accelerating product innovation and product market fit now I will turn the call over to Julia to share more details about our financial performance.

Julia Brau Donnelly: Thanks, Bill. Good afternoon, everyone.

Julia Brau Donnelly: Thanks, Bill and good afternoon, everyone.

Today I'll be discussing our first quarter 2024 financial results and provide an update on our preliminary second quarter 2020 for outlook.

Julia Brau Donnelly: Today I'll be discussing our first quarter 2024 financial results and providing an update on our preliminary second 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 noted. Our team has made tremendous progress across users, monetization, and profitability over the past few quarters. This quarter is a testament to how focused execution and alignment across our strategic priorities can drive strong gains for the business.

Julia Brau Donnelly: All financial metrics, except for revenue will be discussed in non-GAAP terms, unless otherwise specified all comparisons will be discussed on a year over year basis, unless otherwise noted.

Julia Brau Donnelly: Our team has made tremendous progress across users monetization and profitability over the past few quarters. This quarter is a testament to how focused execution and alignment across our strategic priorities can drive strong gains for the business.

Julia Brau Donnelly: Like Bill said, we found our best product market fit in years. Users and advertisers alike are taking notice, leading to our highest MAU count ever and our fastest revenue growth quarter since 2021. User growth is accelerating as we are investing in areas that are unique to Pinterest, such as human curation at scale that allows our AI to generate highly relevant personalization and recommendations across multi-session commercial journeys and significant improvements in actionability. We also see our investments in positivity and inclusion responding deeply with our users.

Julia Brau Donnelly: Like Bill said, we found our best product market fit in years users and advertisers alike are taking notice leading to our highest mou count ever and our fastest revenue growth quarter since 2021.

Julia Brau Donnelly: User growth is accelerating as we were investing in the areas that are unique to pinterest such as human curation at scale that allows our AI to generate highly relevant personalization and recommendations across multi session commercial journeys and significant improvements in action ability.

Julia Brau Donnelly: We also see our investments in positivity and inclusion resonating deeply with our users.

Julia Brau Donnelly: Additionally, our lower funnel tools and formats, including mobile deep linking, API for conversions, and clean rooms, as well as direct links, are driving meaningful and sustained ROI improvement for advertisers, which is reflected in our continuing revenue acceleration. These efforts have been complemented by our introduction of third-party demand onto the platform, which has added density to our auction and allowed us to serve more relevant and engaging ads to our users. Now, let's dive into our first quarter results.

Julia Brau Donnelly: Additionally, our lower funnel tools and formats, including mobile deep linking API for conversions in clean rooms, as well as direct links are driving meaningful and sustained ROI improvement for advertisers, which are reflected in our continuing revenue acceleration.

These efforts have been complemented by our introduction of third party demand onto the platform, which has added density to our auction and allowed us to serve more relevant and engaging ads to our users.

Julia Brau Donnelly: We ended the quarter with 518 million global monthly active users, growing 12% and reaching another record high. We accelerated user growth year over year across all our geographic regions. In the US and Canada, we had 98 million MAUs, growing 3% up from 2% last quarter, adding 1 million sequential users for the third quarter in a row.

Julia Brau Donnelly: Now, let's dive into our first quarter results.

Julia Brau Donnelly: We ended the quarter with $518 million global monthly active users growing 12% and reaching another record high we accelerated user growth year over year across all our geographic region.

Julia Brau Donnelly: In the U S and Canada, we had $98 million in May is growing 3% up from 2% last quarter, adding $1 million sequential users for the third quarter in a row.

Julia Brau Donnelly: In Europe, we had 140 million MAUs, growing 10% from 8% last quarter. In our rest of world markets, we had 279 million MAUs, growing 16%, up from 15% last quarter. Now to revenue. In Q1, our global revenue was $740 million, up 23% or 22% on a constant currency basis. The revenue strength this quarter, which exceeded the high end of our guidance range, highlights how we are driving value for advertisers across the full funnel.

Julia Brau Donnelly: In Europe, we had 140 million MAA is growing 10% up from 8% last quarter.

Julia Brau Donnelly: In our rest of World markets, we had $279 million in may use growing 16% up from 15% last quarter.

Speaker Change: Now to revenue.

Speaker Change: In Q1, our global revenue was $740 million up 23% or 22% on a constant currency basis the.

Speaker Change: The revenue strength this quarter, which exceeded the high end of our guidance range highlights, how we're driving value for advertisers across the full funnel.

Julia Brau Donnelly: Our lowest funnel conversion objective was our fastest growing, with particular strength coming from our shopping ads format as advertisers turned to Pinterest to drive sales. We know that we are creating value for our advertisers, and we're seeing signs of value capture from our largest, most sophisticated advertisers, who have been able to see sustained performance gains in their own measurement sources of truth and have shifted more budget to us as a result. However, we finished our GA rollout of direct links in March, and we expect more value capture to still be in front of us, similar to the historical lag we've seen between value creation and value capture from other lower funnel products we've launched, such as mobile deep linking, API for conversions, and our shopping ads format.

Speaker Change: Our lowest final conversion objective was our fastest growing with particular strength coming from our shopping ads format as advertisers turned to pinterest to drive sales.

Speaker Change: We know that we are creating value for our advertisers and we're seeing signs of value capture from our largest most sophisticated advertisers that had been able to see sustained performance gains in their own measurement sources of truth and shifted more budget to us as a result.

Speaker Change: However, we finished our rollout of direct links in March and we expect more value capture to still be in front of us similar to the historical lag we've seen between value creation and value capture from other lower funnel products, we've launched such as mobile deep linking API for conversions and our shopping ads format.

Julia Brau Donnelly: From a vertical perspective, we saw broad strength in retail. Within retail, we saw our larger, more sophisticated advertisers continue to lean into the platform as they have adopted our lower funnel tools and are seeing continued success. We also saw nice growth in our emerging categories, including financial services and technology. Next, as expected, our third party demand partnerships began to scale in Q1, and we're an emerging contributor to our growth. Finally, we estimate that Leap Day in February and the Easter shift into March this year contributed approximately two points of growth to Q1.

Speaker Change: From a vertical perspective, we saw broad strength in retail within retail we saw our larger more sophisticated advertisers continue to lean into the platform as they have adopted our lower funnel tools and are seeing continued success. We also saw a nice growth in our emerging categories, including financial services and technology.

Speaker Change: Next as expected our third party demand partnerships began to scale in Q1, and we are an emerging contributor to our growth.

Speaker Change: Finally, we estimate that leap day in February and the Easter shift into March this year contributed approximately two points of growth to Q1.

Speaker Change: Turning to our geographical breakouts in the U S and Canada, we generated $592 million in revenue growing 22%.

Julia Brau Donnelly: Turning to our geographical breakouts, in the U.S. and Canada, we generated $592 million in revenue, growing 22%. Strengths came from retailers and emerging categories, including technology and financial services. In Europe, revenue was $118 million, growing 27% on a reported basis or 25% on a constant currency basis. Strengths in Europe came from retail and CPG categories.

Strength came from retailers in emerging categories, including technology and financial services.

