Pinterest, Inc. (PINS) Earnings Call Transcript & Summary

Good morning, everyone. I really appreciate you joining us today. And we're pleased to have Pinterest's CFO, Todd Morgenfeld, with us today to discuss a number of topics. Todd, how are you doing today?

I'm doing great. Thanks for having us.

Yes, really appreciate you being here. So we'll jump right in with a pretty juicy question. Obviously, there's been a lot of interest and updates on advertising trends, given the unprecedented impact of COVID. Can you share anything on the business trends you've seen in May as some states have started reopening?

Yes. Thanks for the question, Justin. The short headline answer is that we're not going to give an update on the quarter. And the reasons behind that answer are worth discussing for a minute because they really highlight why this moment is so different than any other I can remember. Normally, I'd have a pretty good understanding of any given quarter by the first week of the last month of that quarter, like the one we're in now. But it just isn't -- doesn't feel like normal times. If we do a quick thought experiment and imagine for a minute that it's now instead of June 4, March 4, just 3 months ago. And at that point, if I gave an update on where I thought Q1 revenue was going to land, we all know that forecast. Even making it in good faith with only 3 weeks left in the quarter, it just wouldn't have been helpful for investors. And so recent history has made me much more wary of trying to predict the immediate future or even giving intra-quarter color that may tempt others to make definitive predictions. Many unknowns remain out there for ad-driven businesses, including for us. And so let me just walk you through, because I think this might be helpful, some of the things that we're looking at when we're trying to forecast the business right now. We're trying to understand whether physical stores around the world are open. If foot traffic is returning, commercial activity is returning as expected. If the appetite for omnichannel retailers to advertise is back and it's durable. We're also looking to see whether those omnichannel advertisers are comfortable with their balance sheets and if they're prioritizing marketing again over cash preservation. Right now, the complexity around physical stores extends beyond COVID, as you know, as many are being impacted by curfew restrictions in addition to COVID-related closures. We're also trying to understand if organic consumer demand for essential products is going down. And thus, if the appetite to advertise those products to generate demand has returned, and I'm sure we'll talk more about that later. And finally, we're trying to understand whether supply chains have recovered and whether merchants are confident that they have the inventory and the logistics infrastructure to meet the demand generated by advertising. And so as you know, many of those remain open questions, which makes it really difficult to responsibly forecast the business with much precision, even in the near term. And then lastly, I think it's important to remind folks that we're operating the business for the long term. And so our philosophy on guidance has always been to be a little bit longer-term in nature. We've offered annual guidance in the past. And so right now, we're trying to make our headway on strategic goals that are long-term in nature rather than really trying to thread the needle on any particular month or quarter.

Got it. Yes. Definitely, it sounds like physical stores is something you're watching. On the other side of the equation, we've definitely seen some interesting stuff on usage. In light of your positive overall usage commentary on the Q1 call, as well as the Today tab launch, which I thought was really interesting, in what ways is Pinterest being used differently now? And is there an opportunity to retain the additional activity that you have been seeing?

