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

Good morning, everyone, and welcome. I'm Neil Doshi, Vice President of Investor Relations. I want to welcome you to Pinterest's first ever Investor Day. We're thrilled to have you here, whether in person or on the live webcast, and thank you for your continued interest in our company. Today, over the next few hours, you'll hear from several of our senior leaders across our business on a wide range of topics, including our strategy, product initiatives and our growth opportunities. In the middle of the morning, we'll have a short 15-minute break and afterwards and after the presentation, we'll actually have a Q&A session followed by lunch. We encourage you to submit questions throughout the day. You'll notice a QR code on the table. Please use that to submit your questions. If you're joining us via the live stream, please use the portal to submit your questions as well. The presentation will be uploaded to our IR website at the conclusion of today's event. Before we begin today, please note that we will be making some forward-looking statements regarding our performance, operations and projections. And such statements involve a number of risks and uncertainties that are included in our SEC filings that could cause actual results to differ materially. During this event, we will present both GAAP and non-GAAP financial measures and a reconciliation of our non-GAAP to GAAP measures are included in the presentation. Please make sure you review the disclaimers. With that, I'd like to kick things off with a video that gives you some insight into what we're all about at Pinterest. And once that concludes, we're going to start things off with our CEO, Bill Ready. Now let's see what our Pinners have to say. [Presentation]

Good morning. I'm Bill Ready, CEO of Pinterest. On behalf of our entire team, I want to welcome you to Pinterest. We really appreciate all of you joining us here in person and those of you that are joining us online. Over the next few hours, we're going to give you insight into what we're building for our users, our advertisers and our shareholders. We couldn't be more excited to share our story and our progress with you. Our story begins with our company mission to bring everyone the inspiration to create a life they love. And as you saw in the video, Pinterest is fundamentally different from other platforms. Pinterest combines global reach, engagement, financial scale. And since our IPO, we've made tremendous progress, particularly in the last year. We now have 465 million people coming to our platform every month. Our revenue over the last 12 months was $2.9 billion, and we generated over $400 million of adjusted EBITDA over that same time period. I'm so proud of these numbers, but I'm even more proud of the story behind them. Over the last 15 months since I joined, our team has changed the trajectory of our business. They've done it by executing on a series of strategic initiatives. We'll talk more about these initiatives, but you can see those, the results of those initiatives reflected as you see in the presentation today. It really has been quite a transformation. We've gone from dealing with declining users to growing users and deep engagement. From being a platform where it was hard for people to shop and take action to accelerating growth in clicks and conversions. Now lower funnel solutions are our fastest-growing products. And we've gone from having significant margin compression to restoring margin expansion with more growth ahead. These opportunities are why I joined Pinterest. When I joined in June of last year, I saw a chance to build a special kind of company. One is uniquely positioned at the intersection of search, social and commerce, unlike any of our competitors. When it's empowering people to have dynamic multi-session journeys that take them from inspiration to action. One is delivering a unique full funnel platform for both users and advertisers. And one is building a more positive Internet, one that brings out the best in humanity, not the worst, and has the potential to reaccelerate growth in monetization. You'll see why our opportunity is so massive when we dive deeper into these areas. Let's start with Pinterest one-of-a-kind position at the intersection of search, social and commerce. Every day at massive scale, people on Pinterest are searching for inspiration. They're curating and collaborating and They're doing it with others to update their look or plan their next project and they're buying products from great brands, Shopping behavior at its core, moves between inspiration, discovery and action. And Pinterest is the one place that brings all this together in one consumer property. People come to Pinterest with intent to go from inspiration to action, many times on long-lived journeys across multiple stages. Pinterest is not where people mindlessly scroll through dance videos or engage in flame wars about politics. They come to discover their next great idea. In fact, users report that we deliver 95% relevancy on our recommendations, and that's up more than 10% year-on-year. They come to Pinterest to decide by searching for specific ideas and making plans with them. There are over 6 billion searches a month. Then increasingly, they come to do, by buying and trying ideas on Pinterest. We all know this last stage was previously an Achilles heel for Pinterest. It was a missing puzzle piece. But we are solving that at scale now. We've seen more than a 50% increase in click-throughs and saves of viable items in Q2 of '23 compared to the year before. And that's thanks to the strength of our new lower funnel offerings. So what does this mean for advertisers. Now advertisers are able to connect with the user across the funnel and see performance too. This really matters because commercial journeys are complex. People stop and start. They refine down, they broaden out, they explore alternatives, and they refine down again. Pinterest brings all these multi-session journeys onto one platform. Unlike other platforms we have to start over with each session, Pinterest lets you come back, right where you left off by saving the boards that you can come back to again and again. That's huge for advertisers. They know users rarely make their whole decision in those last few seconds before the last click. And they want to engage in the users purchase journey much earlier, but they need to be able to see the clicks and conversions to know the performance is real. Now we're solving for that actionability in the low funnel. Our differentiation in managing the broader journey is shining through significantly now that we are bolstering the lower funnel of our solution. And here's where the story gets even better. When users take these journeys, they share with us valuable intent signals that no other platform has. We're different from social media platforms because users are expressing commercial intent directly on our platform. They engage with Pins that interest them by curing their ideas and saving the boards and clicking when they want to learn more. This curation doesn't happen on any other platform, which is why we have such strong intent signals compared to others. This lets us provide recommendations that are deeply tailored to the user, both ads and organic. And we do this at every stage of the full funnel too. Pinterest was always great at the upper funnel, where we reached people earlier in their purchase journeys. But now we're solving for the lower funnel too. We're the only platform that delivers complete full funnel solutions for users and advertisers in one place. By leaning into our differentiators and consumer intent, we're laser focused on helping advertisers find more value in the lower funnel so they really get the promise of the full funnel experience. And we're working to make every pin shoppable, helping you just find more of what they're looking for. For advertisers, this means more clicks and conversions to their sites. And we're advancing measurement capabilities for advertisers so they know that our lower funnel solutions work. Brands don't have to choose between aiming for awareness or performance on Pinterest. They can have both. That's rare. Some platforms are good awareness. Other platforms are good at conversions. Some companies can deliver both, but on different consumer-facing properties. Today, when a customer sees ads on Pinterest across the funnel, conversion rates are 2x higher than when ads are seen for just one objective. That is the promise of the full funnel finally delivered. Better ultimate conversion by engaging through the whole journey. And our full funnel offering will be even more valuable in the future, especially as we move into a cookieless world. We all know that digital advertising is in the midst of a transformation as cookies are deprecated. Many platforms are struggling to adapt to these changes. But Pinterest is different. We don't need to follow consumers around the Internet to know what they're interested in because they come to Pinterest and they tell us directly. That's why today, advertisers have seen a 45% increase in return on ad spend, when using our first-party intent signals compared to retargeting alone. When you combine these signals with our world-class AI, we help brands put the right ad in front of the right user at the right moment in time. Speaking of AI, Pinterest has been a leader in AI for years, pushing the industry forward in many ways, which we'll hear about later. But in the past, we often applied this technology to areas that didn't help monetize or serve users intent on our platform, like pushing short-form entertainment style videos. We overhauled our strategy last year, and we're now applying AI to our core use cases and satisfying users' intent, which gives them a better experience and advertisers, better results. Our CTO, Jeremy King will dive into this even more, but know this. At Pinterest, AI is foundational to everything we do and is producing real results for users and advertisers right now. By now, you've heard why I was so excited about the opportunities here, the commercial intent of our users, how we help manage multi-session journeys, how we deliver full-funnel solutions that help advertisers at every objective. Our world-class AI, take all this together and we have a flywheel that's unlike anything out there. Here's a view of our flywheel. And here's the headline. What is special about Pinterest is that we don't have to choose between growing engagement or growing monetization because of the commercial intent of our users when we deliver on relevance, increasing ad load can increase engagement. That's not true on many other platforms where ads tend to take users away from what they were trying to do. Pinterest is the rare business where the interest of users and advertisers are aligned. Our Chief Strategy Officer, Martha Welsh, is going to speak more about this when we discuss shopping later this morning. Everything we've talked about thus far is what happens when the business is working. And it all ladders up to what I believe is our biggest differentiator in the long run. That's being a more positive alternative to traditional social media. We have the opportunity to do business in a different way to prove a different business model for social media. One built on positivity, one that's additive rather than addictive. We want our users and advertisers to feel safe and positive when they're on our platform. And we make deliberate decisions to deliver that experience. For example, we're tuning our algorithms to avoid the made you look triggering content common across social media. Instead, we prioritize explicit intent signals, signals that tell us when people search, when they shop, when they save. That delivers an experience that keeps our users more in control, feeling more positive and delivers a brand-safe environment for our advertisers. I referenced that we've made a series of strategic pivots since I joined. We've also become much more clear about our business priorities. These priorities are helping us build a growing durable business for the long term. One is growing users and deepening engagement. Two is improving monetization per user or ARPU, and three is driving profitable growth. Let me walk you through each where we were, what we've done and the progress we've achieved as a result. First, we've reinvigorated user growth and engagement. We went from underutilizing our intent-based signals to making them the foundation of everything we do. And that's in order to show more relevant content and better recommendations. We went from being highly exposed to SEO changes to focusing on deepening engagement directly on our mobile app. Our App is now a destination for our users, and it drives more than 80% of our revenue and engagement. We went from focusing on entertainment-based short-form videos, which is really an undifferentiated strategy to doubling down on what makes Pinterest great, leaning into curation at scale. That takes people from inspiration to action. And we went from trying to be the retailer with shopping siloed as a side feature to partnering with retailers and making all of Pinterest shoppable. 15 months in, it's clear that our strategy is working. In 2021 and the first half of 2022, users were declining, even after the pandemic unwind had completed for others. But now user growth has accelerated each of the last 4 quarters. This is happening both in UCAN and internationally. And those users are more and more engaged. I talked about a basket of metrics that indicate user engagement, including impressions, engage sessions and saves. As MAU grew 8% in Q2 this basket of metrics grew 14% year-over-year. This means we are deepening engagement per user, even as we're growing users and growing monetization. That's really hard to do and again, highlights what is so different about Pinterest, and we've made big strides in monetization as well. We've delivered more ad product innovation in the last year than we had in the prior 2 years combined. And we're delivering higher ad relevance today, which allows us to increase ad load and provide a better user experience simultaneously. That's coming from designing ads into the core of the product, treating ads as relevant content for users and prioritizing monetizable features. And we went from a limited focus on the lower funnel to innovating in the lower funnel better than ever with solutions that are driving major increases in clicks and conversions. This means advertisers get more customers and users get more of the things that they're looking for. The success of these strategic pivots can be seen in our key metrics. Over the last year, as we returned to MAU growth, engagement grew even faster than MAUs, ad impressions grew more than twice as fast as engagement. This demonstrates the point that ads can be relevant, engaging content when the user has commercial intent as they do on Pinterest. This gives us further confidence in our continued long-term opportunity and ARPU expansion. Finally, we're executing with more operational rigor to drive profitable growth. Our growth focus has evolved from shipping more and more disconnected features to solving user needs that drive engagement and ARPU. We've instilled operational rigor throughout our organization, to drive disciplined innovation and margin expansion. And we are now responsibly allocating capital with a disciplined approach to capital return. The opportunity ahead helps frame our future growth potential. The digital ads market remains massive, and our opportunity is as large as ever. We're less than 1% penetrated in the global and UCAN markets today, and we remain confident that we'll continue our long-term track record of growing significantly faster than the market. As we progress through the day, we'll give you more insight into the drivers of our revenue growth and the upside from a modeling perspective. We'll talk about user growth, engagement growth, ad load, pricing and additional contributors to our revenue upside. I've taken you through how we've laid a strong foundation to execute against our strategy and how we're reaccelerating revenue growth while expanding profitability. Julie is going to go through the detailed building blocks that give us confidence in the forward outlook in her section. But I wanted to preview our 3- to 5-year outline. You've seen that we've been steadily accelerating revenue, and we're back to margin expansion. We believe we'll grow revenue in the mid- to high teens and improve EBITDA margin to the low 30% range over the coming 3 to 5 years. And let me be clear, while that's what we are committing to today and what we have confidence and conviction in today, our aspirations are beyond that. We see this as a business that clearly has the potential for 20%-plus growth as we go forward. But this is what we have confidence in today and what we're committing to today even as our internal aspirations are much higher than that. By now, I hope you see why we're so excited from engagement to monetization to profitability and cash generation. Our new strategy is working. But as far as we've come in the past year, we know that there's still so much more opportunity ahead of us. In Pinterest, we have a unique digital experience at the intersection of social media, search and commerce with a highly valuable demographic. Our tremendous $550 billion advertising market, that opportunity to win that as a lower funnel increasingly monetizes and we address being underpenetrated in core geographies. We have a differentiated financial profile defined by scale, growth, profitability and cash generation. And I'm so grateful to have a world-class management team with me to capitalize on these opportunities. So finally, I want to introduce the team you'll be hearing from today. I've worked with a lot of great people over my career. And believe me when I say "this group is special". They are world-class talent in each of their areas of expertise. And I'm excited that you'll be hearing from many of them today. They're going to talk about deepening engagement through our product, our content and shopping efforts. They're going to talk about our growing ads business and the incredible ad product innovation happening over the last year. We'll have a conversation with CMOs from iconic brands about what they're seeing in the market and in the Pinterest. We'll talk about our world-class AI and how it's powering so much of the differentiated value on our platform and our great new CFO, Julia, who will give you in-depth insight into our financial profile. Then we'll have Q&A with all of you. So there's a lot to get to. We're going to start with someone who I had the pleasure of working with at Google, and that I'm thrilled has joined us here at Pinterest as our Chief Product Officer. Please welcome Sabrina Ellis.

Thanks, Bill. Hi, everyone. I'm Sabrina. And as Bill said, I joined Pinterest in May after 12 years at Google, where I helped to find Google smartphone vision, leading product for Android and software for our Pixel phone. It was a great job, and I loved it. But when the opportunity to join Pinterest came, it was an easy decision to say yes. It's a once-in-a-lifetime chance to build a positive product that helps people create a life they love. Four months in, I'm incredibly excited by the progress the team has already made and the potential we have looking ahead. So today, I want to talk to you about our audience, who they are, why they come to Pinterest and the product investments driving our growth. So let's start with our audience. As Bill highlighted, one of the core reasons that Pinterest stands apart is the mindset that people bring to our platform. It's not to watch movie dialogue reenactments or some outrageous stunts. Instead, people come to Pinterest to build a better life. From the everyday moments like what to wear, what to cook, to the epic moments like decorating their first home or taking a dream vacation. They come to explore tens of thousands of interest, fall outfits, kitchen inspo, beauty tips, car restoration ideas and everything in between. And they don't want to just keep scrolling. They want to act on the ideas and bring them to reality. So let's meet some of them. [Presentation]