Speaker Change: In Europe revenue was $118 million.

Speaker Change: 27% on a reported basis or 25% on a constant currency basis strength in Europe came from retail and CPG categories.

Julia Brau Donnelly: Revenue from the rest of the world came in at $30 million, growing 25% on a reported basis or 26% on a constant currency basis. In Q1, ad impressions, which is composed of ad load and total impressions, including both organic and paid impressions, grew 38%. This was driven both by increases in total impressions as well as increases in ad load. We've been able to flex up our ad load through whole-page optimization to provide relevant ads to users in moments of high commercial intent.

Speaker Change: Revenue from rest of world with $30 million growing 25% on a reported basis or 26% on a constant currency basis.

Speaker Change: In Q1 AD impressions, which is composed of AD load and total impressions, including both organic and paid impressions grew 38%.

Speaker Change: This was driven both by increases in total impressions as well as increases in ad load.

Speaker Change: We've been able to flex up our AD load through a whole page optimization to provide relevant ads to users in moments of high commercial intent and we see continued room to steadily progress. This as we further improve the action ability of our users commercial journeys and relevance of ads.

Julia Brau Donnelly: And we see continued room to steadily progress this as we further improve the actionability of our users' commercial journeys and the relevance of ads. Meanwhile, ad pricing declined 11%, an improvement from down 16% last quarter, largely as a result of accelerating ad demand, but still a year-over-year decline as we continue to drive increased value to advertisers in the form of more clicks and greater efficiency. Moving to expenses.

Speaker Change: Meanwhile, AD pricing declined 11% an improvement from down 16% last quarter, largely as a result of accelerating AD demand, but still a year over year decline as we continue to drive increased value to advertisers in the form of more clicks and greater efficiency.

Julia Brau Donnelly: For the past few quarters, we've been able to drive continued margin expansion through effective expense discipline while allocating resources towards our highest ROI initiatives. Cost of revenue in Q1 was $177 million, up 6% year over year and up 2% versus Q4, due to increased infrastructure spend related to users and engagement growth, partially offset by our continued work to drive cost optimizations on our infrastructure spend. Our non-GAAP operating expense was $453 million, up 10%. The increase was primarily driven by higher headcount-related expenses across R&D and sales and marketing, as well as incremental marketing spend.

Speaker Change: Moving to expenses for the past few quarters <unk> been able to drive continued margin expansion through effective expense discipline, while allocating resources towards our highest ROI initiatives.

Speaker Change: Cost of revenue in Q1 was $177 million up 6% year over year and up 2% versus Q4.

Due to increased infrastructure spend related to users and engagement growth, partially offset by our continued work to drive cost optimizations on our infrastructure spend.

Our non-GAAP operating expense was $453 million up 10%.

Speaker Change: The increase was primarily driven by higher head count related expenses across R&D, and sales and marketing as well as incremental marketing spend.

Julia Brau Donnelly: Our revenue outperformance and expense discipline led to another strong quarter of adjusted EBITDA and margin expansion, coming in at $113 million with an adjusted EBITDA margin of 15%. This was up approximately 1100 basis points versus last year. And finally, we ended the quarter with cash, cash equivalents, and marketable securities of $2.8 billion. We utilized approximately $100 million of cash in the quarter for net share settlement of equity awards. As a reminder, this process mitigates dilution by holding back shares to cover the taxes on employees' vested RSUs, where the company pays for the taxes from its own cash reserve on behalf of the employees.

Speaker Change: Our revenue outperformance and expense discipline led to another strong quarter of adjusted EBITDA and margin expansion coming in at $113 million with an adjusted EBITDA margin of 15%.

Speaker Change: This was up approximately 1100 basis points versus last year.

Speaker Change: Finally, we ended the quarter with cash cash equivalents and marketable securities of $2 8 billion.

Speaker Change: We utilized approximately $100 million of cash in the quarter.

Speaker Change: Net share settlement of equity awards.

Speaker Change: As a reminder, this process mitigates dilution by holding back shares to cover the taxes unemployed vested Rs use where the company pays for the taxes from our own cash reserve on behalf of the employees.

Julia Brau Donnelly: This process, combined with last year's share repurchase, has led to an approximately 1.6% decline in year-over-year fully diluted share count relative to the positive 2-3% average annual dilution target that we outlined at our Investor Day. Now, we'll discuss our preliminary guidance for the second quarter. We expect Q2 2024 revenue to be in the range of $835 to $850 million, representing 18 to 20% growth year over year. This guidance represents a continuation of the strong growth we saw in Q1, driven by many of the same initiatives I just outlined, including direct link value capture and the emerging contribution from third party demand partnerships.

Speaker Change: This process combined with last year's share repurchase has led to an approximately one 6% decline in year over year fully diluted share count relative to the positive 2% to 3% average annual dilution target that we outlined at our Investor day.

Julia Brau Donnelly: This guidance range is roughly consistent with the revenue growth that we've seen in Q1 when adjusting for the two points of year-over-year growth benefit in Q1 from the Easter timing shift and leap day and an additional one-point benefit in Q1 from foreign exchange, which we're not expecting to continue into Q2 based on current spot rates. Turning to our expense guidance, we expect Q2 non-GAAP operating expenses of $490 to $505 million, growing 11 to 15% year over year. Our operating expense guidance does not include the cost of revenue.

Speaker Change: Now, we'll discuss our preliminary guidance for the second quarter.

Speaker Change: We expect Q2 2020 for revenue to be in the range of $835 million to $850 million, representing 18% to 20% growth year over year.

Speaker Change: This guidance represents a continuation of the strong growth we saw in Q1, driven by many of the same initiatives I, just outlined including direct links value capture in the emerging contribution from third party demand partnerships.

Speaker Change: This guidance range is roughly consistent with the revenue growth that we've seen in Q1, when adjusting for the two points of year over year growth benefit in Q1 from the Easter timing shift and leap day and an additional one point benefit in Q1 from foreign exchange, which we're not expecting to continue into Q2 based on current.

Speaker Change: Spot rates.

Speaker Change: Turning to our expense guidance, we expect Q2, non-GAAP operating expenses of $490 million to $505 million growing 11% to 15% year over year.

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 Q1.

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 Q1. 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. As we have said previously, we are anticipating year-over-year 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.

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.

Speaker Change: As we have said previously we are anticipating year over year 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 flooring profitability through to the bottom line.

Julia Brau Donnelly: We expect margin expansion in both halves of 2024. However, we expect significantly more margin expansion to occur in the first half versus a more modest level in the second half. As we lapped the strengthening adjusted EBITDA margins, we drove in the second half of 2023. All in all, I'm pleased with the strong progress we've made against our strategic priorities. There's strong momentum in our business, and we're successfully executing against our plan. Now, I hand it over to Bill for some final words. Thanks, Julia.

Speaker Change: We expect margin expansion in both halves of 2024, however, we expect significantly more margin expansion to occur in the first half versus a more modest level in the second half as we lap the strengthening adjusted EBITA margins, we drove in the second half of 2023.