Yes. It's a great question. It's been really interesting to watch user behavior in this environment. The headline is that engagement from our existing and new users remains really strong. There's been some moderation in that trend since the peak levels we saw in late April due to the lockdowns lifting, and more recently, a shift of focus to news events, but the overall message that -- is that engagement remains incredibly strong. It's important to think about when you -- when we double-click on that and we think about how people are using the platform, we've long talked about bringing Pinterest into more things in a user's life as the key to our engagement trends. And right now, people are using Pinterest to discover new use cases as well as deepen existing ones, which is something we've been after. Since mid-March, to be specific, we've seen an increase in users engaging in more than 2 use cases, which is really important for the depth of the signal we're getting and reducing churn in our user base. If you take a step back, our users are using Pinterest in the ways that we've always observed in some respects, but there are some nuances. The 2 things that people do, they use Pinterest as a personal utility to discover practical solutions and they plan for their future. In the early days of the lockdowns, Pinterest helped our users solve novel challenges like how to educate and entertain their kids, how to clean during quarantine, what food to put in the pantry and how to make masks. But then as the lockdowns kind of progressed, we saw -- and in recent weeks, we've seen people revert to more traditional planning behavior and to plan for their future. And so recently, we've seen a trend toward more future-oriented use cases on the platform, things like vacation, travel and events. You asked about the Today tab, which we're really excited about. The Today tab is a curated feed of trending topics that makes it easier for our users to discover new use cases on Pinterest. And so this is content that we see in the aggregate, trends that we're seeing across Pinterest that we then curate and serve to our users on the dedicated Today tab. So for example, in May, we showcased a bunch of use cases that were particularly popular, even if our users weren't searching for them individually. In the aggregate, it allowed us to serve content around things like grilling and barbecue recipes, no-equipment workouts, bucket list trips, do-it-yourself painted denim, and easy home makeup. So you might not have been on Pinterest to search for those things specifically, but they were trending, and we could then serve it to you to hopefully provide you some serendipitous discovery and give you more reasons to be on the service. Because the topics are curated, it also helps us become even more relevant in international markets where today, our organic content corpus is still in development. And so the feature is now live in 15 countries. This is super exciting because what it does is it gives people a reason to reengage. In the early days, about 1/3 of our users on the Today tab reengage within a week after they first use it, and it's improving our new user activation. So what I'm most excited about it is, like, it helps us retain new users on Pinterest because they're finding new reasons to be on the service and improving the relevance of their home feeds over time because they're discovering even more signal that we can then redeploy toward our recommendation engine. I think you asked a little bit about the opportunity of retaining those higher levels of engagement. It's still early, but we're seeing some encouraging signs that our users, the ones that are resurrected and new, are seeing -- continuing to get real value from being on the service. And so a significant percentage of the engagement gains that we saw since mid-March, importantly, have come from new and resurrected users. And so we're hopeful that those people have found reasons to stay on Pinterest now post-crisis. The indicators we're using to test this are things like board creation and revisitation rates, which we talked about growing nicely on the last earnings call. And we saw that strength continue. Both reached all-time highs in April. Board creation, though, has slowed down a little bit since the peak, but revisitation is still growing. And so we've never had a situation like this before, and some of the usage since mid-March has certainly been driven by people being in their homes. And future engagement will depend on people continuing to find the platform inspiring and useful under more normal conditions, but it's definitely been a positive trend for us going through the last 2 months. In terms of new areas, I think the final part of your question, I think, was around new areas. I would expect that as lockdowns lift, some of our traditional use cases, things like beauty, are reemerging, where some of our more feature-oriented use cases, again, like travel, vacation and event planning, have been growing. And so during the heart of the lockdown, things like parenting and health were probably a little bit more prevalent than they are now. Food and recipes never went out of style and remain a significant use case. And I think we talked about this on the last earnings call too, but about half of our growth in new users is coming from folks under the age of 25. And so you might imagine that Gen Z use cases, things like wedding inspiration searches that are up 4x, social goods searches that are increasing about 60% around things like Earth Day, and high funnel searches like mood boards and room ideas are up significantly.

Great. That sounds encouraging. I think maybe I'll go up a level and ask about the TAM. How do you see your global TAM versus the 2.7 billion monthly users on Facebook? And we've been tracking app downloads. I think we publish it on every month. I've seen some impressive numbers there. What does that mean for your TAM? And what are your focus areas for expanding U.S. reach?