Look, there isn't another platform that combines utility and inspiration quite like Pinterest. To illustrate this, I want to share a recent personal project, my home remodel. Like most consumer journeys, my path from dream to reality. It's been full of twists and turns and way too many delays. So it started with a general idea, though. I wanted my bathroom remodeled in a transitional style. Now those words mean different things to different people, which is why Pinterest's visual experience is so powerful. I can find ideas even when I didn't have the exact words. So I'd open Pinterest to see a personalized home feed full of ideas. Because of our years of investment in ML and AI, the content is personalized to my taste. When I saw ideas that sparked my interest, I saved them to boards like this one called Bath Remodel. My board is like a visual shopping cart with a ton of useful product information. From here, I can see how different items matched or not and compared styles and price points. Sometimes, I made decisions quickly. Sometimes I started over. Sometimes I close the app to think through the options. Then I came back and picked up where I left off. As Bill mentioned, the journey from inspiration to action. It can take a lot of sessions. When I decided I have found the right product, I tapped through was taken to the retailer and bought the item i wanted. Pinterest helps users along their decision-making process from the spark of an idea, to refined concept to a specific product they're ready to purchase. I want to highlight one key difference between Pinterest and other social platforms, the role that ads play in the experience. With social feeds ads or interruption between the content you want. With video platforms ads literally keep you from the content you want to watch. On Pinterest, we skew heavily [on] towards commercial journeys. So that means that the ads are often the content that users are seeking. That perfect burgundy jacket, that coffee table that matches your room, ads can unlock higher engagement because on Pinterest ads are content. So who is coming to our platform. It's a diverse audience of 465 million people every month with nearly 80% coming from outside the U.S. 2/3 of them are women and 42% are Gen Z. And they are a highly valuable audience, full of decision-makers with money to spend. In the U.S. alone, we reached 50% of people online who have a college degree. And 57% of women earning over $200,000 a year. Looking at it another way, more than half of U.S. moms and nearly 1/4 of U.S. dads, they're on Pinterest. Our users come from every corner of the world, from London to Sao Paulo, we see the universal need to discover, evaluate and buy amazing products. Just look at these stats. The 4-year CAGR in Europe is 11%, and the rest of world, it's 18%. And going forward, we still have significant headroom for growth in markets around the world. We found that the impact of our personalization technology is scaled globally really well. So that enables us to drive effective engagement regardless of language or local. And as we look to the future, it's clear that Gen Z will be a powerhouse on Pinterest. This was the biggest surprise for me, when I joined Pinterest. The youngest demographic has always been challenging to target and build for. And I've been chasing this kind of growth and engagement from them for my entire career. Seeing the passion from Gen Z towards Pinterest, it's been amazing. Gen Z is our fastest-growing audience. Growing 20% year-over-year compared to 8% growth of our overall base. They also have the deepest engagement. They're saving 2.4x more ideas compared to other generations. In research these younger users tell us that Pinterest provides a unique, positive environment where they can envision their future lives. That also means that that's where they'll be making their future spending decisions as that future life becomes reality. We continue to see healthy growth in our core use cases, and we're also seeing strong growth in emerging use cases, particularly those that resonate with non-core audiences. The number of monthly active users engaging in men's fashion is up 27% year-to-date. Auto is up 22% year-to-date. We've done this by improving our content supply in emerging verticals. Men's fashion products in our catalog have grown 70% year-over-year, and we've increased the items in the auto catalog by 30% in that same time. We've also seen significant growth in usage of our mobile app. When Pinterest first started in 2010, it was a strictly a web company, and some even worried that the visual experience wouldn't work well on mobile devices. That worry proved false. And the Pinterest app is our stickiest and most retentive experience. App users have over 2x more saves than web users. So the formula is proving out. The more people we can get to try the app, the more sustained growth we see. We've been driving app growth with targeted acquisition, better onboarding and personalization, and we're finding our notification to bring users back to the app. Those efforts they're paying off. Our mobile app 4-year CAGR is 19%. And finally, what I'm most excited about is how our future looks. Pinterest is finding its strongest product market fit in years. We're seeing that our recent cohorts are our most engaged. Take, for example, our save function. And this is our highest intent signal because when people save an idea, we've sparked their interest, they want to come back to it and are likely to act on it. So if you look at our data, the users who joined in the last year are doing almost 2x as many saves in their first year as the cohorts who came before them did in their first year. So we believe the best part of our growth story is actually ahead. That's a summary of our users. They've got big wallets. They're global. They're getting younger and are more engaged with each passing year. So how are we getting these results? And what are we doing for the future to take growth to the next level? I'm going to walk through our progress and plans in three core investment areas. Reinvesting in personalization, doubling down on saving and atomization and collages. Okay. Before diving into these product areas, I want to call out how refocusing on our unique value proposition has turned around our user engagement over the last few quarters. In 2021, we bet on entertainment video and the creator-driven ecosystem. That bet did not resonate with Pinterest users and, it particularly hurt engagement in the U.S. But in the last 15 months, we reached new highs in user engagement by refocusing on what makes Pinterest unique and what our users love. So let's delve into more detail on how we're continuing that trajectory. Let's start with personalization. When people come to Pinterest, they find an experience that feels tailor-made for their interest and taste. Bill touched on one of our superpowers, the unique signals on Pinterest. We deeply understand the nuances of taste and what appeals to our users. We focused our AI on using those intent signals to deliver customized recommendations. That's been a huge reason for our return to growth. People love a personalized experience. And personalization drives a more than 60% increase in saves per monthly active user. We've made it a priority to build a unique inclusive product, we want every user, regardless of background to feel celebrated when they come to Pinterest. We've launched an industry-leading experience like skin tone ranges, which gives users the tools to find the beauty results that are just right for them and their complexion. This work improves skin tone diversification and recommendations by more than 4x. And just recently, we announced our new body type technology. It's an industry-first patent-pending technology that uses shape, size and form to identify various body type on images across Pinterest. With this signal, we've improved body type diversification by more than 5x. Our users are loving these features. They tell us it's a core reason that they choose our platform over our peers. They like feeling seen, and that's driving increases in sessions, saves and impressions. And the future promises even more possibilities for personalization. First, we want to help users explore their tastes. Users have told us for years that they know what it's like when -- they know what they like, when they see it, but they struggle to put it into words. We want to help them by leveraging AI. Take, for example, on the left, users use the language to describe what inspires them based on what they have saved. Terms like Zen industrialist, organic modern or Japandi to describe home decor. They can add to their own self-understanding and use these words to explore more. On the right, you can see another exciting effort to empower users with new tools to provide feedback and refine their style. You can define exactly what you find appealing about that Japandi Style. The minimalism, the raw wood. It's definitely the muted colors. This feedback improves how we tune recommendations. It gives us an even better ability to deliver content that we know people will love. It also gives advertisers the chance to target the right audience like never before. Saving is the core of Pinterest. It's how we began as a tool for bookmaking ideas around the web. And users still love to save the ideas that inspire them. There are 1.5 billion saves every week. And each save enables users to further their multi-session journeys. It also provides a meaningful intent signal that powers our personalization engine, so that Pinterest is perfect for them. In fact, people who save ideas, revisit their profile and retain 28% better than those who don't. So what are we planning in the future to make saving even better. First, we're making it even easier to save and retrieve ideas. Many of our users have thousands, if not tens of thousands ideas saved on pinterest. We want each of them to always be at their fingertips. That's why we're introducing new search, sort and filter features. So that inspiration that people love is always available and accessible. We're also using AI to auto-organize saved content. AI can suggest logical boards that can be created with just a tap. There's so much we can do here, and the early tests are really showing some promising results. But not every project is a solo project, often it's best and, frankly, a lot more fun to plan with others. So whether it's a birthday party for your partner or a home or a trip with college friends or my home remodel, which my family had just a few opinions about, so we're making it easier for users to save and plan with friends and family. We think people will love these new tools to collaborate and share their ideas with others. When they collaborate with others, engagement grows, users actively saving with others on collaborative boards show a 14% increase in engage sessions and a 33% increase in saves. Finally, I want to introduce a technology that unlocks an all-new level of saving and curation on Pinterest, Atomization. Atomization breaks down complex scenes into individual elements. Until recently, the art of dreaming and planning on Pinterest, it's been done by saving and curating pins. And while users love their boards, we know they've been creating more refinement tools, more ways to play and make their vision uniquely their own. So the first thing about this atomization is cutouts. Cutouts enable users to extract and save just the elements they love most about a pin. So let's say you come across a home decor pin with the lamp that would be perfect for your bedroom. With cutouts, you'll now be able to cut out and say just that individual lamp instead of saving the entire pin. Atomization then allows users to combine cutouts into new interactive pin format that we're calling Collages. Collages empower users to visualize, curate, personalized and share ideas. They can create totally new content for Pinterest. Users, especially Gen Z, have embraced collages as a way to express themselves and share outfit inspiration beauty ideas, home decor and more. Think Taylor Swift concert outfits and Barbie makeup ideas. We started testing these visual expression ideas with our sister app Shuffles. And we've taken the best elements and integrated them into the main Pinterest app. Early experiments have shown that users love this new format. They save Collages at a 2x higher rate than other pins. With atomization, users are saving at a more granular level, and we're able to better understand their preferences and serve even more personalized recommendations using segmentation technology and generative AI. This personalization unlocks tremendous value for our users as well as for our advertisers. So we've covered a lot that our users come to Pinterest with a breadth of interest and meaningful commercial intent. That we have a valuable global audience, which is growing, and our product resonates with Gen Z that our recent cohorts are most engaged, and that's a dream for a product person. And that we're continuing to build a user experience that allows for multi-session journeys with even better personalization saving tools and atomization powered Collages. I'm incredibly excited about our future. And with that, I'll hand it over to a man who brings so much of that magical inspiration on to Pinterest, our Chief Content Officer, Malik Ducard.

Thank you, Sabrina, and thank you for all the great magic and innovation and engagement that your team drives. Hi, everyone. My name is Malik and I lead Content at Pinterest. So I joined in December of 2021, after about 11 years at YouTube and then before that, around a decade at several Hollywood studios. And then prior to that, I worked for several years in advertising at Young & Rubicam advertising in New York. Now going from there from Madison Avenue to then Hollywood to then Silicon Valley, all really taught me one thing, and it's that storytelling that content is really the connective tissue to it all. And at Pinterest, we really bring that all together because as you heard from Bill earlier on Pinterest the ads are not a distraction, the ads are content too. So today, I'd like to talk to you about how content is really moving our strategy forward and hit on three areas: one, how it's diverse; two, how it's scalable; and three, how it's driving engagement and shopability. So let's start with diversity. So I want to walk you through the 6 different content formats on Pinterest. So we have images that allow you to click into an idea to learn more. Videos that provides the steps of an idea. Products that merchants upload from their catalogs. Ads to reach users across the full funnel, then is the atomized content that you just heard about from Sabrina and then Boards, which is the surface area that allow our users to really curate and organize all of these different formats into one place. And this is all happening in a positive and very brand-safe environment. Now what also makes our content corpus really special is our ability to deliver and distribute it to the right person at the right time on their discovery journey. And that's because curation is our superpower. We're doing a human curation at a scale that's just never been seen before. So when a user discovers content on Pinterest or on the Internet at large, they save that content on to their boards where they organize it. Now hundreds of millions of people are saving billions of Pins organizing different aspects of their lives. And this is happening at a massive scale. 70% of our monthly active users have created a board, and there's over 10 billion boards on the platform. And this is always growing and users are always adding to this, and every time this happens, it strengthens our ecosystem. So let's say you are saving and creating a Board about a family camping trip that you're preparing for. So Pinterest learns more about you, what type of outdoor activities you like, what type of taste you have in recreation and gear. But there's also something much, much bigger happening because every time you click and save, Pinterest also learns more about the content itself. What kinds of tents go with what types of flashlights go with what types of coolers. And then take those signals billions of times over signals [going and going]. A network effect happens and then we're able to deliver outstanding recommendations to our users, that our users actually want. Now video is essential to all of this, and we're integrating shoppable video throughout our platform, giving users more opportunity to engage with actionable content wherever they're at on their journeys. Our users really want lean forward content, not lean back entertainment. And when you check out our home feed or scroll through our search results, and I encourage you to do that, what you'll find is actionable content that's really moving and nudging our users forward in their discovery journey from putting together an outfit to organizing a kitchen. And we've really worked it to weave and integrate videos seamlessly into the platform. And with all of this, we've seen our video content corpus grow 170% year-on-year. But as much as we've done, we don't stand still. We're constantly evolving and really changing and shifting our strategy when we need to. And one of those shifts happened last year. But first, I want to take you back to 2021. In 2021, our main focus was on building a creator ecosystem. But that kind of pulled us away from what makes Pinterest unique. What works best on Pinterest is content with personality, not only personalities with content. So we shifted by really expanding our sources of content supply, now creators play an incredibly important role in all of that. And they're one part of a broader puzzle that includes publishers, merchants, brands and more. Now our content sources are expanding, but our content is also reaching further and traveling and having more lives on Pinterest. So Pinterest is a visual experience. We're strong in verticals like fashion and home decor. And so much of our content doesn't have geographic boundaries. It really travels well around the world. And in fact, 62% saves on Pinterest is on content from outside of a user's home market. So our content really works hard. And content not only travels across geography, we find it travels across demographics as well, especially Gen Z. Millennials are over 30% more likely to save a Gen Z created image than an image from their own generation, which is also pretty interesting. Now content on Pinterest is also relevant a lot longer. It's not part of this content treadmill that we see elsewhere. Content on Pinterest is evergreen. And it takes about 13 months for the best ideas to reach their half-life. Our users save and revisit ideas all the time and great ideas for back-to-school, holidays, Halloween or that recipe that you love so much endure often and year after year. Now this also makes the economics for us and for content suppliers more sustainable because great ideas on Pinterest do not have an expiration date. So I hope that gave you a good overview of content and importantly, how we're evolving our approach, and I'll recap a range of formats, including from human curation that really drives incredible recommendations, expansion of sources of content, content that travels far geographically and demographically, content that is evergreen and content that's increasingly moving users from discovering a thing to doing a thing that is leaned in content, not lean back entertainment. So that's content. Thank you so much for your time. And now I want to thank our next speaker who's coming out who does so much to drive engagement, shopability and strategy on Pinterest. Please join me in welcoming Martha Welsh.