Speaker Change: All in all I'm pleased with the strong progress we've made against our strategic priorities, there's strong momentum in our business and we're successfully executing against our plan.

Speaker Change: Now I hand, it over to Bill for some final words.

Bill Ready: Thanks Julien.

Bill Ready: 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.

Bill Ready: 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.

Operator: Thank you. If you would like to ask a question, please dial star followed by one on your telephone keypad. Now, if you change your mind, please dial star followed by two to exit the queue. When preparing to ask your questions, please ensure that your phone is unmuted locally. And finally, in the interest of time, we respectfully ask that you limit yourselves to one question per person, and our first question today will be from the line of Brian Nowak of Morgan Stanley. Brian, your line is open if you'd like to proceed with your question.

Bill Ready: Thank you if you would like to ask a question. Please dial star followed by one on your telephone keypad now if you change your mind. Please I'll stop by to two excuse me Q1.

Speaker Change: When preparing to ask your questions. Please ensure that youll phone is on mute locally.

Speaker Change: And finally in the interest of time irrespective, we ask that you limit yourselves to one question per person.

Speaker Change: Our first question today.

Speaker Change: It will be from the line of Brian Nowak of Morgan Stanley.

Brian Thomas Nowak: Great, thanks for taking my questions. I have two.

Brian Thomas Nowak: Your line is open if you'd like to proceed with your question.

Brian Thomas Nowak: The first one, the first quarter results seem to come in quite a bit stronger than the guide, so I was just curious about any specific areas you'd call out that really came in a lot better than you were expecting, call it 90 days ago. And then the second one, as we sort of look at the back half of the year, Julia, I know the year-on-year growth comps get a little more difficult.

Brian Thomas Nowak: Great. Thanks for taking my questions I have two the first one.

Brian Thomas Nowak: First quarter results seem to come in quite a bit stronger than the guide. So I was just curious about any specific areas you'd call out that really came in a lot of a lot better than you were expecting call. It 90 days ago and then the <unk>.

Brian Thomas Nowak: How do we think about sort of continuing to be able to grow at this 20% clip even through the more challenging comps because of all the momentum you have with the business and third-party partners, etc.? Thanks.

Speaker Change: Second one is we as we sort of look at the back half of the year Julia I know the year on year growth comps get a little more difficult how do we think about sort of continuing to be able to grow at this 20% clip even through the more challenging comps because of all the momentum you have with the business and third party partners et cetera. Thanks.

Bill Ready: Thanks, Brian. On your first question, we were really pleased with the revenue acceleration we saw this quarter, leading us to come in above the high end of our guidance range. As I mentioned in my prepared remarks, and we talked about it yesterday as well, we've got multiple ways to win and drive revenue. And we're seeing broad-based strength across all of these initiatives, all of which are performing generally as we expected or better.

Speaker Change: Thanks, Brian on your first question.

Brian Thomas Nowak: We were really pleased with the revenue acceleration, we saw this quarter, leading us to come in above the high end of our guidance range as I mentioned in the prepared remarks.

Julia Brau Donnelly: And we talked about in Investor day, as well, we've got multiple ways to win and drive revenue and we're seeing broad based strength across all of these initiatives all of which are performing generally as we expected or better.

Bill Ready: First of all, continued strong growth in engagement on the platform. We're seeing the best product-market fit we've seen in years, not only growing MAU but deepening engagement, even as we accelerate the rate of user ads on the platform. And we're doing that synergistically with ad load. We are demonstrating that because our users have commercial intent, ads can be relevant content on the platform.

Julia Brau Donnelly: First of all continued strong MAU and engagement on the platform we're.

Julia Brau Donnelly: We're seeing the best product market fit we have seen in years.

Julia Brau Donnelly: Not only growing in our U but deepening engagement.

Julia Brau Donnelly: Even as we accelerate the rate of user ads on the platform.

Julia Brau Donnelly: And we're doing that.

Julia Brau Donnelly: Synergistically with AD load, we're demonstrating that because our users have commercial intent ads can be relevant content on the platform.

Bill Ready: Second, on monetization, strength in the lower funnel driven by our shopping ads and direct links value capture is a strong contributor. There's particular strength in U.S. and retail, where we're taking share and starting to get more access to performance budgets. And that's really driven by the fact that we doubled the number of clicks to advertisers year on year. We doubled the number of clicks to advertisers in Q4, and more than doubled the number of clicks to advertisers again in Q1, and actually accelerated from Q4.

Julia Brau Donnelly: Secondly on monetization strengthen the lower funnel driven by our shopping ads and direct links value capture.

Julia Brau Donnelly: A strong contributor to those particular strength in the U S in retail, where we're taking share and starting to get more access into performance budgets and that's really driven by the fact that we.

Julia Brau Donnelly: Again doubled the number of clicks to advertisers a year on year, we double the number of clicks to advertisers in Q4 and more than double the number of clicks to advertisers again in Q1 and actually accelerated.

Julia Brau Donnelly: In Q4, so that's really driving that penetration into those performance budgets.

Bill Ready: So that's really driving penetration into those performance budgets and driving strength in U.S. and retail. And, you know, as I mentioned, we saw an emerging contribution in Q1 from our 3P partnerships, which are ramping up, and which helped to complement the really strong growth that we're seeing in first-party demand. So it really is broad-based. All of those contributed to the acceleration in Q1, and we see that continuing as we think about the Q2 revenue guidance as well. And with that, I'll give it over to Julia for your second question. Yeah, so thanks, Brian. So I think it's clear we're shifting into a

Julia Brau Donnelly: And driving strength in U S and retail.

Julia Brau Donnelly: And as I mentioned, we saw an emerging contribution in Q1 from our <unk> partnerships, which are ramping and which helped to complement the really strong growth that we're seeing in first party demand. So it really is broad based all of those contributed to the acceleration in Q1, and where we see that continuing as we think about the Q2 revenue guidance as well.

Julia Brau Donnelly: I will give over to Julia for your second question.

Julia Brau Donnelly: Yeah. So thanks, Brian So I think it's clear we're shifting into a higher gear here in the first half of 2024 and Bill just outlined a number of those drivers.

Julia Brau Donnelly: We're clearly seeing a more favorable ad market backdrop, but perhaps more importantly, we're also seeing the initiatives that we laid out playing out kind of as we expected or even better, as Bill just outlined. We do have tougher comps going into the back half of the year, and there are some additional uncertainties from the ramping deprecation of third-party cookies on Chrome through this year and into early 2025.

Julia Brau Donnelly: We're clearly seeing a more favorable AD market backdrop, but perhaps more importantly, we're also seeing the initiatives that we laid out I'm playing out kind of as we expected or even better.

Julia Brau Donnelly: As Bill just outlined.

Julia Brau Donnelly: We do have tougher comps going into the back half of the year and there are some additional uncertainties from the ramping deprecation of third party cookies in chrome through this year and into early 2025.