Yes, it's -- look, it's been clear that Pinterest has been increasingly useful and relevant to people during this crisis. And I was really excited to report our user growth both in the U.S. and internationally on the last earnings call. And as we've mentioned, it's been strong since, even though that trend had moderated a little bit. I haven't seen that app download analysis, Justin, that you referenced and had a chance to look at it. But it does seem generally consistent with the overall engagement trends that we've seen since mid-March. On the U.S. growth in particular, we plan to grow at a much slower rate in the U.S. than we do internationally. It just reflects the difference in maturity of those respective markets. The way we're thinking about driving that growth is by deepening engagement of existing and episodic users. We're doing that by cross-selling relevant content in new interest categories to further grow monthly active users. Things like home feed diversity and search suggestions that have been personalized to help you discover more serendipity and delight you with new use cases that you may not have considered Pinterest to be helpful to you personally for in the past. But once we show you some of that content, we think it will bring you back. You'd asked about the Today tab. That's another way for us to introduce topical content that may not be directly relevant to your individual search behavior, but is definitely relevant to trends that we're seeing across the service that may be of interest to you. So as we do those things, we think we can convince existing and episodic users to come back for more things in their life. The second big growth driver is around resurrecting former users, people who have used Pinterest intensively for maybe a project at one time. They planned a wedding, they planned a home remodel, probably had a great experience, but they thought that, that's all Pinterest was for. By making them aware of other relevant content in other interest categories, they may come back for more things in their life. And so we're spending time making sure that people realize that unlike -- we talked about this before, but like unlike gaming where you may -- or some other apps, where you may have joined and then churned, you're probably never going to recover because you weren't a satisfied user. For us, we have a lot of users who may not be active monthly active users for us, but they had a terrific experience, and they just need to be shown new use cases to come back for more activities in their life. Then the third category is attracting net new monthly active users by making the service more inspiring and useful across a much broader range of people. And so that's where you're seeing us invest in acquisition categories like event planning, collaboration tools, and importantly, the shopping experience. We'll reach those folks, and we've talked about marketing efforts in the past, but we'll reach new users who aren't on the platform through better comprehension marketing around what Pinterest is and why they should use it. I'm really excited about some of the marketing work that we have planned leading into the spring. And as you might imagine, in this environment, doing out-of-home, comprehension marketing is probably less effective. So we pushed it back a bit. But that will be an important tool for us to continue to drive net new MAUs to the platform.

Got it. It sounds like you have a lot going on. As we look out over the next 12 to 24 months, what initiatives are you most excited about for expanding your product ad -- or ad product offering? And then can you discuss how you're measuring attributed cut -- conversions? I think you brought that up on the last call. I thought it was quite interesting. And what helped drive the uptick in those in April?

Yes. This is a really important point. I am incredibly excited about what we're building on the advertising side. As much as I've been delighted with our user growth and our engagement and organic product development, two things stand out around what we're building that are really important to take away. The first is that we're building products that create measurable value for conversion-oriented marketers, and we want to make it easier for more businesses to spend and scale on the platform. So those are the big 2 points that I really want to make sure we hit home here. So on the first, the creating measurable value for conversion-oriented marketers. Where you're seeing that is in our investments in conversion optimization, our oCPM product, and our shopping product as well as driving significant traction in our tag adoption and making sure those tags perform the way that we expect them to. The areas where that's selling up is our new collections format, which is an evolved version of Shop the Look ads. And then importantly, our Shopify integration GA announcement from a few weeks ago, that will have a big impact on scaling our tag adoption. We're seeing a lot of progress here. As we mentioned in Q1, in the Q1 shareholder letter, our attributed conversions growth was 40% just in the month -- going from the month of March to the month of April, and we think that, that's accelerating with our third-party integrations with folks like Shopify. Your question on attributed conversion, just as an aside, the way we think about an attributed conversion is a conversion event that we have successfully matched to a Pinner and that we can link to engagement on Pinterest. You viewed something, saved something, or clicked the ad within a specified attribution window. And that attribution window can be of various lengths. And we've provided some analytics tools to help advertisers measure conversion activity depending on how long they're willing to give credit for that attribution window. The second big category, I talked about, number one, measurable value for conversion-oriented marketers. And then the second is making the products much more automated and scalable for mid-market advertisers and the more sophisticated SMBs out there who probably don't have a dedicated account manager, like an internal salesperson who's assisting them. So that means we got to be investing in 3 technical areas, the first of which is measurement. We're investing in self-serve reporting tools at scale, being able to effectively pull your own reports as an advertiser without relying on an internal member of our sales team to do it for you. Where that's showing up right now tangibly is things like our expanded Pinterest conversion analysis tool, which allows you to do what I described earlier, predicting conversion activity across multiple attribution windows. And the second is conversion upload. That's a tool that allows advertisers to send off-line transactions to us through a variety of upload methods that became available in mid-April and matching online and off-line conversion activity. The second big area is just making our ads manager better. We're automating tools for things like bidding, targeting and budget utilization by investing in engineering and machine learning. Automatic bidding is an important one. So we launched that for traffic objectives earlier this year. And the design for that is to get an advertiser the most clicks at the lowest possible CPC while still spending through their entire budget. And what we found is enormous adoption on that in that CPC traffic objective category, where the product is now comprising more than half of the spend that we see in that area. And so we've been so encouraged by the results we've seen against traffic objectives in CPC advertising that we're going to roll that out for our oCPM, or optimized conversions product, in July. The next big tool category for us, and you might imagine this is important as we continue to grow outside of the U.S. where agencies are incredibly important, is to build better integrations for advertisers and agencies to use our desktop as manager product, which has been an area where we've had some catching up to do, frankly. And then third, formats and creative. We've been investing in new ad formats and evolving the ones that we have that have been performing but have room for revision and improvement. So we added this product called Collections, which makes it easier for advertisers to tell their story. So I'm super excited about this because I think when you come back to what makes Pinterest unique in terms of consumer planning behavior, and the evolution of inspiration all the way through action, this conversion focus is going to be an important one for us.