Thanks, Malik. Hi, everyone. I'm Martha. I joined Pinterest as Chief Strategy Officer this past January, and I am thrilled to be here. I came to Pinterest after nearly 12 years at Google, where I most recently helped to lead the shopping and commerce initiatives across the company. Shopping is what drives me and shopping drives Pinterest, and I can't wait to tell you how we're transforming the shopping ecosystem. Specifically, I'm going to talk about three things. First, the shopping experience on Pinterest. Second, our shopping strategy, both where we've been but most importantly, where we're headed. And third, why shopping and ads are highly synergistic. Making this a meaningful business driver for Pinterest. Okay. So you heard this morning about the unique intent that people bring to Pinterest. Our users don't come to watch funny dance videos and certainly not to doomscroll. Instead, they come to find inspiration and shopping is a huge part of that. In fact, more than 50% of users see Pinterest as a place to shop. Now, for some of you who might be a bit more utilitarian in how you shop, let me tell you, shopping is fine. It's walking them all. It's about seeing something that you love and finding then just the right item that fits you in your side. whether it's getting ideas for a home remodel, like Sabrina mentioned, or figuring out those perfect items to update your fall wardrobe. And as a visual search platform Pinterest can enable walking the digital mall like no one else. Pinterest is also an incredible place for merchants to connect with customers. Look at this. 96% of searches on Pinterest are unbranded. What that means is that a user may have an idea of what they want, they haven't locked in on a specific item yet. But for the advertiser, this means finding a customer who is in market and undecided. That's the magic moment that Pinterest can deliver. Now for years, there's been high shopping intent on Pinterest. But frankly, we haven't always delivered on this opportunity. Pinterest was great at inspiration, but we couldn't help users take action. There was a lot of window shopping, but it felt like all the stores were closed. That's why last year, we made two fundamental shifts to our shopping strategy. First, we integrated shopping into all Pinterest experiences across the platform. And second, we stopped trying to be a retailer, and we started partnering with retailers. Let me walk you through both of these. All right. First, we integrated shopping across all core experiences. So in the past, Pinterest's strategy siloed shopping on a separate tab. But we know inspiration can strike anywhere and relegating shopping to a single tap got rid of that full funnel experience, the discover, decide, do that Pinterest uniquely enables. Our users were frustrated, engagement was low. So last year, we pivoted hard, we made shopping possible across the entire platform. So today, it doesn't matter if you're browsing inspirational content in the home feed, looking through related pins or searching for something more specific. We're enabling shopping across all of these. And our users are loving it. With this pivot, we've seen a 50% year-on-year increase in click-throughs and saves of viable items, and we're just getting started. Now I know not all of you are active users of Pinterest. So let me show you a few examples of what shopping looks like across the platform. With our Shop the Look feature, users can discover where to buy the products that they see in the inspirational pins that they love. And with visual search, we're enabling users to see related items that may fit their style or budget better. Maybe you like that green purse but not at $700. Well, now we can show you dozens or even hundreds of similar items, so you can find just the right one for you. With shopping pins, brands and retailers can upload their catalogs directly on to Pinterest. And with shopping ads, brands and retailers can promote their products to users. These are all ways that we're bringing shoppable content across the full platform. Now the second big strategic shift that we made last year is we stopped trying to be a retailer, and we started partnering with retailers. Previously, we had a deep and narrowed approach, and that was focused on trying to drive transactions on Pinterest. We look at fail to deliver value or to scale. It cost the time, it exposes us to more risk and it disintermediated retailers. And once again, our users didn't like it. That changed completely last year. Now we're partnering with retailers. We're enabling seamless handoffs between users and merchants at the point of purchase. This approach is better for users, it's better for retailers and is enabling shopability across the platform. Now look, as far as we've come this past year, I know it's just a fraction of what's possible with shopping on Pinterest in the future. So I want to walk you through our go-forward strategy, focused on 4 key investment areas. First, we're increasing shoppable content across the platform. Second, we're improving shopping recommendations, leveraging the power of AI. Third, we're enabling seamless handoffs between users and merchants. And finally, we're scaling ads. All right. We're continuing to make shopping content across Pinterest, turning the incredible lifestyle images that users engage with into viable content. So take this pin from a fashion blogger showing one of the latest trends. Now in the past, a user might save that pin for inspiration. But now we're making the whole look shoppable. We're showing where to buy the jacket, the jeans, the purse, the shoes, and we're seeing great results. With the Shop the Look feature, 70% of the products that we recommend are either rated as exact or highly relevant matches. This means that our users are getting exactly what they want, and so are our merchants. They're seeing a 10% lift in conversions when users engage with them through Shop the Look. And the same experience works for home decor and lots of other content. Our investments in product understanding, coupled with our leading visual technology allows us to understand the content of each pin and to deliver this experience to users at scale. Our second focus area is using AI and our first-party signals to supercharge personalization and recommendations. You ever walk down the streets of Soho in New York, and you see all those gorgeous window displays, all right. Well, now imagine, as you're walking down the street, every storefront is quickly reshuffling its display to fit to your personal style and taste. That would be amazing. And that's what we're building toward Pinterest. Is an experience that feels so personal. It feels like it was handpicked just for you. Now look, I know every platform talks about personalization, but thanks to our assets, we can deliver on it like nobody else. Our users are saving ideas across multi-session journeys. We've seen a 50% year-on-year increase in viable items saved this past quarter. And with Boards and now with collages users are bringing together items. They're mixing and matching brands and products, all representing their unique style. Our users are doing curation at scale. And with these unique first-party signals, we're able to help people shop not just the things they want, but also recommend new brands and new products, which means we can help merchants find their next great customer. This personalization is only going to get better as we continue to invest. The third pillar of our strategy is we're enabling seamless handoffs from users to retailers at the point of purchase. Now previously, we either had a lot of inspiration and no action or when we did enable buying, we tried to get the users on our site. But last year, that all changed. And with the launch of mobile deeplinking, we now make it seamless for users to click out to a merchant app. This has driven a 235% lift in conversions over the previous experience. That's massive. And MDL is now being leveraged by some of the world's largest retailers like Sephora, as you see here. And for those retailers who don't have mobile apps, we recently launched Direct Links, which brings the benefits of MDL to all retailers. Direct Link is currently in beta, but it's already driven an 88% increase in outbound clicks merchants compared to before. This is tremendous value that we're delivering to retailers and we're excited to continue to find opportunities to help connect users and merchants. Our fourth area of focus is on scaling ads. Now as Bill mentioned, on Pinterest, ads aren't a distraction. They enhance the experience. We offer an opportunity for brands to inspire, not to interrupt and this is especially true across shopping, where we know our users have high commercial intent. With relevant ads, we're able to help our users to discover new products and brands, and we're able to help merchants discover new customers. In fact, we see that the shopping ads format has the highest engagement rate of all formats, over 2.5x the click-through rate. And with relevant ads, we can also increase ad load for high commercial intent experiences, which brings me to our final effort. Accelerating our ads opportunity with our first third-party partner, Amazon ads. Now as you all know, Amazon's ad business has been one of the best growth stories in ads in recent years. With $41 billion in annual revenue, growing at 22% year-on-year. With our new partnership, we're able to unlock budgets from advertisers that are not yet on Pinterest. Amazon ads also brings one of the largest and most comprehensive product catalogs, along with the best-in-class seamless buying experience, which helps us to deliver meaningful content to our users in moments of high intent. They also deliver great performance and measurement solutions for advertisers. So let me walk you through how the partnership works. When a Pinterest user expresses commercial intent, say, searching for something as specific as green dresses or broader like hiking guides. We send a request to Amazon for relevant ads. Amazon gets that request and sends ad candidates back to us. We then decide which ads to show based on relevance and price blended with our first-party auction. And when an ad is engaged, Pinterest and Amazon share the revenue. So that's how it works. But what makes this partnership especially exciting is that because these sponsored product ads are designed for search on Amazon, they're well suited to perform on Pinterest, where we see similar behavior. So now brands and retailers who buy sponsored product ads on Amazon can expand their reach to capture similar commercial intent on Pinterest. While it's still early, initial results are proving very promising. We've seen a 50% increase in relevance with ads on search compared to current ads. And we're seeing more than 100% increase in relevance on related pins. This improvement in relevance is meaningful, and it creates opportunities for us to grow overall revenue on Pinterest in two ways. First, it creates opportunities to replace existing less relevant ads and increased option density by bringing ads that feel more native to the user experience. This leads to higher user engagement and higher willingness to pay from advertisers. Second, relevant ads can serve as strong performing content. This means that we can increase ad load where we have high commercial intent, while also delivering on better user experiences and driving engagement. Now, as we said all along, this is a multi-quarter implementation, but we're really optimistic about the results that we're seeing. We're focused on launching on search in the U.S. and then expanding to related pins in the U.S. And as we look to 2024 and beyond, we'll look to scale internationally and explore additional partnerships. We see meaningful opportunity to scale ads and increase shopability across the platform. As Bill said, shopping is a key driver of the value flywheel for Pinterest. And what's special about Pinterest is that we don't have to choose between growing user engagement and growing monetization because of the commercial intent of our users when we deliver on relevance, increasing ad load increases engagement. That's not true on many other platforms. Pinterest is the rare business where the interest of users and advertisers are aligned. Now as someone who heads strategy across all of Pinterest, I also know that shopping is just one use case. And there are many other opportunities where we can help users go from inspiration to action and better serve commercial intent. This includes verticals like travel and local commerce with things like wedding planning and home design, where we see meaningful opportunities in the years ahead. But make no mistake. In 2024, we're all about shopping on Pinterest. So here are a few things to take away. First, our users come to Pinterest with an active shopping intent, and we're enabling multi-session journeys across the core experience. We pivoted our strategy last year, and it's working for both users and for merchants. As we head into 2024, we're going to continue to invest in creating opportunities across the platform. To help users go from inspiration to action and to seamlessly connect with merchants. And we're going to continue to scale ads because of the commercial intent on Pinterest, when we deliver on relevance, increasing ad load increases engagement. I am so excited about the progress that we've made, and I'm even more optimistic about the opportunities ahead. And now I am thrilled to welcome Bill Watkins, our Chief Revenue Officer, to come share more about our advertisers and the innovation that we're driving across the platform.

Hi, everyone. I'm Bill Watkins, I'm glad to be here today. Compared to everyone that you've heard from thus far, I've been at Pinterest for quite some time. Nearly a decade. When I started, obviously, we were not a public company and we were pre-revenue. But when I think back to what drew me to Pinterest all those years ago, two things stick out in my mind. First is our company mission to bring everyone the inspiration to create a life they love. It brings me just as much meaning and purpose today as it did back then. And the second, Pinterest was the only social platform that had this authentic user experience of pinners saving products from brands into a collection of things that they were going to buy in the future. Pinterest literally was the only place that would team up with its users across multiple customer journeys from discovery to purchase. I remember thinking back then, that was a massive opportunity for advertisers and one that I think is even bigger today. And while some things have remained the same over the years here at Pinterest, Trust me, this is a far different company today. I've had the privilege of seeing the company through multiple stages of growth. And I can honestly say that this moment right now feels different. It feels like we're getting ready to take this next big leap forward. And from my vantage point, we have our advertisers to thank for that. The partnerships that we have built and the value that we're driving for them like nobody else can. And today, we're going to tell you how we do that. So over the next 30 minutes or so, we're going to talk about a few things. I'll start by talking about our advertiser base and our value proposition. I'll then hand it over to my colleague, Matt to go through the ad product innovations that are driving growth for us this year, and I'll bring us home by talking about our go-forward priorities for advertisers. So let's first start by adding a little context and taking a look at our advertiser base. What we're looking at here are 4-year CAGRs. On the left-hand side, we're pleased to report that since going public, we have tripled the size of our quarterly active advertisers on the platform. And as we do that, we aim to diversify the revenue. In the top right, you can see this cut by [geo], and we're pleased to report that the Europe and Rest of World regions are leading in year-over-year growth. And specifically, the percent of revenue from these regions has grown from 6% to 20% during this time. And as we grow, we've seen a healthy and balanced growth across all verticals. Of course, you know us for performing so well with the retail and CPG industries, but we've been live across all verticals since launching. We're pleased to see other verticals outpacing on growth, and as a sneak peek to my later section, we're really excited about how these verticals are adopting our new products. Let's now take a look at our advertisers. We think about our advertisers in two segments: large advertisers and SMBs. And the message that I want you to hear from me on large advertisers is this, Pinterest matters. For 85% of the world's largest 200 brands and for a majority of the top 500 Internet Retailer Top 500, they are live in spending on Pinterest right now. And as you know, getting in the door with these advertisers, that's the hard part. We've already done that, right? Like that's why the strategy with large advertisers is all about winning share and you win share by driving better results. And we do that in a couple of different ways. The first, we have a global full-time sales force that works with advertisers day in and day out, and we have sales support teams across disciplines such as creative, performance optimization and measurements. But in our experience, we also find that having a deal construct is a great way to articulate the results that we deliver. We've had relationships with the big 6 agency holdcos for many years. But we just started doing deals with agencies last year. That being said, we've had deals, upfront deals, annual upfront deals with the largest advertisers in the world for many, many years. This is a very important part of our business, and it's outpacing growth. This cohort here is growing faster than the overall business. Shifting to SMBs. Our strategy here is all about acquisition, retention and growth. We do this with our full-time sales team that works with the head of SMB partners. When you're thinking about small businesses, you need to think about efficiency and scale. We're really pleased with the partnerships that we have with organizations like Shopify as well as WooCommerce, and we're also pleased with our self-serve tools, the systems, the tools that we have. You're going to hear Matt Crystal talk about automation and AI. This is how we're thinking about driving growth with SMBs, but with all partners. Speaking about growth, what is it that advertisers are investing in on Pinterest, and this is our unique and differentiated full funnel advertising solution. The message here that I want you to hear is we can now confidently say for any advertiser of any size and for any objective, be it awareness, consideration or conversion, we don't have the right advertising tools for our advertising partners. However, this wasn't always the case. Historically, you've known Pinterest to perform very well in the upper funnel. If you're launching a new product or if you're trying to drive lifts or shifts in purchase intent, we had and still have world-class solutions for those objectives. But the reality is we needed to focus on and truly improve our lower funnel solutions. We had gaps in the lower funnel. In fact, some of our mid- and lower funnel solutions used to be based off of impressions and not clicks. It might have taken you 2, 3 or 4 clicks to go from a pin to a purchase, and that needed to change. We needed to listen to our users. We needed to listen to our advertisers. And we're happy to report that we have new product innovations that's addressing just this. With the API for conversions that launched at the end of last year, with mobile deeplinking that went generally available in July. And as you heard from Martha, with the launch of our Direct Links product innovation that just went into beta last month, we can now confidently say it is a new day in the lower funnel on Pinterest. We can confidently say that 2/3 of the revenue takes place in the lower funnel, but most importantly, we know we are driving better clicks, conversions and better results for our advertisers. Now I wish I could say that was the magic of Pinterest that made that happen. The reality is it was much simpler than that. As I said, in the last year, we got a heck of a lot better at listening to our users as well as to our advertisers. Our users tell us they're smart. They know what an ad is. And when they click on it, They want to be taken straight to the advertiser domain. And our advertisers are always asking us for more clicks, more conversions and better performance. And I'm really proud of the product innovations that we've been able to create across creative, across formats, across measurement solutions up and down the funnel with an eye on shopping and video. But it's not just what we're building. It's how we are designing it. And we're doing this with an eye towards what makes Pinterest unique and different, and this is critical because when we do this, it ensures that ads on Pinterest are content. And it ensures that we're driving the best results for our advertising partners. I'm excited for Matt Crystal who will walk you through all the ad product innovation in just a minute. But again, what I want you to hear from us here is we can now confidently say with this unique and differentiated full funnel solution but in particular, for it being a new day in the lower funnel on Pinterest. And we're very excited about what we have, and we can confidently say for any advertiser of any size and for all objectives, we have the right solutions. For advertisers to drive results. Speaking of results, I did want to take a few moments and go through our new solution, the API for conversions. This is incredibly important because the mechanism for tracking conversion visibility and attributing success up until now cookies are going away. Okay? And with our API for conversions product, this is a direct server-to-server integration between Pinterest and our advertisers Where in a privacy safe and compliant way, they can share their conversions with us. And when they do that, we're seeing far better results. Since this product went generally available in September of last year, we have seen a consistent lift for advertisers adopting this solution, a consistent lift of 28% in attributable conversions to Pinterest. And when we're delivering more value, there's opportunities for reinvestment. And we're seeing this cohort adopting API for conversions in concert with other lower funnel solutions grow at 31% year-over-year. What I think best illustrates our growth path forward is the percentage of revenue that is supported by the API for conversions. Now I'm happy to report that when we began this year, only 14% of revenue was supported by the API for conversions, we've doubled that to 28%. And while that's good, all lower funnel revenue needs to be supported by the API for conversions, and this is precisely one of the things that my team is focused on every day. So that's one way to drive results. I wanted to end this first section here by zooming out and taking a look at results more broadly. And this first starts with do we know our advertiser goals? I'm very pleased with the operational discipline of my sales team and to be able to say that for 95% of campaigns, we have advertiser goals, input into our ads manager. This is important because when we have that, we can then go optimize those campaigns. A little over a year ago, we launched a new team on the global sales work called the Performance Solutions team. And what they do all day is work with our sales pods and our advertisers to optimize campaigns in particular with the largest advertisers. And since this team has been around, we've grown the percent of campaigns meeting or exceeding goal on Pinterest by 14%. And this team is just getting going. And while these two are first-party Pinterest stats, this last stat here is a third-party accredited stat through Accenture, which says this. When an advertiser wants to dynamically retarget on Pinterest, as they onboard their audience data, if they co-mingle that with our first-party signal, our interest-based targeting or our keyword targeting, they see a 45% higher ROAs than dynamic retargeting alone. This not only speaks to our ability to drive results, but it speaks to the uniqueness of our signal. So all of this, again, we're very pleased with where we're headed. And to talk about the product innovation that is driving growth for all of our advertising partners right now. I'd like to introduce Matt Crystal. Matt?