Julia Brau Donnelly: But as we've said before on cookies, from a relevancy and targeting perspective, we feel like we are well positioned, given our unique first-party signal. And from a measurement adoption perspective, we feel like we're doing all the things we need to do to drive privacy-safe adoption among our advertiser base. However, we expect many of the initiatives that Bill just outlined to ramp throughout this year as well. Specifically, we think more value capture on direct links is ahead of us than behind us, and we expect third-party ad demand to continue contributing to growth and grow off the base that we are seeing here in Q1. So those are the puts and takes as we think about 2024 revenue from here, but we feel really good about the initiatives that we're driving.

Julia Brau Donnelly: But as we said before in cookies from a relevancy and targeting perspective, we feel like we are well positioned given our unique first party signal and from a measurement adoption perspective, we feel like we're doing all the things we need to do to drive privacy safe adoption among our advertiser base.

Julia Brau Donnelly: However, we expect many of the initiatives that bill just outlined to ramp throughout this year as well specifically, we think more of the value capture on direct links is ahead of us and behind US and we expect third party AD demand to contribute continue contributing to growth and grow off the base that we're seeing here in Q1. So those are the puts and takes as we think about 2024.

Julia Brau Donnelly: Revenue from here, but we feel really good about the initiatives that we're driving.

Speaker Change: Great. Thank you both.

Speaker Change: Thank you.

Eric James Sheridan: Our next question today is from the line of Eric Sheridan of Goldman Sachs. Eric, your line is open. Please go ahead.

Speaker Change: Our next question today is from the line of Eric Sheridan of Goldman Sachs. Eric. Your line is open. Please go ahead.

Eric James Sheridan: Thanks so much for taking the question. I'm going to be following on from what Brian asked there, just looking out towards the second half and even over a multi-year time frame. How do you think about the key investments that have to be made in the platform over the medium to long term? And how should we be thinking about your relative competitive positioning on those products relative to other scaled players in the industry that are employing equal amounts of some sort of OPEX and CAPEX as a percentage of revenue towards initiatives like shopability and AI? So it is a bit of a relative competition question as well as an investment scale question as we go through this year. Thank you.

Eric James Sheridan: Thanks, So much for taking the question maybe following up on what Brian asked there just looking out towards the second half and even over a multiyear timeframe. How do you think about the key investments that actually made in the platform over the medium to long term and how should we be thinking about your relative competitive positioning on those products realm.

Eric James Sheridan: Two other scaled players of the industry that are deploying equal amounts of sort of opex and capex as a percentage of revenue towards initiatives like shop ability in AI, so bit of a relative to competition question as well as some investment scale up as we go through this year. Thank you.

Bill Ready: Yeah, thanks, Eric. Well, what I'd say is, you know, as you look over the past seven quarters, I think we have demonstrably improved our competitive positioning across the board. You look at our growth rate in users, the fact that users grew across every geography, and we continue to deepen engagement per user, and that really speaks to just how much the greater actionability that we're driving for our users, both on shopping and on curation, is causing deeper user engagement on the platform.

Speaker Change: Yeah, Thanks, Eric well, what I'd say is as you look over the past seven quarters I think we have.

Speaker Change: Demonstrably improved our competitive positioning across the board you look at our growth rate and users. The fact that usually grew across every geography, we continue to deepen engagement per user and that really speaks to just how much the greater action ability that we're driving for our users both on shopping and on curation.

Eric James Sheridan: As causing deeper user engagement on our platform.

Bill Ready: That's really been driven by both AI advancements and the unique signal on our platform where people curate on our platform. So we just get truly unique signals that don't exist anywhere else, where users spend hours and hours and hours refining their interests, curating their interests, and we understand their interests at a depth that you just couldn't understand otherwise. As the AI acts upon that, it lets us drive much more relevant recommendations.

Eric James Sheridan: That's really been driven by both.

Eric James Sheridan: Advancements and.

Eric James Sheridan: And the unique signal on a platform where people cure rate on our platform. So we just get truly unique signal that doesn't exist any place else, where users spend hours and hours and hours refining their interest curating your interests and we understand their interests at a depth that you just couldn't understand otherwise.

Eric James Sheridan: The acts upon that it lets us drive much more relevant recommendations and so yes, you have general competition and large models, but we also have completely unique signal that we're able to train those models on that unique signal and you see that evidenced in.

Bill Ready: So yes, you have general competition and large models, but we also have completely unique signals that we're able to train those models on that unique signal, and you see that evidence in the relevancy improvements we've made. Same on the ad side.

Eric James Sheridan: And the relevancy improvements we've made same on the AD side for advertisers, we're able to bring them users in a highly commercial moment, where they have intent, but have not yet decided what to buy so it's greater commercial intent than you would see elsewhere and social but it's also bringing more of the inspiration than what you would typically find on.

Bill Ready: For advertisers, we're able to bring them users in a highly commercial moment where they have intent but have not yet decided what to buy. So it's greater commercial intent than you would see elsewhere in social, but it's also bringing more inspiration than what you would typically find in other very low funnel moments. So I think that's demonstrating that we have a unique space that we occupy with the user where they see us as something distinct and separate from the rest of social media, where social media tends to be lean back entertainment. We have a lean forward commercial intent. We are still early in our journey to see what we can get from that.

Eric James Sheridan: Other very low funnel moments. So I think that's demonstrating that we have a unique space to be occupied with the user where they see it as something distinct and separate from the rest of social media, where social media tends to be lean back entertainment, we have leaned forward commercial intent we.

Eric James Sheridan: We are still early in our journey and what we can get from that we see a multi year journey ahead as to how we continue to refine and make that better and then that cuts through to advertisers, where we're delivering very strong performance to advertisers doubling the number of clicks year on year.

Bill Ready: We see a multiyear journey ahead as to how we continue to refine and make that better, and then that cuts through to advertisers, where we're delivering very strong performance to advertisers. Doubling the number of clicks year on year is exceptional, and our advertisers see that as exceptional. As Julia noted, more of the value capture from that still lies ahead of us versus behind us, and we think there's more runway to go in driving more and more commerciality on our platforms.

Eric James Sheridan: Is exceptional our advertisers see that is exceptional and as Julian noted more the value capture from that still lies ahead of us versus behind us and we think there's more runway to go and driving more and more commerciality on our platform. So we feel really well positioned in a unique space.

Bill Ready: We feel really well positioned in a unique space, and as AI continues to advance, we're able to adopt off-the-shelf large language models, tune those to our unique signals, and then get very unique results because of the very distinct, unique signals we get on our platform because of the human curation at scale on our platform. And then Eric, maybe to the second part of your question.

Eric James Sheridan: And as as AI continues to advance.

Eric James Sheridan: We're able to adopt to off the shelf large language models to news to our unique signals and then get very unique results because of the very distinct unique signals, we get on our platform because of the human curation at scale on our platform.

Julia Brau Donnelly: And then Eric, maybe to the second part of your question on sort of investment areas in 2024. So as a reminder, you know, overall in 2024, we're expecting adjusted EBITDA margin expansion overall. But on a dollar basis, in terms of the areas where we're looking to ramp operating expenses in particular, there we're really focused on R&D investments, so headcount additions primarily in the AI space, as Bill was mentioning, to benefit both our users and our advertisers, as well as on the sales and marketing line where we anticipate adding to our sales organization with a focus on enhanced technical selling capabilities, particularly in the lower funnel, and some expansion of frontline sellers as well.