Great. Maybe as a follow-up, and this kind of addresses a question we get all the time, which is on competition. But in what ways do you see your ads product, as it is today or maybe in the future, as most differentiated from other platforms such as Google and Instagram? How is your value proposition different from those platforms?

Yes. It's a nice segue. Actually from the last comment, I probably could have just kept going right into this because I think that whole conversion concept that we were talking about is incredibly important because our user's mindset on Pinterest is different. Our users are coming with early commercial intent, and we're building the product innovation that allows us to measure that intent, going from inspiration to action for advertisers that have performance objectives. And so that's what -- that's the meta theme that makes us different. So when you start and you're an -- from an advertiser perspective, what we hear from CMOs is that they really like the unique user intent that we're seeing on the platform. And the reasons they like it are that it's commercial in nature, people are coming to plan, they're looking for ideas about things to ultimately buy. The second big category is that it's early. It's not like a last destination before you go and transact. You're looking for unbranded ideas. So it's very early in the demand creation funnel. And so our users with early commercial intent aren't just looking to transact. They're looking for ideas about what to buy and about what they want to have in the future. And that creates an opportunity for us with marketers because they sense that we're generating new demand for their products. When we talk to CMOs, they're frustrated, they're tired of being charged for retargeting that just accelerates rather than generates new demand. And they're tired of bidding on their own keywords and being charged a navigational tax when consumers are typing their brand name into a search engine. We're different, again, because of that commercial intent and the commercial mindset of our users and the fact that it's very early. On the ad side, so that's the -- on the user side, what we're doing with our advertising partners to help demonstrate the value of that is we're increasing our ability to deliver conversions by boosting our efforts in conversion optimization, the oCPM product and shopping products as well as driving traction on tag adoption. So we talked about the definition of an attributed conversion earlier. It's taking that conversion activity, matching it to a Pinner and linking it to specific engagement on Pinterest, a view, a save or a click within a specified attribution window. Our progress on delivering those conversions has been helpful to our advertisers during the COVID crisis, in particular, because you can imagine that the idea of spending hard to measure less ROI accountable advertising is not the way that they want to be thinking about things. ROI accountable advertising is more important than ever. We're also making our ads products more automated, scalable and easier to use, especially for mid-market advertisers and SMBs. And we talked about that before on measurement, everything we're doing on measurement tools and formats. And the last thing I would say is it's really interesting in this environment because I've been talking to a number of advertisers in the last several weeks. And the consistent theme here is they really value the differentiated insight that we're showing into consumer behavior. What's resonating in particular is when we have conversations and we can point to commercial intent, early signal on future purchase behavior and helping our brands and advertisers anticipate and respond to rapidly changing behavior of their customers. When they're start -- like here's an example. So like people are, for a while, were searching for home school ideas, and then they started planning in recent weeks for outdoor summer furniture. When I speak to retailers that have a breadth of products, they're definitely looking for insights into what's on the come in the next few weeks and into the summer as they're planning their inventory, as they're planning their marketing efforts. And so that signal on where consumer trends are going is something that we're uniquely capable of seeing because of the user experience, and advertisers see that and value it, especially in this environment.