Thank you, Bill, and hello, everyone. So like Bill, I've been at Pinterest for a while. Just a couple of weeks ago, I celebrated my 11-year anniversary at the company. When I joined, we had around 50 employees. I can honestly say I've never been more excited about the company or our future than I am today. It's a thrill and an honor for me to have the opportunity to talk with all of you today about the ads products that have helped drive all the growth that Bill just outlined. Today, I'll walk you through the 5 key areas we're investing in as an ads product team. Advanced AI to drive advertiser performance, ad format innovation across the full funnel, measurement solutions that prove our performance, ease of use and automation to make it as effortless as possible for advertisers to get results and creative tools that help advertisers generate ads that resonate with users. Before I dive into each area, I want to spend just a minute talking about our pace of innovation. In the past, we've heard from advertisers and from investors that our pace of ads innovation was too slow. Over the last year, we've been focused on listening to our advertisers and are delivering on their needs with urgency. Our ads product teams are now building and executing at higher velocity than ever before, and I'm extremely proud of what they've accomplished. Over the last year, we've delivered more products than we did in all of 2020 and 2021. And what matters even more than the number of products is that these products are delivering the results that advertisers care about. With that, I'm excited to share more about what we've been up to. Our first ads product focus area is AI. For as long as I've been here, we've been leveraging AI to push what's possible to improve the Pinterest experience. This last year has been full of some incredible breakthroughs on the advertising front. We've shifted our ads models to GPU serving. Which has enabled us to run models 100x larger than before. This has greatly improved our ability to show the right ad at the right time. First party search ad relevance is up 30% year-to-date. Which means a better user experience and better results for brands. This also means we can show more ads. On Pinterest ads are our content. Users come to the platform with real intent. And because of that, ads are as relevant and engaging as organic pins. We're investing in whole page optimization, so that at any moment, we can show users the optimal blend of free and paid content. And as a result, ad impressions are also up 33% year-over-year. And as we do all of this, we're driving big gains in advertiser performance. Through the first half of this year, our AI models grew clicks by 18% and conversions by 9%, and we expect this to continue to grow as the impact of Direct Links materializes. Our second focus area is innovative new ad formats across the full funnel. Whenever an advertiser comes to us with a goal, whether it's brand lift or conversions or something in between. We want to ensure we have formats that meet their needs and that delight our users. For brand advertisers at the top of the funnel, we've launched two new formats this year, Premier Spotlight and Showcase ads. Brands like e.l.f and L'Oreal are adopting these new formats and seeing great results. While we've made great progress in the upper funnel, the majority of our focus has been in lower funnel format innovation. In June, we launched the beta of lead ads, which allow advertisers to capture qualified leads natively. And just last week, we launched quiz ads, which help users make purchase decisions by answering a few questions. Early adopters like Marco Polo and Hill's Pet Nutrition are getting fantastic performance. To build on the success of our shopping ads format, we launched video and shopping catalogs in August. This was a top request from many of our merchants. We've also expanded catalogs to new verticals. Earlier this summer, we launched travel catalogs. And with this infrastructure in place, we're positioned to expand catalogs to more verticals over time like automotive. Last, but certainly not least in formats is the work we're doing to drive advertisers significantly more clicks and conversions. First is mobile deeplinking, which we made available to all advertisers in July. Merchants can now link users directly into their mobile apps. Participating advertisers are seeing a 235% lift in conversion rates, along with 35% improvement in their CPAs. And then there's Direct Links. We've migrated CPC campaigns to Direct Links across standard and shopping ad formats. The results from this change have been incredible. Outbound clicks to advertiser websites are up 88% and the average cost per click is down 39%. So as you just heard, we've made a ton of progress driving more performance for our advertisers across the full funnel. But just driving that performance isn't enough. We also have to prove it. We've been executing urgently to ensure that we have measurement solutions and partners that meet all of our advertisers' unique needs. The first focus has been enabling advertisers to share conversion data with us in privacy-centric ways. We've made two primary investments here: API for conversions and clean rooms. For our conversions API, we've added 10 new third-party partners this year to facilitate the integration for advertisers. We've also invested to make our first-party solution dead simple to use. For clean rooms, we launched an integration with LiveRamp in April that's driving great results for partners like Albertsons Media Collective and Wayfair. With a privacy safe foundation for conversion data in place, we've then added a wide variety of new measurement partnerships to ensure we can support our advertisers' preferred measurement solutions. We've added 20 new measurement partnerships this year, an increase of 5x versus last year across a multi-touch attribution, media mix modeling, sales lift, foot traffic and match market testing. In the past, we've gotten feedback from advertisers that our products and tools were too hard to use. Advertisers obviously care a lot about return on investment, but they also care about return on time. So in addition to building new products, we've been heavily focused on making our products much easier to use. We sat down with a long list of advertisers and agencies, gathered detailed feedback and committed to fixing their most common points of friction. Ads manager is now much easier and faster to use. It takes 40% fewer clicks to create a campaign versus last year. And in August, we launched Business Manager, to an initial set of agency partners. Business Manager allows agencies to understand their overall performance and collaborate across accounts to get more value from Pinterest more easily. In addition to making our tools easier to use, we're continuing to invest heavily in automation in order to drive the best possible advertiser performance with the least effort required. We made significant progress here over the last few years. And as of today, 85% of our global revenue runs on automated bidding and budgeting. The fifth and final focus area is creative tooling. Pinterest is full of inspiring content. And we're investing in helping advertisers to produce and optimize Creative that resonates with our users. In June, we launched an alpha of our creative split testing product. This is a highly requested feature that enables advertisers to test creative side by side to optimize campaign performance at scale. And last, just a few days ago, we announced Creative Studio. A generative AI-powered product that enables advertisers to produce beautiful, Pinterest friendly creative. The catalogs that advertisers upload to Pinterest are often full of product images on white backgrounds. Creative Studio allows advertisers to make those images more engaging by generating beautiful, inspiring backgrounds. Over time, we'll invest in personalizing this technology such that the images users see will be tailored to their own unique interest. Before I wrap up, I want to give you a quick preview of the product I'm most excited about as I think ahead to 2024. I just walked you through our 5 key ads product focus areas. AI, format innovation, measurement, ease of use and creative tooling. Those focus areas will continue into next year. And in 2024, we'll launch a fully automated end-to-end ad offering that ties all 5 of these focus areas together into a single seamless product for our advertisers. This product will be Pinterest version of Advantage Plus or Performance Max. Advertisers will be able to provide us with a budget, a goal and some seed creative and we'll do the rest. We'll manage bidding, targeting and dynamic creative at scale. All in service of delivering the best possible performance for our advertisers. And with that, I'll hand it back to Bill Watkins. Thank you.

Thanks, Matt. So I hope everyone can see, we are sprinting to give our advertisers what it is that they've been asking for. So with that product innovation as context, let's talk about our go-forward priorities. For advertisers, which is the following. Number one, we are going to drive adoption of our new lower funnel ad solutions to increase clicks and conversions for all global advertisers. Two, we are going to drive the adoption of our new full funnel video ad solution. Three, we are going to further diversify across verticals, four, we have a primary focus on international growth. And lastly, we're going to grow through our first-party sales team, but also through reseller partners. So let's first start off and take a look at the lower funnel initiative. So in the past, we have had lower funnel products, one-off products, some that were based off of impressions and not clicks. We had a lot of feedback that we needed to address from our users as well as from our advertisers to build a truly new and viable lower funnel solution. So let's take a look at the component parts here. The first is shopping ads, the shopping ads format. You've heard us talk about this in the past. This is our most lowest funnel format. It's high growth, growing at 47% year-over-year and 14% of global revenue runs through this format. But this is one format of many that drives clicks and conversions. So for all formats, enter mobile deep linking as well as Direct Links. For Mobile deep linking, which launched generally available in July of this year, we are seeing phenomenal results. We have very good adoption of this product. And for advertisers adopting MDL, we're seeing an increase in conversion rates of 235%. But for advertisers that do not use MDL because, of course, MDL is for the largest advertisers in the world with in-app presences for all other advertisers, this is where directlinks comes into play. This just went into beta last month and is also delivering very strong results. We're seeing an increase in clicks out to advertisers to the tune of 88%. And lastly, as we're driving more clicks and conversions across all lower funnel formats, we need to ensure that this revenue is supported by our API for conversions. Again, I'm pleased with my sales team doubling the percent of revenue covered by API for conversions, but all revenue in the lower funnel needs to be supported by the API for conversions. And my team is laser-focused on driving adoption, not just of one of these products, but of this entire solution moving forward. Now we do have some demonstrated traction. Nearly 60% of revenue adopts one of these products. But only 13% of revenue adopts the full solution. The good news is we're having success. When we started the year, only 2% of global revenue adopted this full solution. So we have seen progress and yet all lower funnel revenue should be adopting all of these products in this entire solution. Second thing I want to talk about is our new full funnel video solution. In the past, we had one-off video products. We dabbled in video here and there. But now with the advent of our Premier Spotlight unit in the upper funnel and shoppable video in the lower funnel, we now have a new, robust, full funnel video advertising solution. So when an advertiser wants to drive awareness via video, we have Premier Spotlight, we have standard units that have success across that objective, and we'll have our first-party brand lift solution to support it. And when folks want to drive conversions via video, we have shoppable video as well as standard products that perform well against these objectives, and that will be supported by our API for conversions. And this is really important because video ads on Pinterest are very popular. Generally speaking in the industry, video makes up about 1/3 of overall TAM. But on Pinterest, video ads revenue was nearly 40%. There's also a trend in market where over the years the lines between format and objective, they have blurred. Five years ago, video equaled upper funnel. Today, advertisers are using video just as much to drive sales. And I'm pleased to say that nearly half of video revenue on Pinterest is assigned to lower funnel objectives. We're really excited about the prospects of video here moving forward. Now let's talk about how we'll further diversify across the verticals. And when I'm talking about verticals here, I'm talking about travel, automotive and financial services. On the left-hand side of this slide, you can see here, our sales teams working on these industries far outpaced the industry average for growth last year in 2022. And while that's great, how do we ensure that we keep pace with that. How do we ensure that we continue to outpace the market and win share? And this is where our new products come into play. Did you know that tens of millions of people come to Pinterest every single month searching for travel inspiration. And yet, Pinterest never had the industry standard ad format, travel catalogs such that OTAs and suppliers could show a fee-based and a dynamic version of their best listings. Now we have that and off goes travel. In autos, this is a full funnel story. Autos are loving our Premier Spotlight unit to drive awareness and to launch new vehicles. And we've never had an opportunity to capitalize on lower funnel Auto. We never had an Auto catalogs format that would allow us to go after Tier 3 local dealer budgets. Now we have that. And we finally have a robust full funnel solution with Autos. And in financial services, it's important to note, our pinners, are planners. They are coming to the service around big life moments and planning accordingly, getting married, having a baby, buying a home. And research would show that these are switching moments for financial institutions, be it switching retail banks, be it switching insurance providers. And we are working with our financial institution advertisers to take their creative messaging to show up in context against these big life moments and leveraging new products like lead ads to introduce them to new customer prospects. But it's not just what we're doing. It's where we are focused on driving growth and driving international growth as the primary focus of our team. On the left-hand side here, you can see the TAM. The opportunity is massive. And in the immediate term, my team's goal is to get our market share in Europe and rest of world to look that similar of UCan. And we're not starting from 0. We're seeing some demonstrated traction you can see shoots of green in ARPU in countries like U.K. and Germany compared to the European average. And we're also pleased with the traction we're having in more nascent markets like Japan, Australia and LATAM, be it in revenue or active advertiser growth. But there's more that we can do and more that we can do right now to drive growth internationally, and this is a 2-part plan. The first might look familiar. It's solutions adoption. What we're looking at here is the percent of revenue in Europe and Rest of World versus UCAN flowing through our shopping ads format as well as the percentage of revenue in Europe and rest of world, versus UCAN in so far as that percent of revenue is supported by the API for conversions. And the play here is simple. We're going to drive adoption of both of these. We're driving more adoption of shopping ads revenue in Europe and Rest of World, and we're going to drive adoption of API for conversions. And when we do that, it will drive further auction density and will drive an increase in ARPU. You might be asking, why haven't we done this already, okay? And here's the reality. What we wanted to do was really focus, while all these products were generally available globally, we wanted to zero in and focus on getting the lower funnel right in the United States first. As you've heard from all of us today, we now believe we now know with conviction, we have done that. Thus, our international teams have a primary focus right now to drive adoption of the lower funnel solution and in particular, shopping ads format and API for conversions. We're really excited and focused on this to drive us forward internationally. The second area is how we'll drive efficient growth through partnerships. You heard Martha talk about Pinterest opening up third-party demand and Amazon as our first partner here and we're thrilled with the early results. That being said, you also heard Martha talk about the prospects of onboarding additional partners. Similarly, you heard me talk about agencies and how important they are. 60% of spend in the United States flows through agencies. But in Europe, for example, 80% of spend flows through agencies. They're even more influential. And up until last year, we had never done deals with agencies. Now I'm pleased with the fact that my team, leveraging our relationships with the big 6 holdcos have done over 50 deals with Opcos globally. And the revenue running through these agency deals is growing far faster than the business at 39% year-over-year. And we're just getting started. The charter of the agency team right now is to go out and do additional deals with opcos with all global [indiscernible] agencies because we know when we partner with agencies to best tell our story, we can best help their agents, the advertisers that those agencies work with help them better drive growth. And there's a last area here that I wanted to cover, and this is how we're going to monetize in countries where we currently do not exist. So important to note that today, Pinterest has access to only 87% of global TAM. So the MAUs that we monetize get us access into 87% of global budgets. There's 13% of global budgets that we currently do not operate in. And it's our job right now to go after those budgets in an effective way. And we'll do that in two ways. And the first is via export. Now while we have dabbled in export dollars in the Greater China region, consider this year as the first year that we took a concerted effort to really drive success and working with partners. And we've done annual deals now with companies like Baidu, Meetsocial, Blue Media and many other partners in the Greater China region. We're also focused on rest of world resellers. You heard UCAN has announced deals with companies like Aleph and Tyroo. These are our fully staffed, fully trained teams that are going to go into markets where we don't exist today like South Korea, Southeast Asia and the Middle East. And in both of these examples, we're going to capture budgets in these countries and export that revenue through Europe and through UCAN. This is currently growing at triple digits year-over-year, and we're very poised by what we're seeing. This is a coverage game and we're going to go out and do more deals with partners in these areas. But lastly, we're thinking about how we're going to monetize MAUs in countries where we currently don't today, such as South Korea or Southeast Asia. And while we don't have anything to announce today, what I do want to share is this, when we do launch in those countries, we will have fully trained and fully staffed sales teams and reseller partners like Aleph to begin monetizing on day 0. So I wanted to end here in summary with going over some key takeaways from the monetization section, which are as follows. Number one, we have a growing and diversified advertiser base. Number two, we have a unique AI-powered full-funnel advertising solution. We're accelerating our ads product velocity, and we're finding success across all verticals. Three, we are driving more clicks, more conversions and better performance for our advertisers globally via our new lower funnel solutions. And lastly, we are very focused on increasing international growth, be it through our first-party sales team, or through partners. And I'd like to end just on a personal note, as someone who has been at Pinterest for nearly a decade, over the years, I've had to go into some rooms and talk about the promise of Pinterest, who we're going to be or what we are going to do? And it's really empowering, I think, from my sales team as well as for our advertisers to say that we now have a solution that's at parity with market but we also have this unique and differentiated full funnel solution. It's a new day in the lower funnel, and we're really excited to go out and drive better results for our advertising partners. But you don't have to take my word for it. Right now, we're just going to go take a little break, but when we come back, you're going to hear from some of the largest CMOs in the world as well as our CMO, Andrea Mallard, who's going to talk about the value that Pinterest drives for them. Thanks, everyone. [Break]

All right. All right. Welcome back, everyone. Thank you. And first of all, we're getting a lot of great questions. Please keep the questions coming in. And now I'd love to introduce our great CMO, Andrea Mallard.

Good morning. My name is Andrea Mallard. I have been the CMO Pinterest for nearly 5 years. And each year, I speak to hundreds of CMOs who are directly calling me for advice. And it's not just about advertising on Pinterest, of course, I do that as well. But it's also, frankly, about navigating the difficulty of being a CMO. I get it. It's hard out there. It's hard out there for a CMO. It has never been harder CEO, CFOs are turning to their marketing leaders, and they're saying, "You've got to tighten your budgets. But you still have to get us as many new customers or conversions as before" In fact, you've got to do it more efficiently than you've ever had to do it before. And by the way, you've got to command attention in the world without tripping into the crosshairs of any number of sociopolitical crisis or nuances. So I always bring a ton of empathy to these conversations because I really do understand the pressure they're under. Not just because of my very unique vantage point as the CMO of Pinterest. But because I used to be in exactly their position as a former CFO -- CMO of a major retailer who used to advertise on Pinterest. So back when I was personally writing the checks, I remember thinking, this is the platform I've been waiting for. The promise of Pinterest was absolutely incredible. But the time, honestly, it wasn't really paying off. So my incremental top of funnel outcomes were great. I drove a ton of discovery. But Pinterest should have been the most full funnel platform in the history of the world. And somehow it wasn't at the time. And yet the users were telling Pinterest that they were there to shop and they wanted Pinterest to make it easier to do. I also knew that Pinterest was sitting on a gold mine of intent signals and insights and data that they weren't serving to me to show me where my customer was headed. Most importantly, it was also the one place where I didn't need to panic about brand safety or sitting adjacent to the triolic content. I didn't want my brand to be underwriting platforms that were amplifying encouraging the worst instincts of human nature. So I joined Pinterest because I knew it could actually deliver against these enormous inherent systemic advantages, it would be unstoppable. And honestly, it would be that platform that every CMO had been waiting for. So I am pleased to introduce some CMOs who know the pressures of the hot seat and who've survived who are incredibly and rightly demanding and exacting about where, how, why they spend every single dollar who are leading the industry in how they harness the full funnel, how they use data and insights to a massive strategic advantage, how they prioritize even the emotional well-being of all their customers. And who've been investing more and more with us every year since the beginning. So I'd like to introduce on to the panel. We have William White, Tracy Ann Lim, Morgan Brown; and Shannon Reed, who are going to take the seat, please give them a warm welcome. All right. So you're in the hot seat, and we're going to be asking questions of you and your experiences with Pinterest, of course, and in the broader industry in general. So to start, just in a couple of sentences, love for each of you to tell us about your relationship with Pinterest and how it's evolved over the last year specifically and just a couple of sentences we'll start with you, William.

Sure. So first of all, Walmart was one of the first ever advertisers on the platform. And each year, our relationship and our partnership has grown. And I think that the last year, in particular, has been transformational for us as your team has invested more into full funnel. I think that's allowed us to really connect with our customers along their entire shopping journey. And so we appreciate the partnership. We appreciate that you're listening and learning, and we're working together for awesome outcomes for the two of us.

Speaking personally, how are you using Pinterest recently?

I've been building a house for what feels like forever. And so Pinterest was certainly the starting point as we were meeting with our architect and aligning on a vision. It's been the starting point and continued point with our interior design folks and then very much recently, we've been working a lot on landscaping and the feed is full of all sorts of landscaping ideas.