Eric James Sheridan: And then Eric maybe to the second part of your question on sort of investment areas in 2024, or so as a reminder, overall in 2024, we're expecting adjusted EBITDA margin expansion overall.

Eric James Sheridan: But on a dollar basis in terms of the areas, where we're looking to ramp.

Eric James Sheridan: Operating expenses in particular, there were really focused on R&D investments.

Eric James Sheridan: Headcount additions primarily in the AI space as Bill was mentioning to benefit both our users and our advertisers as well as on the sales and marketing line, where we anticipate adding to our sales organization with a focus on enhanced technical selling capabilities, particularly in the lower funnel and some expansion of front line sellers as well.

Julia Brau Donnelly: Thank you. Our next question today is from the line of Ron Josey of Citigroup. Ron, your line is open. Please go ahead.

Speaker Change: Thank you our next question.

Eric James Sheridan: Is from the line of Ron Josey of Citigroup. Your line is open. Please go ahead.

Ronald Victor Josey: Great, thanks for taking the question. Bill, I wanted to ask a little bit more as a follow-up to some questions around your comments around greater returns for advertisers and gaining access to performance budgets. And one of the questions we get is just the visibility that Pinterest has on these budgets and the adoption of these newer tools. It's so great to hear progress with direct links and API for conversions. But we'd just love to hear a little bit more on your commentary around direct link adoption. I think you talked about measurement tools; more advertisers need to be walked through the process. So any insights there would be helpful?

Ronald Victor Josey: Great. Thanks for taking the questions I wanted to ask a little bit more of a follow up to some questions around your comments around greater returns for advertisers and gaining access to performance budgets and one of the questions. We get is just the visibility that pinterest has on these budgets and adoption of these newer tools and so great to hear progress on directly.

Ronald Victor Josey: It's an API for conversions, but would just love to hear a little bit more on your commentary around direct links adoption I think you talked about measurement tools more advertisers need to be work through the process. So any insights there would be helpful. And then you mentioned the launch of dynamic.

Ronald Victor Josey: And then you mentioned the launch of dynamic, I think, campaign creation tools and then the 2D launch of ROAS bidding. Just talk to us about how you envision all these tools sort of coming together as we move forward here. Thank you.

Speaker Change: I think campaign creation tools and then the two the launch of rollout bidding just talk to US how you envision all these tools sort of coming together as we as we move forward here. Thank you, yes certainly.

Bill Ready: Yeah, certainly. As I mentioned in the prepared remarks, we launched direct links at the very tail end of Q3. So really, Q4 is when we first started to see its effect, and we continue to ramp that through Q1. We now have 97% of our lower funnel revenue has adopted the direct links format. The effect that, you know, both Julia and I have talked about is that, you know, there's a lag effect between the value that we create for advertisers when we start to send them more clicks and send them better conversions and better return, and when they're able to see that flow through to their models and measurement systems, which typically has, you know, sometimes So when we say that we see more of the value capture still in front of us than behind us, we clearly see that value capture is happening with direct links.

Speaker Change: So as I mentioned in the prepared remarks.

Speaker Change: We now have we started we launched direct links at the very tail end of Q3. So really Q4 was when we first started to see its effect.

Speaker Change: We continue to ramp that through Q1, we now have 97% of our lower funnel revenue has adopted the direct links format.

Eric James Sheridan: And our conversion for <unk>.

Eric James Sheridan: If you ever conversion is now covering 40% of revenue so.

Eric James Sheridan: The effect.

Speaker Change: Julian I have talked about is that.

Speaker Change: Theres a lag effect between the value that we create for advertisers when we start to send them more clicks and send them better conversion and better return and when theyre able to see that flow through to their models and measurements systems was typically has sometimes.

Speaker Change: Sometimes a quarter or multi quarter lag effect, particularly if they haven't implemented measurement. So when we say that we see more of the value.

Speaker Change: Value capture still in front of us than behind US, we clearly see that value capture happening with direct links we have seen budget shift as.

Bill Ready: We've seen budgets shift. As I mentioned in my remarks, particularly with some of the larger, more sophisticated advertisers that pick up these changes very quickly, we're seeing that they have shifted budgets and that we are now, you know, capturing 5% or more of total budget, which implies a much deeper penetration of their digital budget. And going into their performance budgets, whereas historically, Pinterest would have been oftentimes in sort of experimental or social budgets, we're now shifting more into those always-on performance budgets and doing quite well there.

Speaker Change: As I mentioned in my remarks that we're seeing particularly with some of the larger more sophisticated advertisers that they pick up these changes very quickly.

Speaker Change: Seeing that they have shifted budgets and that we are now capturing 5% or more of total budget, which would imply a much deeper penetration of their digital budget and.

Speaker Change: And going into their performance budgets, whereas historically petrus would've been oftentimes in sort of experimental or social budgets. We're now shifting more into those always on performance budgets and doing quite well there.

Bill Ready: But, you know, that broad-based adoption of the measurement tools that let the advertisers see it and then their shift of budget, we see more of that in front of us than behind us, but that's what gives us confidence in our ability to continue delivering because we know that we're delivering the clicks to those advertisers. And then the second part of your question around the automation suite for those advertisers, you know, we have delivered some of the most important components of a full automation suite, like the fact that we have 80% plus of our revenue going through automated bidding.

Speaker Change: But that broad based adoption of the measurement tools that let the advertisers see it and then their shift of budget, we see more of that in front of us than behind us, but that's what gives us confidence of our ability to continue delivering because we know that we're delivering the clicks to those advertisers and then the second part of your question around the automation suite for those advertisers.

Speaker Change: <unk>.

Speaker Change: We have delivered some of the most important components of a full automation suite like the fact that we have 80% plus of our revenue going through automated bidding, but we have some other really meaningful components that are still in front of us like dynamic creative optimization, which will be launching and ramping over the coming quarters and realized level bidding, which is also going be launching and ramping over the coming.

Bill Ready: But we have some other really meaningful components that are still in front of us, like dynamic creative optimization, which will be launching and ramping up over the coming quarters, and ROAS-level bidding, which is also going to be launching and ramping up over the coming quarters.

Speaker Change: <unk>.

Speaker Change: So these are things that say, okay. We know there's a compounding effect of delivering more clicks and conversions to the advertisers, giving them more ability to measure it and then making it easier and easier for them to create sort of set it and forget it campaigns to deliver them great ROI all those things have a compounding effect and with each one of those we've got clear elements.

Bill Ready: Okay, we know there's a compounding effect of delivering more clicks and conversions to the advertisers, giving them more ability to measure it, and then making it easier and easier for them to create sort of set it and forget it campaigns that deliver great ROI. All those things have a compounding effect, and with each one of those, we've got clear elements of the potential for that, but then we're driving more and more of that adoption, which is what gives us confidence in the continued adoption ahead. And, you know, finally, I just mentioned that I talked about this in my remarks.