Interesting. I think I'd like to follow-up on -- you mentioned the importance of ROIs. Just kind of what feedback are you getting from advertisers on Pinterest's ROIs? And what are initiatives are you currently have in place to get advertisers that may have pulled back spend in March to come back to the platform as kind of the economy comes back?

Yes, it's good. I think the basic message is that what we hear from advertisers is that their ads are performing well in Pinterest. And I think that's an important concept as we're growing our company. I mentioned earlier, the COVID has only made people more focused on ROI accountable outcomes, such as conversions and sales. And so we've been investing heavily there. And I'd say in this environment, there's been no big shift in the way we go to market. We're just trying to make sure we're as nimble as possible, proving that Pinterest is more performance, easier to use and is a source of differentiated consumer insights, which we talked about a moment ago. And I think those will be persistent beyond the COVID crisis. But on ROIs in particular, ROIs in general, the basic theme is that we wouldn't be seeing our business grow if we weren't delivering a compelling ROI for advertisers, and that's what they're telling us. But those ROIs are often hard to compare to other platforms because advertisers have been trained to overvalue the last click despite knowing that the early demand generation is really important and is often happening on our platform. The reason for that is that last click has been really easy to measure, whereas the earlier touches that are actually generating the demand have not been as easy to measure, and the industry hasn't grown up in that way. So a lot of our efforts are around working to prove the value of the early touch on Pinterest across 3 fronts. One is around getting our tag adoption widespread and making sure those tags are working, providing better conversion analytics and educating the market about the earlier -- the value of the earlier touch as opposed to a last click mentality. On the tag adoption, I think we talked about this a little bit before, but it's really important that we've announced a number of partnerships over the last year on tag integration and including Shopify, we were up sequentially, we doubled sequentially in terms of tags, third-party tag managers and the integration. So that was an important step for us. The conversion analytics, we talked about conversion analysis, showing the value of conversion activity across more of a window. But the education side is probably the one that's like net new, and even more important here, we're educating advertisers that early commercial intent is creating that net new demand. We published a -- or Neustar published a report that we've included on our website that shows the value of being on Pinterest, that we're the most efficient channel for generating incremental brand sales compared to other digital channels, and that Pinterest is driving a stronger return on ad spend than search and social. So I thought that was an important indicator or a third-party indicator of the value of that earlier touch that we provide in the upper funnel discovery process and the value of that relative to the way the industry has grown up around last click. I think there's a lot that we've been doing to continue ad spend in this environment that piggybacks on the ROI comment. We adopted 3 near-term strategies to help our advertisers in this environment. One is just helping advertisers who are continuing to spend, run the most performant campaigns possible because every dollar needs to be measured and accounted for. That's like another theme. In addition to looking for consumer insights, the other theme that keeps coming up with our advertising partners is ads have to be performant in this environment because resources are not abundant. So we have a big opportunity here because we're at an inflection point right now in our ability to predict, to deliver and to measure conversion activity. The second big thing we're doing is we're helping existing and new advertisers who have unique opportunities in this environment. This market environment has created some winners and losers or big shifts in consumer behavior, some of which may be temporary and some of which maybe a little bit longer term in nature. So starting in mid-March, our sales team shifted their attention to developing deeper relationships with businesses that are most relevant to Pinners who are sheltering in place. So you can imagine companies that are selling at-home workouts, leisurewear, online education tools, et cetera, versus those that are selling travel packages or cars. One specific example is NordicTrack. It's a provider -- for those who don't know, a provider of connected home fitness gear. It's been able to reach a large audience on Pinterest as people explore home exercise options. And the company has told us that they significantly exceeded their return on ad spend targets over the last couple of months. The third big category, we talked a little bit about consumer insights before, but the third big category for us as we think about this environment is helping advertisers who have paused their spend figure out how and when to reactivate. And we're doing that by delivering the value of our insights. Things like we mentioned patio furniture before. We're seeing a lot more around home garden improvements. Even though planting activity hasn't started yet, we've been -- we knew when people stop searching for masks and started planning their broader improvements to their home decor. And so an example of that was Parachute. It's a bedding brand that initially paused spend on Pinterest as the lockdown started but then reactivated their campaigns as consumers thought to upgrade their home environments. And we believe that those vertical-specific insights showing consumer intent, early consumer intent and interests, are key to helping our advertisers navigate and begin to spend again.