Great. So we're all invited to his house as soon as it's built. That's very kind. Tracy Ann, how about you?

So we have seen tremendous growth on your platform. We were one of the earlier adopters in our category on Pinterest. And now I believe that we are your largest.

You're the biggest since [indiscernible].

Yes. And, that's because we've been able to prove its value. I think we're one of those use cases where we've been able to nail down the Pinterest social platform and Pinterest as a search platform and really put you through the same pace as we would any other acquisition channel, and that's been really able to drive our investment. And of course, when brand safety isn't a moving target, and it's not a distraction, we find ourselves in a position to be able to test and innovate in partnership with you and your team.

That's great. Morgan.

So big personal user of interest, renovations, landscaping projects, but also more recently, how to entertain my toddlers and pre-schoolers and kindergartners on the weekend. So lots of great activity boards and that sort of stuff there. Professionally, I've been working with Pinterest for probably 4 years or so at Wayfair. And really, when my team took it on, it was a little bit of an afterthought for Wayfair. It just sort of ran by itself, but we didn't really see it as a good growth opportunity. And I was like, you guys are missing something like there's a lot of potential here. This is basically the perfect shopping platform. And so we started investing human time into it and felt like we were getting a little bit of traction, but the partnership, especially more recently, especially on the lower funnel side of it has really accelerated and fueled that growth in a big way. So we keep spending more and more. We keep feeling like there's more headroom and more opportunity, and we're super excited about the platform and the opportunity there.

Great. Shannon.

I'm proud that L'Oreal was your first joint business partner 9 years ago, 9 years ago and we've been on the platform consistently and growing, as William said, with the platform ever since this year being probably our largest year on the platform and seeing really accelerated growth. A lot of that due to the measurement and the ability to understand that full funnel, and it really is making a difference on behalf of the brands in our business. On a personal perspective, I have one story where my best friend told me probably 10-plus years ago, what engagement ring she wanted, and It was one of the first pins that I ever pinned on Pinterest personally. And fast forward 12 years or 8 years later, I was able to pull up that image, share it with her soon to be fiance and have that ring made for her.

Wow. That's incredible. That's incredible. What you said, we heard from Malik that content last forever on Pinterest, and that's proof of it right there. So Incredible Okay. Well, so let's get started. So Morgan, let's start with you. So now Wayfair has an absolutely industry-leading reputation for using data and measurement in really, really sophisticated ways, especially at the lower funnel, if you ask any marketer in the world, what's the one word they associate with Wayfair, it's not furniture, it's data. That's what they'll say. And so I'm really curious because we know you're exactly. We know Wayfair has very, very high standards. What made you feel, especially this last year, in particular, that our new lower funnel solutions, were actually going to be able to meet that standard from Wayfair?

Yes. So like I mentioned before, it felt like a few years ago, we were sitting on this gold mine, but nobody really knew how to tap into it. And one of the things that we worked on very closely with the Pinterest team, especially more recently is trying to figure out from a measurement standpoint, what we could be missing like why there wasn't such obvious over efficiencies, if you will, that you could lean into and scale up into. And we had this hypothesis that some of the ways that the product formats on the Pinterest site were structured Weren't giving the same signal back to some of our internal systems. And we had a lot of ideas, but really, the Pinterest team stepped up to the table and met us as peers and brought in really like heavy hitting science and technologists to say like, this is what we think we could partner them with our data scientists, with our engineers, and we could say, you know what, actually, we do feel like there's a bigger opportunity here. And then we started investing in some of the new formats and new product innovations with the Pinterest team to actually redesign some of the flow so that we could get better data for our measurement systems. We could also improve that customer experience by just having a Mobile Deep Linking, the Direct Linking, that really just improved the signals that were coming for us, we were able to lean into that and really scale up a lot.

And I've got this right. I think especially with directlinks, for example, you were seeing a 80% increase in site visits, you're seeing, I think, 16% increase in purchases. So they're conversion data. So there was a real step change when you got that visibility and measurement, which obviously explains.

Yes, 100%. I mean we basically internally been having to apply some sort of like multiplier that our science teams have figured out to sort of approximate what we thought the real value actually really was because we knew intuitively, it was more valuable than we were seeing, but once we actually got the product innovations in place then boom, it came through. So it was, I mean, it was big, it was 3x, 4x, right?

So fantastic. It's great. All right. So now Tracy Ann, let's talk about you because you have been, and as long as I've known you, you've been really obsessed with catching your prospects early, right? So you have a really full funnel, uniquely full funnel approach to, I think, your marketing spend. But you know, obviously, when people come to Pinterest, they're coming to plan, right? We've heard this from Bill Watkins, so if I'm planning a home renovation or I'm getting married, I'm having a baby, whatever it might be, that's a really interesting trigger moment for our financial services reevaluation, right? Can you speak a little bit about how you thought about this? Because I know in conversations we've had, you said, "I want to be there, the very first second, I want Chase to show up with a solution in that moment. Can you just talk about how you really harness that early stage to get to really lower funnel, lower converting actions and outcomes on the platform. It's been pretty amazing.

Thanks. I mean, what I would say it's not too dissimilar to Morgan's journey in the sense that we had a thesis like it is intuitively correct to think Pinterest as planners that just get in there and meet them where their dreams are and see if we can be useful to see if we can add value and utility that will help them convert their dreams into reality. We've done the hard work in partnership with your team to be able to measure that thesis. To be able to prove that getting in early at the earliest possible juncture, has real bottom line performance of value. So one great example on the credit card business, we've been able to see this year that we've, by spending more in the upper funnel, getting there at the very onset of a plan or a dream. We've been able to turn that into incremental accounts and the cost of those incremental accounts is going down. So I think now as I speak to you, that cost has gone down by over 1/3. So there's a there, there for getting in early.

Yes. Yes. But still, again, having that view of the entire funnel. So you're not just happy with awareness, you want to see that translate into the actual sign-up of a new credit card all the way down.

And you're demanding of us to be smarter with our content as well. So we have to make content that speaks to the moment in question. So if you're planning a new home or in my case, kitchen renovation, that kind of thing, it's all about matching that dream, that plan with product or service that ads utility that adds real value.

I couldn't love that word, more utility is really important, right? So again, what we always tell our advertisers is be useful. People are looking, they're already primed to buy. They're already in a mode give them a solution that's helpful in this moment. It's not that you have to distract them into oblivion to look over here at my ad, it's be helpful in this moment, and I think you've taken incredible advantage of that. Okay. So speaking of mounting pressure on CMOs, Shenan, it's so interesting back in the day, I think if you're a CPG leader, such a formidable one, if you were launching a new product, it was like, look, you've got to drive awareness, you got to drive maybe increased consideration, that's what you were held accountable. Now you still definitely need to do that, but I assume if you're like every other CPG leader, I know you're being say cool, and I need you to drive conversion all the way down not just through kind of immediate e-commerce list, but I want to see it in brick-and-mortar. Now again, you've been masterful at using Pinterest in this way. Can you just walk us through how you've managed to launch products on Pinterest and see the results in incremental new customers in brick and mortar?

Sure. And I appreciate the comment on Mastery and Mastery and mastery comes from having great partners who are building the tools to help us get there. So thank you for that. I think the I'll use a very specific example of CeraVe. Hopefully, everybody is using CeraVe. If you're not, it is the #1 dermatological recommended skin care brand available at Walmart. So please pick some up always selling, Always selling. It's a phenomenal product. CeraVe, the Pinterest team came to us with some really interesting stories and stats about how consumers were using the platform to search for skincare routines. And skin care routines, if you're not familiar, often quite confusing for people. Do I use a serum first, or you use my sunscreen last? When do I put on this or that another thing. And so there's a lot of interest in the platform of help me understand in how to create skincare routines. And so we worked with your team to try and create ad units, video ad units that would bring that experience and that storytelling to life. And like Malik said, like the advertising is part of the story, right? And I've said for years that advertising when done well is a service to the consumer, and Pinterest really delivers on that. It is a service ultimately to the consumer. The ads become a part of that experience, and they're adding value, not creating distraction, and what we saw from that solution was we worked with NCS, which is one of our measurement partners, one of your measurement partners to understand the offline sales of this particular campaign. And when we did that, what we realized was not only did we see a tremendous amount of off-line sales, which was great. More than 50% of the sales that we were achieving off-line came from net new buyers. And so we weren't just reaching already existing consumers. We were actually increasing it. And then the cherry on top was that the volume of search on Pinterest for a product like CeraVe, moisturizing cleanser, was 2x and stayed there consistently post campaign. So the long-term effect of that was really tremendous.

And I think that incrementality is such a key. Again, we heard from Martha that the overwhelming majority, almost 100% of our searches are unbranded, right? So you're not just getting people who already love CeraVe though that's fantastic. You're getting people who are looking for skin care solutions, but haven't yet picked their brand. So that incrementality and being able to prove that, I think, is really important, obviously, for . Yes. Okay. So William, so you have, I don't want to embarrass you, but you've recently been named the 2023 Forbes most influential CMO of the year. He is #1 on the list. I noticed, I know this, because I'm #27 on the list, so if you sense resentment, it's real. And I'm going to ask them a really hard question.

When we found out about this list. You had the biggest smile in. I feel like you were happier for me.

Was thrilled for you. Is so well deserved. It really is well deserved, and I'll tell you why. So William has made Walmart Cool for Gen Z. Among many other things he's done. He's made it Cool for Gen Z, and I'd love you to speak to a little bit of how you did that because you're not only having to capture demand. You're having to create net new demand. You've done that on Pinterest. I loved it. I'd love to talk about that.

Yes. I mean, in general, obviously, we're a really big company. We engage with a lot of different customers across backgrounds. And we want to appeal to everyone, but we certainly know that to really appeal and engage with the next generation of customers, we've got to show up differently. And for Gen Z, we've got to show them that we're not their parents Walmart or their grandparents Walmart. And part of that is really opening up the aperture in their mind around what are the categories and where and how to shop with us. And so we're trying to move that perception from our food and consumables place to we're really a destination for style and for fashion. And I think that one of the really cool things that we did together this summer was what we called our fashion Eras campaign. And we were leaning into the fact that during the summer, really retro summer aesthetic was coming into play. And so we built out fashion destinations around '80s looks and '90s looks and 2000s looks. And we dominated the Pinterest spotlight for a week or so throughout the summer that then perpetuated to where fashion Eras, which is something that we develop became a trending thing within Pinterest, and Walmart as a whole, beyond just fashion really started trending. And so the cool thing was we were able to then take all of that demand that we are generating. And with the multimillion SKU product fee that we have, we are able to capture that demand within the platform. And so it's just a really exciting campaign and effort this summer. Which I think has continued as we've gone into the fall and with refreshing looks with fall looks and then obviously moving into holiday, we're excited how the platform can really help us change that perception with a new audience.

Yes. It's, and we'll touch on this briefly in a second. But again, I love how using, because people come to plan the things they're about to do on Pinterest. We really do quite literally see the future first. So based on how the shape of the data is trending on our platform, we can go to incredible companies and say, listen, we think this search is going to spike. We think this is a trend that's going to come. It hasn't peaked yet. It's about to peak in the next few months. Do you want to get in on the ground floor of that upswing? And you did so masterfully, but again, you connected your pipes to us so that you had all the products to fit all that demand. As it was coming up. So that's great for our users. There's no one loses in this equation. And obviously, it's great for you. So really well done. Okay. So Morgan, similar to Williams. So you're seeing us move a little bit more into the big leagues now. And because we have this stronger than ever lower funnel, conversion data and measurement visibility, we're getting access to a lot more of these always-on performance budgets. I'm curious if you can speak to some of the formats and tools that you've been pushing for some time, all of you have been pushing for these for some time that we've that we even bet that we built that you feel like are giving you that confidence that we can access that different bucket of always on spend.

Yes. So I touched on this a little bit earlier, but I'll cover a couple of other ones as well. But just being able to get to our site as quickly as possible, we believe is ultimately better for the consumer. And we've actually heard that mirrored back to us from the Pinterest team, which I think has been really powerful because if you can remove some of that friction, whether that's very technical definition of friction like we're not actually seeing the click on our sites. So our measurement systems don't know that it was actually a good experience for the customer. Or just a customer friction where it's like, yes, If they click three times before they actually get to what they're getting to, if we can reduce and remove some of that, we think everybody wins. And I think it's been born out, right, in the data, we're actually really seeing that come to life. So I think that's probably been one of the biggest things that's the Mobile deep linking and the direct linking, but there's been a lot of other innovations as well that I think have been really fruitful for the partnership. And we're testing into things like adding video on our product catalog, the product feed shopping pins, which I think is exciting because we have a lot of video from our supplier partners that it gets very deep in the carousel on our own site, but like how can we surface that more in different platforms. So that's one. And then there's been a lot we've been doing around kind of more on the measurement technical side, but around using clean rooms so that we can better reach specific customers who are looking for specific things. In a privacy safe way, right? And so I think there's some exciting innovation on that front too.

Well, and now obviously, you're all very sophisticated. You all have resources to have bigger teams in setting up things like clean rooms. I'm curious what would you say to a smaller advertiser who maybe wouldn't, in the short term, think about setting up the clean room system?

Yes. And I think ultimately, it's right, right? It's like there's only going to be a tip of the iceberg that's going to be able to access that. But I think what we're really learning and leaning into and are really excited about is this idea that ultimately, there's so much of a first-party signal. It's so strong of intent, right, of commerce that's coming from the Pinterest platform that you really don't need to rely so much on the targeting type signals that you might on some other social media type platforms. And in that way, it's sort of more similar to like a search engine, right, where the customer is telling you exactly what they're looking for and then the platform is delivering that. Ultimately, you don't need to necessarily know what 10 other websites they've been to in the last 2 weeks or what are their interests or other things that they like because they're giving you the most powerful signal of all, which is that intent, and they're giving it to you in real time. And so ultimately, I think that's actually something that every advertiser can really tap into. And be able to leverage, right?

Agreed. And even as we think about cookies being deprecated, the average consumer doesn't want to feel like they're being chased around the Internet, right? I think we've all had that sensation. So it does feel really good with our first-party signals to have in one place the full funnel, it all happens there over multi-sessions. I think that's exactly right. I've also heard many of you say, at some point, Tracy Ann, that you've seen our pace of innovation pick up and that we're being far more responsive, especially in the past year or two. I'm curious from anyone of the panels if you really felt that, that acceleration have you? The degree to which you felt that acceleration happening, we'll start with William, how about you?

Yes. I mean I think that as you've engaged more in the lower funnel that's allowed us to engage more. And so in particular, I think about the mobile deep linking product that you launched this summer, and for us, when we brought that on board, we saw our really our ROAs on that conversion on that lower funnel go up 15x on a 3-day last touch. Attribution model. And so for us, that has now unlocked different parts of our budget. We've always been on Pinterest for the upper and mid-funnel. So many people start their inspiration journeys there, but now that you've taken it down through the funnel, we're investing parts of our budget that historically, we've really only invested in search type platforms.

And that's, I mean, obviously, for us, strategically, that's really critical as well because the shift away from dollar-based budgets to ROI-based budgets really does change the economics in a really exciting ways. So I'm glad you've had that success. And obviously, we, we expect that to continue for others as well. I'm going to switch really quickly to, we touched a little bit on data insights. I do want to hit this. I think it's really important. You said you used the eras, the fashion eras that was based on some insights. I'm actually going to turn it to Tracey to talk about what you did with credit cards because I do think it was, as you were looking for where Gen Z was traveling. Can you speak to a little bit how you used some of our insights to get you there?

Yes. I mean we have some pretty amazing data in our own [indiscernible]. But what we've learned is that the plus up with leveraging Pinterest information as well as that we're able to see the future a little bit. And so we're pretty good at knowing what happened or what's happening, but understanding where the world is going is both interesting and challenging because it kind of lays out clearly for us what we need to produce and change in our, in the way we think about content and messaging. So that we are hyper hyper relevant and relevancy is a massive [indiscernible] for us, especially with GenZ who have a very interesting relationship with finance and the finance sector. And so breaking through with them is different and requires different thinking on our part. And so one interesting way that we think about that is through travel. And I'm one of the people that are so excited to think about travel catalogs and how we can tap into that in the future. But as a category in its own right, we've been really challenged with understanding Gen Z through that Prism and then driving relevancy with our messages. And actually, in prepared for today, I got a statistic that said that 200% growth in travel interest for Dublin, Ireland, which I'm like selfishly, I think is a bad time. pertaining to Gen Z, and it's something that we could think about in our content generation. It's just -- it gives us those unique insights that we are then able to apply to content, which then makes us more relevant, which then drives performance.