Speaker Change: The potential of that but then we are driving more and more of that adoption, which is what gives us confidence and the continued adoption of head.

Speaker Change: And <unk>.

Speaker Change: Finally, I just mentioned.

Speaker Change: Talk about them in my remarks, everything that we've talked about here is consistent with what I've said since I joined what we outlined at our Investor Day. These things have compounding benefits over time, So don't expect like Big Bang moments on these things, but you saw us hit a new gear from H, one to H two last year, we doubled our growth rate from <unk>.

Bill Ready: Everything that we've talked about here is consistent with what I've said since I joined and what we outlined at our investor day. These things have compounding benefits over time, so don't expect, like, big bang moments on these things, but, you know, you saw us hit a new gear from H1 to H2 last year. We doubled our growth rate from H1 to H2 last year, and you're seeing us do it again as we come into this quarter and project forward into next quarter, into Q2, and so those are compounding benefits, and so expect that similar kind of behavior, that the benefits just continue to compound versus, you know, one big hockey stick moment in a particular quarter.

Speaker Change: Two last year Youre seeing us do it again as we come into this quarter and project forward into next quarter into Q2.

Speaker Change: So those are compounding benefits and so expect that similar kind of behavior that the benefits just continue to compound versus one big hockey stick moment in a particular quarter.

Bill Ready: I hope that helps. That's great. Thank you, Bill. Thank you.

Speaker Change: Okay that helps that's great. Thank you bill.

Speaker Change: Thank you.

Ross Adam Sandler: Our next question today is from the line of Ross Sandler of Barclays. Ross, your line is open. Please go ahead.

Speaker Change: Our next question today is from a lot of Ross Sandler of Barclays. Ross. Your line is open. Please go ahead.

Ross Adam Sandler: Great, Bill, I guess another big picture question. I think last year and early this year, there was a debate in both the advertiser industry and among the investment community around how smaller platforms like Pinterest and Snap and others are able to keep pace or not with the larger platforms given levels of investment. I would say these one-cue results fly in the face of that, or at least answer some of that debate.

Ross Adam Sandler: Great Bill.

Ross Adam Sandler: Another big picture question.

Ross Adam Sandler: Last year coming into the earlier this year there was a debate in both your advertiser industry.

Ross Adam Sandler: Among the investment community around how smaller platforms, like pinterest and snap and others.

Ross Adam Sandler: Are able to keep pace or not with the larger platforms given levels of investment.

Speaker Change: I would say these <unk> results fly in the face of that or at least to answer some of that debate. So I guess the question is.

Bill Ready: So I guess the question is, How are the conversations with marketers changing? You obviously sound pretty good about the sustainability of the growth that you're seeing. But I guess, you know, what gives you that confidence? And as you look out over the next year or two, with things like, you know, the tick-tock situation going on? How do you see those conversations with marketers changing? You know, in your favor, going forward? Thank you. Yeah, thanks, Ross. Yeah, we feel great about our competitive edge.

Speaker Change: How are the conversations with marketers changing.

Speaker Change: You, obviously sound pretty good about the sustainability of the growth that youre seeing.

Speaker Change: But I guess, what gives you that confidence as you look out over the next year or two with things like the tick tock situation going on.

Speaker Change: Do you see those conversations with marketers changing.

Speaker Change: In your favor.

Speaker Change: Going forward. Thank you.

Bill Ready: Yeah, thanks, Ross. Yeah, we feel great about our competitive positioning. We think we have a unique and distinct use case for our users, and, you know, we have strong commercial intent, and we're now delivering more and more of that performance for advertisers, and we see those advertisers shifting budget to us, and notably, you know, moving us into those performance budgets, those always-on budgets versus the experimental area that Pinterest historically played in, and I'd say what's fueling that, again, is, you know, the uniqueness of the use case, we solve for our users, but also, you know, as you think about the way that AI plays out, I do think this first wave of AI or some of the first conversations in AI were about, you know, value accruing to the model creators and those who have, like, the largest general-purpose models.

Speaker Change: Yeah. Thanks, Ross, Yeah, we feel great about our competitive positioning we think we have a unique and distinct use case for our users.

Speaker Change: And we have strong commercial intent and we're now delivering more and more of that performance for advertisers and we see those advertisers shifting budget to us and notably.

Speaker Change: Moving us into those performance budgets theres always on budgets versus the experimental area. The Pinterest historically played in.

Speaker Change: And I'd say, what's fueling that again is the uniqueness of the use case, we solve for our users but also as you think about the way that AI plays out.

Speaker Change: I do think this first wave of AI.

Speaker Change: Some of the first conversations on AI, we're about value accruing to the model creators and those who had like the largest general purpose models.

Bill Ready: I think it's also the case that there's a distinct set of value creation around both fit-for-purpose models and taking unique signals and applying them to those larger models, and you see us doing both. We have taken off-the-shelf larger models; we then train them on our unique user signal that lets us, you know, I talked about on prior quarter calls, 10 full percentage points improvement in user relevancy, so you see us doing those kinds of things.

Speaker Change: I think it's also the case that there is a distinct set of value creation around both fit for purpose models and taking unique signal applying it to those larger models.

Speaker Change: He is doing both we've taken off the shelf larger models within train them on our unique user signal that lets us I've talked about on prior quarters calls 10 full percentage points improvement in user relevancy.

Speaker Change: You see us doing those kinds of things you're also seeing see us doing things with our own foundational models like really.

Bill Ready: You also see us doing things with our own foundational models, like really unique computer vision work, where we have one of the largest image corpuses out there, we have really unique signal about how users associate those images, styling outfits and styling rooms and things like that, and that's let us train fit-for-purpose models, so we feel really good about our ability to compete both in terms of a unique space for the user, delivering great value for advertisers, leading them to shift share to us, and we think there's more of that to go as they're just now starting to measure and see that and shift budgets. And from an AI perspective, you know, we feel really well positioned in terms of the uniqueness of the signal we get through the human curation on our platform, as we're leaning into that, we're seeing that accelerate as well through things like our collage format, which is driving three times the engagement, approximately three times the engagement of traditional pins, so we think that's an entirely new content type on Pinterest that is unique to what people do on Pinterest, fueled by AI, and has this flywheel effect of feeding us more and more granular feedback, more and more granular signals that let us train our AI to do unique things that don't occur on other platforms, so all that to say, yes, we feel good, it's a competitive space, it always will be, but we feel well positioned and I think reflected in our results.

Speaker Change: Unique computer vision work, where we have one of the largest image corpus is out there we have really unique signal about how users associate those images styling outfits and styling rooms, and things like that and that's let us train fit for purpose models. So we feel really good about our ability to compete both in terms of a unique space for the user delivering great value for advertisers is leading them to shop.

Speaker Change: <unk> share to us.

Speaker Change: We think there's more of that to go as they are just now starting to measure and see that and shift budgets.

Speaker Change: And from an AI perspective.

Speaker Change: We feel really well positioned in terms of the uniqueness of the signal we get through the human curation on our platform as we lean into that we're seeing that accelerate as well through things like our collage format, which is driving three times. The engagement approximately three times engagement of traditional pins. So we think that's an entirely new content type on pinterest that is unique to what people do.