Got it. I want to go back to one of the earlier questions. When you talked about ad trends, you really mentioned you're monitoring physical stores and retail activity. Maybe can you just give us an update or overview of your exposure to off-line retail ad spend and how retail store closures have impacted your business? And it definitely feels like you're increasing your focus on direct-to-consumer, but is that definitely something that's going on internally right now?

Yes. I know it's a great point, and it's one that we've had a lot of conversations about over the last couple of months. We started our monetization efforts around larger CPG and retailing -- retailer accounts. And so we still have meaningful exposure to omnichannel retail advertisers, and that had a big impact on our business in the month of April, which we talked about a couple of weeks ago. Our pure-play and e-commerce advertiser exposure was also affected, but to a much lesser extent. It's just a smaller part of our overall revenue story for a business that grew up on the back of much larger omni-channel retailers. And so those retail advertisers as a segment have represented a significant piece of our revenue for a long time. And many of those larger omnichannel retailers obviously have physical stores in addition to a digital presence. For sure, that group has been disproportionately impacted by the COVID crisis. And we talked about that in quantitative terms on the call. But within omnichannel, the difficulties stem from a couple of distinct problems that are actually kind of interesting when you double click. For our retailers that are selling goods that are non -- deemed nonessentials, but think about like clothing stores, for example. With their physical stores closed, demand definitely got impaired at a time when all their costs remain fixed. And so that was an issue. But separately, there were retailers that sell goods that are deemed essential, stores that sell disinfecting wipes, groceries, big box, et cetera. They have been overwhelmed with organic demand, which created logistics and supply chain challenges for them just around delivery. And so even -- so for those that were closed or for those that were selling like crazy, both had to reduce need for advertising services. Advertising demand from pure-play retailers has also been impacted, but that spend appears to us to be much more resilient. They're looking for concrete returns on their ad spend and all the emphasis we put around conversion measurement and activity is going to make sure that we're proving our value to those advertisers. Just that their -- the composition of their revenue relative to our total retail segment is still growing and not material enough to have driven our performance relative to some of the pressures we saw in the omnichannel segment.

Got it. Something we've talked a lot about with people is the increasing trend of convergence of e-commerce and advertising. Can you discuss some of your initiatives such as product catalog feed uploads? I know you give us an update every quarter on that. And how do you quantify the monetization uplift opportunity? And then maybe you could fold in some thoughts on the partnership with Shopify or tell us about the new Shop tab with Lens. So all that stuff seems really interesting and related.