Yes. I mean in fact, what all 4 of these amazing people have in common is they are so greedy about our insights and data. They're so demanding William has become every year to present to his entire team in November, what is going to be trending the year ahead. Then he said, "I want you to actually send me a weekly e-mail that we're going to send to 500 of my employees so they can make real-time decisions on it". So he's given me a ton more work, but nevertheless, that's a hallmark of these great leaders. You -- I mean you're adapting creative directly to say, not just that Gen-Z are gonna travel. They want to travel to Cardiff or they want to travel to this location. I'm going to bend creative to that. I just think that's phenomenal. I think you too Morgan, I mean we do something every year, Pinterest predicts or we say, here's what's going to trend in 8 months and 10 months or in the future. You have this enormous catalog, but you've started badging some of the furniture and the products in your catalog that are actually part of our predictive trends. So you can say, Hey, we were there first. We knew this was going to be fashionable before the rest of the world did and using that as a sort of curation tool, I think. Can you speak a little bit to that.

Yes. Yes, exactly. So I mean we have this massive catalog of 20-something million SKUs, and you can't really surface all of that to every customer. But the beauty of, especially in this day and age of AI and sophisticated algorithms, you can take all this data and actually Curate and recommend a personalized assortment for really everybody -- and so it's been, I think, a really cool opportunity for us to say like how do we curate a particular assortment of pins on Pinterest to lean into some of these like Pinterest predicts and then actually use some of that insights to drive back upstream a little bit and talk to some of our teams and maybe reorganize a little bit of how we're presenting our product to customers.

I mean it's an amazing way to sort of future proof or to derisk where you're spending, where you're investing, not just on the marketing side, but in the future world on the merchandising side as well. Okay. I know we're over time. I'm going to just ask two more quick questions of you, Shenan. So final shift, we talked a little, we touched about positivity and why that matters. I know we've recently, you've done a lot of cause-based marketing. As you can imagine, in beauty, that's a really important thing, the emotional well-being of how the products help your customers feel. Can you speak a little bit of some things you've done recently, which I thought have been really phenomenal in our side and the kind of degree which you think that CMOs of the future are really making decisions not just based on ROAS, but based on this other dimension. I would love to hear you.

Yes. I'll start with the fact that in my position at L'Oreal overseeing the media investment, part of my mission, part of our mission, this organization is I'm as proud of the things we don't do as I am of the things that we do and that means making sure that we're always keeping consumer safety at the absolute forefront of what we do and there'll be moments where we don't opt into that new shiny object because we can't prove that it's going to keep our consumer data safe even if there's gotten great return on investment coming after for other advertisers. And so there's a lot of pride that we take in making sure that we really try to hold those ethics high. The interesting piece you heard about our cause marketing, Maybelline New York, has a tremendous cause called Brave Together and its mission is to normalize conversations around stress and anxiety, especially in Gen Z and giving them tools and access to different resources that are available to help deal with that stress anxiety. As you can imagine, trying to find where to advertise that available tool set to that consumer was an interesting challenge on behalf of the team. The Pinterest team came back to us and said, seeing actually a lift in searches on the platform of people looking for ways to control their stress, things like art journaling as an opportunity. And we were able to turn that into an ad campaign, specifically supporting the cause. It had nothing to do with driving sales, had nothing to do with driving anything related to bottom of the funnel and everything to do with creating a connection with these consumers and giving them the tools that they needed to help manage that stress, and we were really proud to see the brand awareness lift, the cause awareness lift was tremendous. So it was a really nice moment to help that next generation.

That's right. And again, durability, we saw a spike, obviously, in emotional well-being and mental health. Searches that then got associated with your brand going forward. So I think that's not a bad outcome at all. It's incredible. Okay. We're way over time. Thank you so much. I just had a final thing. Obviously, again, these are 4 of the most sophisticated demanding marketers, advertisers in the world, absolutely [indiscernible] absolutely top of your game. Just curious if I had to say, hey, you're feeling bullish on our product road map, bullish on our lower funnel measurement, solutions and new products, bullish on Pinterest overall fair Yes. No? We're good. All right. Thank you so much. Job is done. Thank you, everyone.

Thanks, Andrea. A huge thanks to all of our panelists. Wasn't that great. It was just great. Hi, everyone. I'm Jeremy. I'm the Chief Technology Officer. I've just joined Pinterest 4 years ago last month. And I was really just attracted to the company's mission and the clear opportunity to develop new and innovative ways for people to shop. Inventing new ways to deliver online and off-line retail experiences has been a passion and focus of mine. Before Pinterest, I spent 8 years as the CTO of Walmart, which was an incredible amazing experience. I've built from the ground up complicated systems, catalogs, marketplaces, shopping solutions at both startups and notable companies like eBay, Walmart and of course, now Pinterest. And in recent months, every CTO has been getting one question more than any other. And the question is, how is your company jumping on to the AI wave, and the great news is, my answer is simple because we don't have to jump into anything. We've been a leader in this space for a really long time because as you've heard several times today at Pinterest, AI isn't a fad it's fundamental to everything that we do. Today, I'm going to talk about what fundamental means in practice. We have an exceptional AI team that we've built, how AI leverages our unique signals, our world-class platform how we're delivering for users, advertisers and for Pinterest and of course, our next chapter degenerative AI. Ironically, for us at Pinterest, AI starts with our people. if you've lived in the [indiscernible] for a while, you know that it's been really special to watch the Warriors Dynasty over the past decade. It's felt like a privilege because every time they were playing, they were playing at the highest level every night. And that's how I feel about working with the people and the technical talent at Pinterest. It's not an exaggeration to say that our people are influencing the industry across visual AI, computer vision, inclusive AI and recommender systems. Our folks have led prestigious AI thought leadership associations that taught the most popular AI classes at Sanford and they're even helping shape AI policy at the White House. These folks who aren't following the trends, they're setting them. This astonishing talent has built a world-class sandbox at Pinterest. This is a place where we can be innovative and lead the industry, which is what continues to attract the best people to do great work. It's a virtuous cycle, and it's really difficult to replicate. But don't just take it from me. Our engineering teams have been consistently recognized by independent organizations for all the work that we've done. In fast company alone, we've received awards for being one of the best places to work for innovators. One of the best brands that matter for our work on inclusive AI and an innovative -- innovation by design award for our personalized shopping experiences. And even though we're smaller than lots of our competitors, we punch way above our weight. Together, this incredible team is developing AI that's driving impact across Pinterest. First, it's leveraging unique signals that you've heard about throughout the day, which users give us when they create, organize and interact with our content. We're talking about 465 million users saving to their boards and creating more than 1.5 billion saves a week. They're also scrolling. They're scrolling through their feeds, they're clicking on their ideas and so much more. And with every action, they're giving us new data that tells us what they're interested in, what their tastes are and what they really love. And it's when they use shuffles and boards to put things together, address with a handbag or a grill with an outdoor patio set, they're tagging this data for us, helping us to make sense of patterns and feeding our systems and associations. All of this creates an unmatched network effect at a massive scale that powers Pinterest in so many ways across the company. And now with atomization, we'll only see our intent signals become even more powerful. But we're not stopping there. We keep pushing forward to ensure our AI is state-of-the-art. Thanks to our excellent infrastructure teams, we've been an early mover on GPU serving. And we've been able to scale our AI models to up to 100x with double-digit impact in engagement with minimal growth on infrastructure. You can see from the chart here that we've been consistently increasing our engagement at the same time, we'd be able to reduce our growth on infrastructure spend dramatically over the last few quarters. Let's be clear, it's not normal to grow something by 100x and to reduce its cost. And we've been able to do that aggressively by increasing our operational rigor on infrastructure efficiency, optimizing our iteration, speed and throughput, having a greater product focus and leveraging AI for hight intent use cases to drive monetization. And we believe that there's still upside and it's really significant. When our team and our data and our platform come together, we really deliver for our users, our advertisers and for Pinterest. And frankly, we're setting industry standards. With saves, we've seen a 60% lift from incorporating these intent signals to our image understanding models compared to just using the visual understanding alone. It's a massive lift and it's so essential for user engagement and satisfaction. One prime example of this is inclusive AI, which Sabrina talked about earlier. We want Pinterest to serve the world. That means everyone from everyone, every background needs to feel seen and represented on our platform. We've worked with diversity, equity and inclusion leaders and inclusive product councils alongside of our AI teams to deliver this experience for users, resulting in features that make Pinterest more inspiring for everyone. Each of our inclusive AI innovations have been industry first from skin tone ranges to hair pattern to body type technology, which we just announced. Among our peers, we have set the standard for improving representation online. And the users really love it. With the rollout of our latest improvements in April, we saw a 70% increase in users saving pins from all 4 skin tone ranges. That's just another signal of that our exceptional talent, our unique data and our world-class platform is really hard to replicate, and it concretely improves the experience we deliver to our users. AI, of course, is also benefiting advertisers that Bill and Matt talked about earlier, AI-driven optimizations, power our ads delivery funnel on the upper and the lower funnel. You've heard it throughout the day, on Pinterest relevant ads drive engagement because of the commercial intent to users. AI is the magic that delivers that experience in a seamless way. To meet this hunger for commercial content from our users, we've made a significant switch last year to start leveraging GPU-based serving to grow our model size, to build new features to greatly improve user outcomes from a wider variety of signals. We now have the ability to do whole page optimization, where AI is optimizing the user's ads experience at high intent moments with a strong focus on not hurting the user experience. And the results really are speaking for themselves, and the upside to do even better is enormous. Then there's AI for shopping. This is, as a long-time retailer, one of my favorite topics. What's especially exciting now at Pinterest is that we can do shopping in ways that have never been done before. That's again because we have a special data set and out of the one platform in our space, where people come with commercial intent. Martha mentioned earlier that signals from multi-session shopping journeys will supercharge our personalization capabilities. We're the only platform in the industry that has to deal with this complexity that solves for the upper and the lower funnel of the journey. And we're very excited because, again, we haven't even scratched the surface of the potential. Yet AI has already delivered a 7% increase in visual shopping relevance, taking over 1 billion products from thousands of retailers to deliver even better recommendations in organic and paid formats, and made visual shopping experience look even better. For example, our Shop the Look module increased conversions by 10% on fashion and home Pins. And it's only getting better as more retailers and more catalogs join in. And finally, we're in an incredible position to capitalize on state-of-the-art generative AI modules to enhance everything that we do from ads to users to our back-end systems to employee productivity. You saw demos of 3 areas that we're piloting and developing, and many more are in internal development. The first one is Creative Studio, take your boring product pins and render them into generative lifestyle images. Generative search guides, which break down generic queries in a visual Pinteresty way. And then Personalized Insights, which takes visual search results and tells users verbally how to describe the personalized style. But under the hood, as a CTO, we're always looking at places to improve the back end. Generative AI can improve back-end search, content understanding, taxonomy, and it will make Pinterest even more great for other ideas around the world. And last, definitely, but not least, we can use generative AI and LLM technology to improve internal productivity with engineering specific like projects like coding copilots, data labeling to increase our speed and quality and to reduce our costs on things like trust and safety. And we believe that generative AI will benefit from our unique signals as it will evolve our world-class sandbox in AI that we talked about and continue to make our unique strength in AI even more prominent. By now, I hope you can see that Pinterest leadership in AI has delivered results in every facet of our company. To summarize, our AI team is world class, especially in visual AI. We have one of the best sandboxes and the people in the world. We leverage unique signals. Our AI models leverage high-quality intent signals based on what users do on Pinterest and product associations that they create. We have a world-class AI platform, driving scale, speed to market and cost efficiency. When our team and our data and our platform come together, we're setting new industry standards. We're employing generative AI to show more relevant content recommendations by combining state-of-the-art industry models with our unique high-quality signals to create more delightful product experiences, enhancing our back-end systems and improving internal productivity. We've also improved our engineering output as well by having a stronger product focus, less experimentation, more focused on developing the right products and doubling down on machine learning and AI improvements. But we're not stopping here. We've been a leader in AI for a long time, and it's only becoming stronger and more important for us on delivering Pinterest's mission to create -- everyone to create the inspiration to create a life they love. And now I want to introduce someone, who has taken this tech-driven business that's great for users and advertisers and has energized the new financial framework that our executive team is aligning around. She joined our team earlier this year and she has been an awesome addition. Please help me welcome our CFO, Julia Donnelly.