Speaker Change: Pinterest fueled by AI and has this flywheel effect of feeding us more and more granular signals that let us trailer AI do unique things that don't occur on other platforms. So all that to say, yes, we feel good it's a competitive space. It always will be but we feel we feel well positioned and I think reflected in our results.

Speaker Change: Okay.

Speaker Change: Yeah.

Anthony Post: Thank you. Our next question today is from the line of Anthony Post of Bank of America, Merrill Lynch. Anthony, your line is open. Please go ahead. Great. Thank you.

Bill Ready: Thank you. Our next question today is from the line of Anthony Post of Bank of America, Merrill Lynch. Anthony, your line is open. Please go ahead. Great. Thank you.

Speaker Change: Thank you. Our next question today is from the line of Anthony.

Speaker Change: Post of Bank of America Merrill Lynch Anthony Your line is open. Please go ahead.

Anthony: Great. Thank you.

Anthony: So we thought U S really accelerate this quarter and some of the international markets were strong but decelerated.

Anthony: Can you talk about.

Anthony: How much.

Anthony: The drivers in the U S. So we're kind of maybe unique to the U S and then.

Anthony: If Amazon was above your expectations in the quarter and then finally, maybe as you think about some of these drivers whether it's partnership or your own internal efforts.

Anthony: Is there more to come internationally in the back half of next year. Thank you.

Bill Ready: Yeah, on the international front, I'd say, again, more opportunities are in front of us than behind us. I talked about the Google 3P partnership, which is just getting going. So that wasn't really a contributor in this quarter; we see more of that as we look ahead. I'd say, stepping back more broadly, the shopping improvements that we have made, and the lower funnel improvements we have made. Of course, we started with our home market, our largest market first, and we're now taking more of those things international. And you can see that

Speaker Change: Yeah on international I'd say again more of the opportunities in front of us than behind US I talked about the <unk> partnership is just getting going so that wasn't really a contributor in this quarter, we see more of that as we look ahead, I'd say stepping back more broadly.

Speaker Change: Shopping improvements that we've made the lower funnel improvements we have made of course, we started with our home market our largest market first and we're now taking more of those things <unk>.

Anthony: International and you can see reflect.

Operator: Apologies, everyone. It appears we have lost a temporary connection with the speaker line. Please, stand by. We will reconnect shortly.

Speaker Change: Apologies everyone. It appears we have lost temporary in connection with the Speaker line. Please.

Speaker Change: Standby, we will reconnect shortly.

Speaker Change: Yeah.

Speaker Change: With that.

Bill Ready: Okay, I think we're back. So... Great, thank you. Apologies for the technical glitch there.

Speaker Change: Oh, Yes, I think of I don't know if I can so.

Speaker Change: Great. Thank you.

Bill Ready: So we see that those shopping improvements that we've made starting in the US, that now as we're just starting to take them international, that that's responding with users as well. So when you look at our MAU acceleration, we saw accelerated user growth in every geography, which speaks to how broad-based the product improvements are from a user perspective, and then now we're taking those advertiser tools and those markets, particularly shoppability in the low funnel, both from a 1p perspective as well as just starting with our 3p and reseller efforts that I talked about as well. So we see much more of that international opportunity still in front of us. Maybe just to add to that, Justin, so on the

Speaker Change: Apologies for the technical glitch there.

Speaker Change:

Speaker Change: So we see that those shopping improvements that we've made starting in the U S that now as we're just starting to take them international that's resonating with users as well. So when you look at our our Miu acceleration, we saw accelerated user growth in every geography that speaks to how broad based the product improvements are from a user perspective.

Speaker Change: And then now we're taking those advertiser tools in those markets appreciate our shop ability and our low funnel both from a <unk> perspective, as well as just starting with our <unk> reseller efforts that I talked about as well. So we see much more of that opportunity international still in front of us.

Julia Brau Donnelly: And maybe just to add to that, Justin, so on the U.S. side, as Bill was noting, obviously, we're seeing really strong growth in our first-party business, particularly in retail, but also emerging contribution from third-party ad demand, as you mentioned. And then maybe just to follow up on the international side as well, you know, we do see currency headwinds in Q1, that if you look on a constant currency basis, Europe and the rest of the world growth was actually the same on a constant currency basis or stronger in Q1 relative to Q4.

Speaker Change: And maybe just to add to that Justin so on the U S side as Bill was noting obviously, we're seeing really strong growth in our first party business, particularly in retail, but also emerging contribution from third party AD demand as you mentioned and then maybe just a follow up on the international side as well.

Speaker Change: We do see currency headwind in Q1 that.

Justin: If you look on a constant currency basis, Europe and rest of world growth was actually the same on a constant currency basis, our stronger in Q1 relative to Q4.

Julia Brau Donnelly: So I would take a keen eye towards the FX changes here, which are changing in Q4, Q1, and also in Q2, as we called that when we talked about guidance for the second quarter. Great, thank you, that's helpful. Thank you. Our next question today is from the line of Doug Anmuth of J.P. Morton. Doug, your line is open. Please go ahead.

Justin: So I would take it <unk>.

Justin: Ex changes here, which are changing in Q4 Q1 and also in Q2 as we called out when you talked about guidance for the second quarter.

Douglas Anmuth: Great. Yeah.

Speaker Change: Great. Thank you that's helpful.

Speaker Change: Thank you. Our next question today is from the line of Doug Anmuth of Jpmorgan. Your line is open. Please go ahead.

Douglas Anmuth: Thanks for taking the questions just when you think about the progress in shop ability and moving down the funnel can you just talk about how that's translating into growth in advertiser count and the degree to which you're seeing a pickup in auction density and then any early learnings from the third party deals with Amazon and <unk>.

Douglas Anmuth: Google anything that surprised you thus far thanks.

Bill Ready: What I would say, you know, our growth and strength have been most pronounced in the lower funnel, particularly in US retail and amongst the largest, most sophisticated advertisers. But we do see that starting to broaden out, as other retailers adopt the ability to do privacy-safe measurement, as they're able to see that flow through their models. We see that starting to flow through to a broader set of retailers as well.

Doug Anmuth: Great.

Doug Anmuth: What I would say are.

Doug Anmuth: Our growth and strength has been most pronounced in.

Doug Anmuth: Lower funnel, particularly in U S retail and amongst the largest most sophisticated advertisers, but we do see that starting to broaden out as sort of.

Doug Anmuth: Other retailers adopt.

Speaker Change: The ability to do privacy safe measurement as they're able to see that flow through the models, we see that starting to flow through to a broader set of retailers as well.

Bill Ready: So we have, you know, our business is less SMB-centric, but we do see that our improvements in shoppability are benefiting a broad swath of retailers from the largest all the way through to smaller retailers as well. So we think more of the value capture today is occurring with the largest, most sophisticated retailers; they're just faster to react. But when we say there's like a multi-core adoption curve for these things, you know, that will start to take us deeper and deeper into sort of midsize and smaller retailers as well. So I hope that helps give you a little bit of color on that part.