Yes, I totally agree, I do. There's a lot going on in this segment broadly. It's been one of the most intellectually interesting moments to be in the middle of all this because of the various crises that are happening and the shifts in consumer behavior. The short version of answering that is, I think we have a really unique opportunity to bring together advertising and shopping in a way that's quite unique. And so when we think about online shopping, that mostly means online transactions today, e-commerce sites where consumers are going to buy things efficiently. In that line -- we talked about this before, but last click ads worked really well in that environment, but we're pursuing this problem differently. Consumers are using our service to do a lot more than simply transact. Pinterest is where they're coming, they're figuring out what they want to buy. This is exactly where advertisers want to be in the purchasing journey. And we're building our ad tech stack and our measurement tools to quantify the value of those earlier touches, when consumers are actually shopping, meaning looking for ideas rather than simply transacting or buying. And second, I would say Pinterest is not merely a place where consumer demand is created. Our mission is not just to inspire people but to inspire them to create a life they love. That's our internal mission, to bring everyone the inspiration to create a life they love. What that means is that we're getting our users to take action on the inspiration that we're delivering. Over the last year, we've worked really hard to enable our users to be able to buy products for merchants they trust. And the first part of that strategy is to increase the inventory of reliable products where we've made significant strides. We've seen that in catalog feed uploads increasing dramatically, migrating existing merchants participating in our Shopify integration and in our Verified Merchant Program, and we're making it easier for our users to pivot from inspiration to purchasing. We built a better shopping experience throughout Pinterest, including the Shop tab with Lens, which you mentioned. I'll spend a minute on that. So we just announced the Shop tab on Lens results experience. And so Lens is a technology that enables a person to take a picture with their phone and use that picture as the search query within Pinterest. We're obviously a visual discovery platform, not text-based. And so in addition to home feed recommendations, text-based searches and cropping and clicking into images, Lens allows people to use their phone to search for things they discover in real life. So now when you snap or upload a photo, you'll see a Shop tab against that image with shoppable pins that are based on in-stock products that we've identified with computer vision technology within that image. Every product pin that you then see goes directly to the checkout page on a retailer's site. This is like important -- it's another important milestone and continued innovation around the shopping experience, which we've been trying to build into more dedicated surfaces across Pinterest to improve the user experience. We've brought shopping to more dedicated surfaces, including boards, searches and pins themselves in addition to things like this new Lens product. Shopify has been really interesting, too, and is obviously in the middle of a lot of online commercial behavior. So the integration became generally available in May. And that takes the body of Shopify merchants and enables them to seamlessly set up their online store for Pinterest-specific marketing objectives. With just a couple of clicks of a button, Shopify merchants can set up their Pinterest tag, send their product catalogs to us and create ads, all in one interface located within the Shopify merchant dashboard. So Shopify merchants who leverage our integration will benefit from increased organic distribution of their products, have the ability to launch paid ads, and we think that will drive additional traffic and conversions to the merchants' websites through shopify.com.

Interesting. There's a lot in there. A lot of initiatives that could be shopped or with ads. Kind of running out of time, I'd love to follow-up, but I just want to get one last one in. Just about your margins, I know there's a lot of interest in that, how are you regulating and prioritizing investment levels during the downturn? There's been some press that spending has picked up. But will you adjust spend based on improving or deteriorating revenue visibility? How are you thinking about that?

Yes. I think that the overall message is we entered the year really confident in what we were building. So we thought the things that we were investing in around content is building more inspiring content on Pinterest, use case diversification to drive engagement, the shopping experience and diversifying our advertiser base and the advertising content that's on Pinterest. Those are the right long-term opportunities to build our business for the next 3 to 5 years. So in a world where we have $1.7 billion in cash, an undrawn $500 million revolver and the right strategy for the long term, it didn't feel like we should be necessarily responding in a knee-jerk fashion to try and hit short-term margin targets, but rather stay focused on those long-term objectives. And so what I talked about before was slowing the rate of investment, and that's going to show up in areas like travel spend, event spend and marketing. I talked a little bit earlier about comprehensive marketing. That's something that we pushed a bit because of this environment that we're in. And I think we will still come back to it when the environment is more conducive to comprehension marketing, especially for out-of-home. But the things around like what are we building, how do we go to market, focusing on conversion-oriented, returns-focused advertising formats for a bigger group of advertisers, those are the right things to build the business for the long term. I'm definitely looking at the market environment and trying to determine when we can accelerate spend again. And obviously, if things deteriorated, we would run the business responsibly, but we're fortunate to have the balance sheet and the right strategy and an enormous commercial opportunity for us in the next few years, if we get it right. So it felt like we should keep investing and then delivering against that.

Great. With that, Todd, we've gone over, but I really appreciate you spending time with us on the update. Obviously, a lot of interesting stuff going on in the company and a lot to follow up on. But thanks so much for spending time with us.

Yes, thank you very much for hosting it. It's the first one of these we've done by phone. So hopefully, we'll be back in person again before too long.

Great, talk to you soon.

Thanks again.