Thanks, Jeremy. It's exciting to see the team you're leading here in the AI space at Pinterest. I know there's more in store for the future. I know many of you in the room, but for those I haven't met yet, I'm Julia Donnelly. I joined Pinterest as CFO earlier this summer. By now you've seen why I was so excited to join Pinterest. I saw this world-class management team and the unique value we're able to deliver for users and advertisers, which is different from so much of what you see on the Internet. It's also a powerful business model. Let me walk you through it. . In his opening presentation, Bill talked about 3 central priorities: growing users and deepening engagement; improving monetization per user, or ARPU; and driving profitable growth. In my remarks, I'm going to take you through how these business priorities drive our financial framework. First, driving durable revenue growth driven by users, engagement and ARPU. Second, improving profitability, which we're achieving because of accelerating growth as well as rigor on expenses. And third, disciplined capital allocation. Let's start by looking back over the last few years since our IPO. As you can see, we are truly a growth business. We have a unique value proposition that has allowed us to grow market share inside of a very large and growing digital advertising market. We've achieved multibillion dollar scale and a 35% revenue CAGR, since IPO. Pinterest also has high profit and cash flow potential, driven by structurally high gross margins, balanced OpEx investments that continue driving long-term growth, and high cash flow conversion. We've achieved meaningful margin expansion, leading us to a mid-teens LTM adjusted EBITDA margin, up from roughly breakeven at the time of the IPO. Our historical achievements are compelling, and I'm equally excited for our outlook over the next several years. On our last earnings call in August, we told you that we were expecting Q3 revenue growth in the high single-digit range. This represented an acceleration in revenue growth versus the previous 3 quarters, and notably is lapping a Q3 of 2022, where we were growing revenue, while many of our competitors began to decline. We also provided an outlook for year-over-year adjusted EBITDA margin expansion of 400 basis points for full year 2023, doubling our prior commitment for margin expansion this year. As we look forward over the next few years, we believe we can continue the progress on the top line and bottom line that we have demonstrated over the last year. We are a growth company. We believe we can grow revenue faster than the overall market, with multiple ways to get there, resulting in a mid- to high-teens revenue CAGR over the next 3 to 5 years. We also believe that we can continue balancing investments in the business to drive long-term growth and also flowing profitability through to the bottom line, resulting in an adjusted EBITDA margin stepping up into the low-30s percent range in 3 to 5 years. There are some important caveats to note. As you know, we are in an uncertain economic environment across the globe. What we can say is that assuming, one, a stabilized to slightly improving digital advertising market, which is consistent with industry commentary today; two, minimal currency fluctuations; and three, a stable regulatory environment; these are the numbers we feel comfortable committing to based on the information we know as of today. Let me walk you through the components that help us get there. First, let's talk about revenue growth, why we can continue to accelerate and the multiple growth levers we have to help us achieve that goal. I want to remind you of the incredibly large $550 billion addressable market in which we operate and gain share. While we have increased the number of advertisers we work with and our share of wallet with existing advertisers, today we represent only 1% of the market in the U.S. and Canada, and even less than that in Europe and rest of world. There's clearly significant headroom to continue growing our share of this very large TAM. Not only is our TAM large, it is also growing, driven by the underlying secular trend from off-line to online digital advertising across the globe and growing at an 18% CAGR over the last 3 years. In comparison, we have been able to grow our revenue at twice the rate of market growth, at a 35% CAGR, as we have grown our share. Now as you all know, the ad market has been softer over the last 12 to 18 months, and the current outlook over the next 2 years is for roughly 10% growth. Of course, we can't control what the broader market will look like, but we will always focus on executing on our business priorities. Let's walk through the drivers of how we can continue to accelerate our revenue growth. There are 5 drivers of our revenue. First, continued global MAU growth with highly valuable demographics, large remaining international opportunity, and success with Gen Z. Second, engagement growth, which has significantly outpaced MAU growth over the last year, supported by our better personalization and recommendations, content that facilitates inspiration to action, and an increasingly shoppable platform. Third, ad load, which is synergistic with engagement and increasing, thanks to our unique flywheel discussed earlier by both Bill and Martha. Fourth, ad pricing tailwinds driven by our lower funnel solutions. And lastly, third-party demand and international, which represent additional revenue upside potential. Let's double-click on user growth. We have a large attractive user base of over 465 million MAUs. In UCAN, where we are significantly penetrated across the most attractive and monetizable users, we expect to grow users at a rate consistent with recent quarters. In Europe, we will focus on user growth in underpenetrated markets, which will allow us to grow users at a faster pace than UCAN. In Rest of World, we will continue to grow users in underpenetrated markets and expect to grow users at an even faster pace than in Europe. Importantly, these strategies that we have employed over the last year, like reinvesting in personalization and saving, driving penetration of our mobile app, and scaling our actionable and shoppable content that Sabrina, Malik and Martha talked about, are all working. We have fueled a return to MAU growth year-over-year. We are also deepening engagement with our existing users. As you can see on the right, engagement as defined by a basket of metrics that saves, total impressions and sessions, grew even faster than MAUs. We expect both of these trends to continue. Now let's talk about ad load. You've seen this flywheel earlier in the presentation. But I want to reinforce here why engagement and monetization continue to grow together and why it fuels our financial performance. Pinterest is the rare business, where the interest of users and advertisers are aligned, relevant ads on Pinterest or content. When we deliver on relevance, increasing ad load can increase engagement, spinning the flywheel that you see on this slide. This effect can be seen quantitatively as well. I'd like to spend a minute discussing the drivers of the ad impressions growth over time. This is a busy slide. Let's start on the left with a basic definition. Global total impressions, defined as the total number of paid and organic pins shown to a user per period, multiplied by the ad load percentage, equals global ad impressions or the total number of paid pins we show to a user per period. On the bar chart, we have decomposed the drivers of global ad impressions growth. In the blue bar, we are showing you the growth in global ad impressions over the last 4 quarters. This is the exact same metric we have disclosed regularly in our 10-Q filings. On our August earnings call, we noted that in Q2, ad impressions grew 33% year-over-year. As you can see, we have increased this growth rate of ad impressions from 15% in Q2 '22 to over 30% more recently. The new information we are showing you in this chart is a breakdown of the 2 drivers that make up this blue bar. In other words, how much of that ad impressions growth is coming from gains in underlying engagement or total global impressions versus increases in ad load. The point of showing you this chart is threefold. First, this is a helpful way to think about the drivers of our business going forward. Second, you can see that our ad impressions growth is coming from a balance of both underlying engagement gains and ad load increases. Third, you can see that, as we have increased the pace of ad load increases in the first half of 2023, driven largely by whole page optimization, we have seen engagement gains continue, thus underscoring the flywheel effect I discussed on the prior slide that relevant ads or content on Pinterest. Going forward, we expect to continue growing our ad impressions over time as we believe we have significant headroom to continue to grow ad load simultaneously with engagement given the amount of commercial intent on our platform and our focus on ensuring ad relevance. Now let's talk about the drivers of pricing as we drive adoption of our lower funnel solutions. Of course, the industry -- across the industry, there's been pricing pressure over the last year, but what is still true is that conversions are worth more than impressions. If you look at the effective CPMs in our U.S. business today, the average eCPM for all of our lower funnel ad formats in Q2 was meaningfully higher than the average eCPM for all of our upper funnel ad formats, providing a nice growth driver to our pricing overall as we grow lower funnel revenue over time. As we make our lower funnel ad formats, even more valuable to advertisers by driving more clicks and conversions through direct links and mobile deep linking, and as we add third-party demand to our platform, we are also unlocking new always-on performance ad budgets on our platform, thereby increasing competition and pricing in our auction. Now I'd like to provide more details on our third-party demand strategy. As we previously mentioned, we have now opened our platform to third-party demand, starting with our partnership with Amazon ads. By opening our platform to third-party ad demand, we are able to improve ad relevance, thereby enabling increasing ad load, greater mix shift to our shopping ads format and higher engagement. We are also able to increase the density of our advertising options to also support ad pricing, which we just discussed. We believe this third-party demand strategy will be accretive to our revenue growth, and provide leverage in our sales and marketing expense line item over time. International is another source of revenue growth. Let's start with Europe and our efforts to increase ARPU. Over the last year, we have focused on improving monetization on Pinterest by more deeply integrating ads into our products. We focused on UCAN first, and we are now beginning to execute the same strategy in Europe, by applying our third-party demand strategy to grow ad demand, accelerating lower funnel ad products and API for conversions adoption as we have in UCAN, partnering with agencies to expand advertiser relationships, and creating an export strategy to bring demand from non-monetized geographies to UCAN and Europe. As we deploy these strategies, we are confident that we can continue to grow our Europe ARPU. In Rest of World, our ARPU has increased 6x in the last 3 years, but really we've barely scratched the surface. We've recently focused the most on U.K. and monetization, followed by Europe monetization, and Rest of World last. But we are increasingly focused on Rest of World's given the growth opportunities available. Our strategy in Rest of World will look similar to our strategy in Europe, but with a few key differences. We will grow ARPU and also grow users, apply our third-party demand strategy, replicate tenets of our UCAN strategy, including lower funnel and API for conversions, leverage reseller partnerships to drive increased ad budgets, and strategically target the largest market opportunities in Rest of World, such as Australia, Japan and LatAm. We believe there is significant upside remaining in our Rest of World monetization potential. I'll spend the next session discussing the drivers of our improving profitability. In our 4 years as a public company, we have consistently generated positive EBITDA. In the 3 years prior to 2022, we demonstrated operating leverage and the power of our financial model. Beginning in the second half of 2022, we have a renewed focus on cost discipline. As we have slowed the pace of hiring and executed our restructuring program, we are now starting to see the results flow through. Q2 '23 was the first quarter of year-over-year adjusted EBITDA margin expansion since 2021, putting us on the path to deliver the 400 basis points of adjusted EBITDA margin expansion we have committed to for full year 2023. Part of our cost leverage comes from increasing gross margin, driven by optimized cloud infrastructure spend through efficiency initiatives and balanced AI investments focused on improving user engagement and monetizable products. As you can see, we have been able to significantly reduce the growth of cost of revenue over the last several quarters, even as our engagement has grown significantly. I'd like to spend a moment providing more details on our path to increasing profitability in the next 3 to 5 years. We exited 2022 with an adjusted EBITDA margin of 16%. In our last quarterly earnings call, we guided to 400 basis points year-over-year adjusted EBITDA margin expansion for full year 2023. As I mentioned on the prior slide, ongoing infrastructure optimization efforts will provide a modest source of leverage in the near- to medium-term, but we will balance this with ongoing AI and technology investments throughout the next 3 to 5 years. Therefore, we expect the largest sources of leverage to come from the sales and marketing line, driven by increasing sales productivity and growth in our third-party revenue line, which carries very little incremental sales and marketing costs, and from R&D with ongoing focused investments in long-term product-led growth and enhanced employee productivity. In combination, we believe these levers bring us to low-30s percent adjusted EBITDA margin in years 3 to 5. To put this in context, our financial profile has evolved favorably since the IPO, and favorably over the last year given our focus on growth and profitability. At IPO, our EBITDA margin was negative 5%, and our long-term target was 25% to 29%. Today, our LTM EBITDA margin is 14% and our 3- to 5-year target is in the low-30s, a level which we have achieved before in 2021, albeit during the COVID period. We believe these targets are within reach with ongoing disciplined execution, balance with investments and long-term growth. It's worth noting that we also generate a significant amount of cash flow from our EBITDA due to our asset-light business model with minimal CapEx as well as generally stable working capital dynamics. As you can see, we have consistently generated free cash flow that is over 90% of our adjusted EBITDA. And last, I want to talk about our approach to capital allocation. Today is the first time Pinterest will be laying out a formal capital allocation framework. Our capital allocation framework is centered around 4 pillars: First, investing in product and technology innovation, as you've heard me discuss above. Second, balance sheet optimization. Third, dilution management. And fourth, preserving flexibility for opportunistic and disciplined M&A. Let's start with the balance sheet. We have a strong balance sheet, driven by a robust cash balance, undrawn revolver with $400 million of capacity, and no financial debt. Our cash has remained above $2 billion since 2021. This strengthen our balance sheet, affords us the opportunity to evaluate multiple ways to optimize capital allocation. We also seek to manage dilution over time from employee stock-based compensation. Lack of a formal policy and rapid hiring in the first half of 2022 led to greater dilution last year. But recently, we have taken 2 significant steps to manage dilution more prudently. First, starting in Q2 '22, we implemented net share settlement. Second, in Q4 of '22, we authorized a $500 million share repurchase program, which we completed last quarter, well ahead of the 12-month plan to complete the program as we saw openings to be opportunistic with our purchases during the quarter. Today, we are announcing that, going forward, we expect to target 2% to 3% average annual dilution over time. We are also announcing a $1 billion share buyback authorization today, which can be used over time to manage dilution within the 2% to 3% target if needed or to opportunistically buy back shares. To wrap it up, I want to reiterate the opportunities ahead and why we are so excited about Pinterest's future. In Pinterest, we have multiple compelling growth levers from MAU and engagement growth driven by our innovative product focus, ARPU upside driven by the synergy between engagement and ad load, as well as lower funnel progress. Third-party ad demand and international provide additional upside to our growth. These levers will allow us to reaccelerate revenue growth to a mid- to high-teens CAGR over the next 3 to 5 years. The combination of growth and our renewed operating rigor will help us achieve an EBITDA margin in the low-30s percent over that same time horizon. And lastly, we now have a disciplined capital allocation framework in place to be diligent stewards of our capital. Before we get to Q&A, I'd like to bring back Bill Ready to the stage to summarize all that we've been through today. Thanks for your time.

All right. Thank you, Julia. And thanks to our entire team for sharing our story today. We're going to start Q&A in just a bit. But before we do, I want to spend just a minute recapping why we're so excited about our progress and opportunity. First, it starts with why our users come to Pinterest. They come with intent and purpose with specific things they want to do. We help them discover great ideas to plan and curate and take action on Pinterest. They're curating at massive scale, giving us deep and unique signals on user intent. Second, when their plans and decisions are set, they want to shop. Unlike other platforms, commercial content drives engagement and higher monetization on Pinterest. And the opportunity is even bigger as we open up to 3P partners. Third, our product market fit is the best it's been in years, as evidenced by our recent cohorts being the most engaged we've seen in many years. Fourth, advertisers have always loved our brand-safe environment and visual discovery. And as you heard on the panel, they're now seeing a significant increase in performance, with clicks, conversions and measurability all improving dramatically. And as they see that, they're consistently increasing share of wallet with Pinterest, particularly our largest, most sophisticated advertisers. Fifth, AI is a fundamental part of the overall experience. We are now focusing our world-class talent on the core areas of our business that drive engagement and improve monetization. Our strategy and execution give us confidence in the opportunity ahead and in our ability to meaningfully accelerate growth while also expanding margin. Thank you for joining us. We're now going to open it up to questions. And as we set up, please enjoy watching a few spots from our latest brand campaign, It's Possible. Thank you. [Presentation]

All right. Thanks for getting in your questions. We have a lot to go through. Let's start.

Thank you for your 3- to 5-year outlook. Can you help us bridge what's required to get you from today's mid-to-high single-digit growth to the mid- to high-teens growth laid out? And what then could allow you to grow 20% plus, as you mentioned?

Yes. Maybe I'll start with a little bit and then give it to Julia to go further. I think we laid a lot of this out in the presentation. But the key thing that I'd say as a, number one, as I mentioned in my comments, the mid- to high-teens growth is what we have confidence and conviction in committing to today. Our aspirations are well beyond that. We think that our platform with all the things that we shared with you around what we're doing in the lower funnel, what we're doing with 3P, what we're doing for international, that this can and should be a 20%-plus growth opportunity. But we want to make sure we're setting ourselves up for commitments that we're going to deliver on. And so that's how we're thinking about sort of the mid- to high-teens that we talked about in that. And then the things that underline that in the business, each of the things that sort of really support that, I think what we laid out, is that none of these are us betting on sort of a future that we don't yet have sort of deep conviction about. We've got proof points on each of these things, whether it's driving further into the lower funnel as you heard about, whether it's what we can do to expand internationally. We're driving better engagement with our users. Each of these things, we have real tangibility behind this. And now I'll give it to Julia to comment more on sort of the overall outlook there.

Yes. I just want to underscore what Bill said. We are operating today in a market environment that is still quite uncertain. We expect to continue taking share based on all the strategic initiatives that we outlined for you today. And we think that puts us at a mid- to high-teens revenue CAGR over the next 3 to 5 years. For the avoidance of doubt, we think about the low end of that range is roughly 15%. But there's certainly upside scenarios, where we could grow even faster than high teens. If, for example, the ad market overall grows significantly faster than the 10% that's currently projected, or, frankly, if some of our strategic initiatives ramp more quickly than we expect as of today. And so there are lots of different ways to get there. We think there's tons of upside potential, and certainly, internally, we're aspiring and shooting for those higher levels. But we don't want to overcommit too early. This is the mid- to high-teens, we think is a level that we're confident in as of today. And certainly, we'll keep you updated along the way.

Great. How is the business trending in Q3? And can you provide an update to your Q3 guidance given we're near the end of the quarter?

Julia, I'll give that one to you, hot potato.

Knew this one might be coming. So in August at the time of our last earnings call, we guided Q3 revenue growth to the high-single-digits range. And at the time, we said that we expected to fall in the middle of that range. Today, I'm glad to report that we now expect to fall at the high-end of that range. which would be the third quarter of acceleration in a row in our year-over-year growth rate, both on a reported and constant currency basis. We also remain confident in delivering the 400 basis points of adjusted EBITDA margin expansion for full year 2023. So we won't be providing any further details on Q3 today, but look forward to sharing more on our upcoming earnings call in October.

Great. It's great to hear about the higher engagement of Gen Z. How does their shop intent and conversion level compare?

Yes. So we're super excited about how well we're doing with Gen Z. As Sabrina shared in her presentation, it's not only our fastest-growing demographic, it's a very large demographic and engaging very deeply. In terms of how they shop, it's interesting, 10 years ago I get these questions like, are millennials that are going to shop and buy? Well, as we look at how this is progressing with Gen Z, it's pressing very similarly. It's really about life stages. And so for those in Gen Z that progress beyond 18, they start to spend more than when they were less than -- under 18. As they move beyond college, they start to spend even more. And so I think it's following the same progression that I see from when millennials are starting to sort of age into purchasing power 10 years ago. I see the same thing happened with Gen Z. So we couldn't be more excited about what we're seeing there, both in terms of how Gen Z is deeply they're engaged on the platform, contributing great content, the tastemakers. Others are consuming that content. But as we see them aging into demographics, we would expect them to be spending, we see them spending. And then the final point on this is just for the higher engagement overall, we've been quite pleased as we have been solving for more of our users' intent and more of the personalization, it's really resonating across demographics. So while Gen Z has been our fastest-growing demographic, we're seeing that the improvements we're making are broad-based across demographics and broad-based across geographies. So I think that bodes really well for the scale and leverage of the work that we're doing.

Great. How do you plan to use your $1 billion share repurchase plan? And why not give a time line?

Julia, you want to lead us off there?

Yes. So we think about the $1 billion share repurchase authorization as part of the broader capital allocation framework that we outlined for you for the first time today. Obviously, a big part of that is also committing to a forward target for 2% to 3% average annual dilution over time. So the $1 billion share authorization can be used to help us manage to that 2% to 3% annual dilution target over time or to opportunistically buy back shares. We aren't committing to a specific time line today for use of that, but we do intend to use it over a multiyear period. And just as a reminder, this new program and authorization is in place really to replace the existing $500 million share authorization that we authorized in Q4 at '22 and just finished executing last quarter.

Great. How much of the high teens revenue outlook is embedded from Amazon and other partnerships, Bill?

Yes. So as we mentioned a couple of times, that outlook is really driven by things that we have clarity on today. So while we're not breaking out third-party partnerships specifically, we are well down that path. Martha covered this in her presentation, where we're far enough down the path that we're seeing that bringing in 3P demand is working really well. And it's working well in the context that we laid out of saying that we believe relevant shoppable ads on our platform can be complementary to engagement and let us take ad load much higher. We are well down that path and have seen all we need to see to have a really strong conviction, both in what we can drive with the Amazon partnership as well as how that sets us up for additional 3P partnerships that can bring more relevant shoppable content onto the platform. So while we're not breaking it out, as Julia and I have both said, that mid- to high-teens revenue growth is what we have confidence and conviction in. And that confidence and conviction is really bolstered by what we're seeing across all of our programs, including in 3P, where if you rewound the clock to earlier this year and said like, hey, Bill, like what's your best case scenario for how 3P could go? I would say we are exceeding those things on both time line of implementation as well as what we're seeing on the relevance that we're getting, which is really key to unlocking that increase in ad load. And maybe it's a good place to pause, like I know, Martha, you've been very close to that in driving that. Do you want to comment a little bit about on what we're seeing with Amazon and how well those results are going with the relevancy and those things?