Speaker Change: So we have our businesses less SMB centric, but.

Speaker Change: We do see that our improvements in profitability are benefiting a broad swath of retailers from the largest all the way through.

Speaker Change: The smaller retailers as well so we think.

Speaker Change: More of the value capture today is occurring with the largest most sophisticated risk faster to react, but when we say there's like a multi quarter adoption curve on these things that will start to take us deeper and deeper into sort of mid size or smaller.

Speaker Change: Retailers.

Speaker Change: As well.

Speaker Change: So hopefully that helps give you a little bit of color on that part of it.

Speaker Change: And then on the <unk> Party.

Bill Ready: And then on 3P, on the third-party side of it, 3P is doing exactly what we expected it to do. And if you step back, when we introduced 3P about a year ago, we were excited to announce our first third-party partnership with Amazon then. And when we first introduced 3P, we talked about the opportunity for 3P to work in parallel with 1P to round out gaps in our auction, leading to greater relevancy and shopability and ultimately to improve modernization.

Speaker Change: So yeah on the third party side of it on the third party side of it <unk> is doing exactly what we expected it to do.

Speaker Change: And if you if you step back when we introduced <unk> about.

Speaker Change: About a year ago.

Speaker Change: Excited to announce our first third party partnership with Amazon Ads, then and when we first introduced <unk>, we talked about the opportunity for <unk> to work in parallel with <unk> to round out gaps in our auction leading to greater relevancy and profitability for our users and ultimately improve monetization.

Bill Ready: And, of course, we've also been investing heavily in our 1P business, even as we introduce the 3P opportunity and we talked about how we believe that creating numerous ways to win and driving a balanced durable top-line growth where this would be a complement to our option that that was the approach we're taking and so you know when we've talked about our 3P efforts as a complement you know it's not that we believe that we're any less excited or see the long-term potential any less it's just we're also seeing significant accelerating strength in our 1P business so our 1P is rounding out those gaps in our auction bringing much more auction density and then 3P is contributing nicely to that as a complement as well so again we see that playing out you know as we had expected in terms of complementing, Go. Thank you. Thank you and our final question today will be from the line of Mark Mahaney of Evercore ISI. Your line is open, please go ahead. Thanks, two questions.

Speaker Change: And of course, we've also been investing heavily in our <unk> business.

Speaker Change: Even as we introduced the <unk> opportunity and we talked about how we believe that creating numerous ways to win and driving a balanced durable top line growth.

Speaker Change: This will be a complement to our auction that that was the approach we're taking and so when we've talked about our <unk> efforts as a compliment it's not that we believe there were any less excited to see the long term, particularly unless it's just we're also seeing significant accelerating strength in our <unk> business. So our one P is rounding out those.

Speaker Change: Gaps in our auction, bringing much more auction density and then <unk> is contributing nicely to that as a compliment as well so again, we see that.

Speaker Change: Playing out.

Speaker Change: As we had expected in terms of complementing.

Speaker Change: And bringing more definitely to the auction, creating greater shop ability. There is broad based because we see broad based strength in retail both first party and <unk> as an emerging contributed to that and as I mentioned in my comments, we expect that where we are now on three P is a base from which we will continue to grow as we optimize further and further with <unk>.

Speaker Change: Our partners.

Speaker Change: And look forward to how we will bring in more demand to complement our auction.

Speaker Change: Okay.

Speaker Change: Thank you Bill.

Bill Ready: Thank you.

Mark Stephen F. Mahaney: Thank you. And our final question today will be from the line of Mark Mahaney of Evercore ISI. Your line is open. Please go ahead.

Speaker Change: Thank you and our final question today will be from the line of Mark Mahaney of Evercore ISI. Your line is open. Please go ahead.

Mark Stephen F. Mahaney: Hey, Thanks, two questions. Please you talked about bill about adding potentially more partners beyond Amazon and Google. If you just put some expectations set some expectations around there it's kind of hard to see any partners that could be as material as those but maybe I'm not being creative enough I'm thinking about it and then secondly, Julia I know you quantified the impact in the <unk>.

Mark Stephen F. Mahaney: March quarter from.

Mark Stephen F. Mahaney: Leap day, and Easter timing is it safe to assume that the emerging contribution from <unk> would have been less than that and Thats. Why you wouldn't that's why you didn't quantify it. Thank you.

Speaker Change: Yes, thanks Mark.

Bill Ready: Thanks, Mark. You know, we're, you know, we're just getting going with our 3P efforts. Again, we feel, you know, that those are performing, you know, in line with our expectations from what we've talked about previously. We're just starting on the international side.

Speaker Change: So again were.

Speaker Change: We're just getting going with our <unk> efforts again, we feel that those are are performing in line with our expectations. When we've talked about previously.

Speaker Change: Just starting on the international side, Google certainly.

Bill Ready: Google's certainly a great first partner there, but we're just getting going. And as we carry forward, you know, we, you know, we think about, we're always looking at this as sort of like a retail problem, right? You have the right products on the shelves when the user walks in, and so we're always looking at where do we need more density? Where do we need more shoppable inventory to round out what the user's looking for?

Speaker Change: First part of that but we're just getting going and as we carry forward.

Speaker Change: We we think about we're always looking at this as sort of like a retail problem right you have the right products on the shelves when the user walks in and so we're always looking at where do we need more density where do we need more solvable inventory to round out what the users looking for and we will continue to look at what are the best partners to round that out.

Speaker Change: As you noted we brought in some really great partners already we see really phenomenal momentum in our first party business, which is always.

Bill Ready: And we'll continue to look at what are the best partners to round that out. As you noted, we've brought in some really great partners already. We see really phenomenal momentum in our first party business, which is always, you know, what you would hope to see first and foremost. But we'll continue to look at how we round out those gaps. And, you know, as I mentioned, we see opportunities to expand our current partnerships to multiple geographies versus the geographies that are in today.

Bill Ready: What you would hope to see first and foremost.

Bill Ready: But we'll continue to look at how we round out those gaps and as I mentioned we.

Bill Ready: The opportunities to expand our current partnerships to multiple geographies versus the geographies that we're in today and.

Bill Ready: And we're continuously evaluating additional partners that can complement the auction going forward. So obviously, I'm not going to comment on any new partners before we have a new partner signed up, but we're continuously evaluating those. And, you know, even though it's been a nice, 3P has been a nice emerging contributor, we're just getting going internationally, and, you know, we see, you know, a lot more opportunity to continue that effort. And then I'll give it to Julia for a second. So, Mark, on the second part of your question, we've always said we're not going to specifically break out.

Bill Ready: And we're continuously evaluating additional partners that can complement the auction going forward. So obviously I'm not going to comment on any any new partner before we have new partners signed up but we're continuously.

Bill Ready: Evaluating those and even though it's been a nice <unk> has been a nice emerging contributor we're just getting going internationally and we see a lot more opportunity to continue on that effort and then I'll get to Julia for.

Julia Brau Donnelly: On the second part of your question. So we've always said, we're not going to specifically break out.