Yes. Well, I think just as you said, it's, I think, going even better than expected. And so while it's still early, we're seeing really promising results, that we've been looking at the improved relevance across both search ads as -- on search as well as related pins. And on search, we've seen more than a 50% increase in relevance. And on related pins, we've seen more than 100% increase in relevance. And what's worth noting here is that we've done -- we've seen these gains not just for kind of core categories like fashion and home decor, but also some of these longer-tail unmonetized verticals. So we see real opportunities to both drive more relevance and increase ad load across a lot of the commercial intent that we see across the platform.

What are the key elements of building product, platform and execution that can close the gap between current ads performance and advertiser budget momentum from today and into the next few years?

Well, I mean, I think we've talked about this quite a bit through the presentation. The promise of the full funnel, Pinterest has always had that promise. The low funnel was sort of the missing puzzle piece in that. And you heard it from our advertiser panel here today, as we're bringing in that low funnel and making that work. It's not just that the low funnel is working. It's that by fixing that missing puzzle piece of the low funnel, it's making the problems of the full funnel finally work. And while we are well down that path to give us real conviction that there's a lot more to go there, we're still relatively early in our journey. So those key elements, like Julia stepped through these in her presentation around what we're seeing in terms of the ability to drive favorable pricing as we drive further into the lower funnel, for us to continue driving ad load expansion as we simultaneously drive increased engagement, I think it's a fundamental point that oftentimes, particularly in social media, where the user doesn't have commercial intent much of the time, that there's a trade-off between engagement and monetization. Here we're proving out that because user has commercial intent, the right relevant ads actually can be complementary to engagement. Those things not only do -- are those sort of the building blocks, we are well down the path with strong proof points on those, but with a lot more execution and opportunity ahead over the coming years.

At what scale do we need to achieve the low 30% EBITDA outlook? And is the margin expansion seen as a steady build over the period or a front-end or back-end loaded?

Yes, this is the one Julia and I talk about a lot. Maybe Julia, I'll let you kick it off.

Yes. So we are thinking about it as a steady build over the period. I think the precise language I used earlier was stepping up into the low 30s percent range in 3 to 5 years. And so the reality is this is a business with very high profit potential. You've seen us demonstrate the profit potential during 2021. If we wanted to run the business today at 30-plus percent, we could, but we don't think that, that's the right thing to do. We think that there's tons of long-term growth opportunities to continue investing in. We think we're a growth company. And we think we can do both over time, both accelerating revenue growth and getting up into that low-30s range over time.

Yes. So this is -- we've seen the business at 30% margins before, we know, structurally, it can support it. But we just had huge growth opportunities and we're going to continue that steady disciplined approach and Julia and I are in lock-step on always balancing these things, sort of you all see steady progression on margin expansion, but also we're delivering the right investments in growth to balance that along the way.

Great. How should investors think about the pathway to unlocking the international opportunity in terms of the runway for MAU growth, ability to drive rising engagement and utility, and key execution points to align revenue growth with the user base. Are there any structural differences, positive or negative, that might impact your international monetization compared to your peers?

Maybe I'll start off there and then, Bill, I'll give it to you in just a second. So Bill laid a lot of this out in his part of the presentation, but a couple of things I'd mention. First, the commercial intent of our users, the way our users behave in a fundamental way that's different from other platforms, the curation they do, all those things. that's really consistent across geographies. So as we have leaned back into our core competencies, as we have leaned into our differentiators, we're seeing that resonate across geographies. . So oftentimes with international, when the first question I always ask, I've led a lot of products that we're in hundreds of markets, one of the first questions I ask is like, do we have to build a different bespoke market, a different bespoke product to reach these other markets? What we're finding is that our product, when we lean into our core differentiators, that's resonating across markets. And you see that reflected in our MAU growth. Our international MAU growth is even stronger than our growth in our more mature markets. In addition to that, the things that we're doing to drive actionability and monetization, those things are working across geographies as well. So from a product perspective, we think we have the right things that are working for global rollouts on these things. Then it's a matter of how we go capture that value that we're creating. And that's where Bill and the sales team has laid out a really good multipronged approach around, yes, there's scaled partnerships, but then also a lot that we're doing for the larger markets to go drive our efforts directly in those markets. I'll give it to you, Bill, to share more there.

Yes. I would just reiterate, one, we think there's a clear pathway, and there's 4 things that we're focused on. First is just the adoption of our lower funnel solution, which would include our shopping ads format, all formats leveraging product innovations like mobile deep linking, indirect links, and then driving further adoption of the percentage of revenue supported by API for conversions. In addition to that, just driving efficient scale and growth via opening up additional third-party demand, furthering our partnerships with agencies globally, and doing continued big deals with them. And then lastly, our approach with export and reseller partners. That's how we're thinking about that pathway.

Yes. And we're well down this path. We've got proof points on this, as Bill shared in his presentation. I do think the unlock around scaled efficient distribution through partners, both 3P advertising partners as well as resellers and others that Bill talked about. Those are meaningful unlocks that should let us go even faster and do it in ways that are a very efficient cost of sales for us.

Shifting gears a little bit. Google and Meta have significantly more AI engineers and researchers than Pinterest. What are you doing to retain your AI engineers? And given all of the recent advancements in AI, how do you compete with these larger companies?

So we've been able to attract some pretty amazing talent, maybe I'll give it to Jeremy to talk more at that.

Yes, thanks. I'd love to answer this question. I actually brought one of our experts here today just in case there was a deeply technical question. Deepak Agarwal, why don't you come up and talk. He's our Head of our ATG team, PhD in statistics and pretty smart guy overall. He talks every day, what do you think?

Thank you for the question. So given how foundational AI is to everything we do at Pinterest, as you all heard throughout the day, I think this is a very important question. So thank you for the question. So look, I think in addition to our company mission, which is a huge draw for every AI engineer in the company, we believe there are 3 things that help us both retain and hire the best AI talent that is out there. Number one, great problems. So great AI engineers thrive on solving hard, complex problems that take them out of their comfort zone and create new innovation opportunities along the way. And as you have seen and heard today, we have plenty of those at Pinterest. Optimizing the entire inspiration to action funnel for 0.5 billion users, creating novel computer vision tech that makes the Internet more inclusive, blending ads and organic seamlessly to provide disproportionate ROI to advertisers, as well as improving pinner experience. These are just some examples of the problems that our AI engineers solve at Pinterest. Next up is data, great data. I mean as you may have all heard, AI is only as good as the data it is trained on. In fact, I will make a very bold claim. It is impossible to do great AI innovation without great data, like, period, like, that's not even possible, given in this day and age. So we have plenty of great data at Pinterest, like billions of searches, billions of ideas curated every single week. This is exactly the kind of data foundation that empowers all our AI scientists and engineers to innovate every single day, adding more pinner delight, more advertiser ROI along the way. And finally, last but not the least, the impact. Now we may not have as many AI engineers at some of our competitors, but I can assure you with 120% confidence, the impact they have on the business is disproportionately higher than they would have at any of these other companies. And again, finally, just to end, I want to also mention that whatever I talked about for AI engineers is true for all our employees. In fact, having done this for many, many years, I can tell you, AI is something that cannot be done just in silos by AI engineers. It takes a village to get AI right, and I'm so proud of the AI ecosystem we have built at Pinterest today. So thank you for the question.

Yes. Thanks, Deepak. This underscores -- this is something I found true for my whole career, that having a great sandbox attracts great engineers. And if you pair that with a great mission, you get really great engineers. And so what Deepak and the team are doing. It really is a fantastic pool of talent that Deepak and the team have assembled on us.

Can you talk about, once you identify shopper intent, what determines in real time, whether you'll reach out to Amazon for ads? And is there potential for Amazon merchants to ultimately be included in the pins option?

Yes. So we're thinking about this -- Martha walked through this in her presentation. We think about this in a very integrated way. But at the end of the day, we control relevancy on our platform. And so when we see shopping intent, we have our own catalog. Partnering with Amazon lets us bring a lot more great shoppable content on the platform as well. So we're going to make those calls out to make sure that there's relevant content available. And then we're blending those things in into an integrated experience for the user. That's one of the questions we've gotten, in terms like, hey, why is this taking months or quarters to implement? Is like, well, this isn't just a display ads implementation where you're just showing display out that may be irrelevant to what the user is doing at that moment in time. This is deeply integrated where we understand the user's intent very well. And then we're pulling across multiple sources for great shoppable content. And the fact that we have built that in a way that we can look across multiple sources as organic 3P that sets us up well as we think about Amazon has been an amazing first partner. There's a lot more for us to do there, but that sets us up well to go for additional partners as well, that we're actually thinking about how do we take content for many sources, and then marry that with our users' intent to show them great relevant shoppable content.

Great. You mentioned the significant opportunity to make gains across the male demographics and emerging categories like men's fashion, auto, finance and travel. Can you talk about your recent efforts and key priorities to drive growth in these areas over the next 1 to 2 years? And as you look at the addressable market a couple of years into the future, how do you envision the global user split in terms of male versus female users?

Let me get this one to Sabrina. She's spoken a lot about this and what we're doing there. So, Sabrina, over to you.

Sure. Look, I talked earlier about some of our efforts just even in the most recent year, right, where we were actually able to increase users on men's fashion 27% year-to-date, auto is 22% year-to-date. And the way that we did that was actually really looking at our product catalog. And so you look at the men's fashion, where you increased 70% the volume that's in there. And that, frankly, from there, you've got all of that mature -- that data that Deepak mentioned, so that you can actually serve up the right content for folks. One thing I do want to take a step higher and say, what is it that we're trying to do? We're really trying to attract those users in these categories that are the influential ones, they are engaged with them, and they're spending. And so if you look at some of our categories, as we skew towards shopping type areas, many of them do have this balance. If you're looking at things like beauty, you're looking at things like fashion, you're looking at things like home decor, that's where you're actually getting some of that demographic split. I don't know that we actually target the specific demographic split so much as finding the right users in each of these categories.

Yes, I think it's a really interesting point that if you looked at retail broadly, I think you'd see a split pretty similar to what we have. Like at the end of the day, our split is driven more by where spend is being driven and what are the sort of -- what's the content and what are the categories that's driving that spend? And I think you'd actually -- we get this question a lot. I actually think if you looked across retail, it'd vary from 1 retailer to the next. But across retail generally, I think you'd find a split pretty similar to what we have, which is we're getting the people that are spending, which is, in an advertising business, that is a heck of place to be.

Great. The API for conversions data is great to see. Can you help us understand what's happening with the 70% plus of revenue from advertisers, who haven't adopted it yet? Has their growth or declines improved from what you stated in May?

Yes. So I'll start with this and then give it to Bill Watkins. As he said, he is laser focused on driving the adoption of this. So one thing that's important to remember is that this is a very recent product for us, right? We've only just -- this is in beta, is sort of late last year. We then took it to GA. We're really only a couple of quarters in to -- a few quarters into the adoption curve. And then you pair that with the lower funnel products that this is helping to measure, which are really recent, like mobile deep linking that didn't come out of beta until just a few months ago, so we're really early in the adoption curve. But each of those signals that we've talked about, as we continue down that curve, we're seeing that hold. You heard it from advertisers on the stage up here earlier. As they're implementing measurability, they're seeing more performance from Pinterest than what they realized they were getting. So Bill, I'll give it you to talk about how you're driving the team through more implementation there.

Yes, just to build on that, again, it's early on, but we're pleased with the adoption that we're seeing. And this adoption needs to take place. Cookies are going away. The mechanism for how you track conversion visibility and attribution, it's evolving, and API for conversions is the way to do this. And while we are pleased to say that we've doubled the percentage of revenue supported by API for conversions this year to 28%, all lower funnel revenue, we want that to be supported by this -- by this product. So as we're thinking about really accelerating adoption, I'm really proud of the operating discipline of the sales team, be it just through our general OKRs that we have within the organization. But we have multiple incentives in place, be it for the sales teams or directly for advertisers. We're also working very closely with Martha and the business development team about how we go out and strike deals with other partners they can bring on multiple advertisers to adopt right away. So these are the ways that we're thinking about accelerating adoption of the API for conversions to make sure that's all of our revenue in the lower funnel, we have maximum visibility and attribution.

Yes. And then one final thing on this, like nothing helps adoption better than having great referenceable clients that are saying you're getting great results. You saw them up here on the stage today. If you're an advertiser and you're navigating through having to go do new measurement implementations as cookies go away, all those kinds of things, you're thinking about like what do you prioritize next? There is no better fuel for that than seeing the largest, most sophisticated advertisers saying, not only is this a great measurement tool that's helping them on Pinterest, but that it's a new day at Pinterest and the low funnel is real, and they're getting clicks and conversions at a scale far beyond what they got from Pinterest before, that is just gold in terms of being able to go out and get the next advertiser signed up. And so again, you all heard it straight from them today. That is a phenomenal place to be in terms of those referenceable clients being the largest and most sophisticated, and now everybody else falling in behind that.

All right. Talk to us about the road map for adding additional 3P partners. Is the infrastructure and auction now fully built such that newer partners can ramp at a faster pace?

Yes. So Martha has been all over this, leading the effort here, so I'm going to give it to her to respond to that one.

Well, the short answer is yes. We've said all along that while Amazon ads is our first partner, we're building for a medium to end state, where we will have multiple partners integrated. And so every place that we've built, as we brought on Amazon ads, has been laying the pipes to allow for that state, where we have multiple partners. I think it's worth reiterating also, and Bill, you mentioned this, that this wasn't just bringing display ads and traditional display ads onto our product. What we know is that when we have high relevance, when those ads are highly relevant, they serve as content. And that allows us to increase ad load. And that's exactly what we've done here, is we've built this, is that we've brought the sponsored product ads from Amazon and we're building it in a way that we can bring on more types of shopping ads to serve the commercial intent on our platform. So as I said earlier, we've seen really meaningful progress, and we continue to build for scale. The last thing I'll note is that, as Matt and Jeremy mentioned, through whole page optimization, we can dynamically flex ad load. So that when we have relevant ads, we can serve them as content. And that I think is also a really meaningful lever for us.

Great. Can you talk about the strategy and efforts involved to build awareness for your tools and onboard long-tail SMB advertisers?

So I'll lead off on this and then give it to you, Bill, to share more. Over the course of the last 15 months or so, we had to get really focused on making sure that we solve for buying experience, make a step function improvement in our ad tools, both in terms of measurement as well as solving to that low funnel. And of course, we started out with home market and largest advertisers first. But again, we are seeing that these things are broadly applicable. And one of the things we're doing is really finding scaled ways to reach SMBs. So we've talked about partnerships like Shopify and WooCommerce and others, Bill hit this in his section. 3P ad partners also bring a lot of aggregation point to that. But then we're also getting really efficient at our own selling into the target-rich areas of SMB. So, Bill, I give you to talk more about that.

Yes. Just to reiterate, the strategy here is to acquire, to retain and to grow. We do have a global sales force full-time that works with the head of the SMB segment itself. And then, to Bill's point, we think day in and day out about efficiency and scale, we work very closely with Shopify, with WooCommerce and other partners, as well as those SMB advertisers. And then you heard Matt talk about just the advancements in our systems and tools, rolling out 7 new products, but specifically the advancements in ads manager. You heard Matt talk about just the efficiency and campaign setup, the advancements in business manager. And then, of course, at and artificial intelligence. It's these sorts of things that all partners, but SMBs in particular, really need to scale. So we're really pleased with, I think, the advancements that we're shipping on the product side to help all advertisers but to help SMBs grow.

Right. On ad load growth expectations, can you talk about what you believe is a ceiling for long-term growth?

Sure. The headline is, I think it can be a multiple of where we are now. If you look at analogs that have high commercial intent, I'm not going to disclose any like nonpublic information, but like as a user, you just go count the ad slots on the page. And when you go to places that have more intent, strong intent, search engines or retailers they have brought a lot of ads into the platform, things like that, you're going to see ad loads in the 50%, 60% plus kind of range when the user has intent. And so we are a long way away from that. And to be clear, getting to that would be multiyear and it's when the user is in a commercial intent mode. But that's a multiple of where we are today. So we have a lot of runway to go. And I think another thing that's really important to understand and the multiple growth levers in our business is that, one, we found a way for ads to be enhancing of engagement, that the ads are great content that help the user do the thing they're trying to do. When the users are coming here for window shopping, but all the stores were closed, well, you didn't come back as much if all the stores are closed. Now they're opening the stores, a lot of that with ad content, the users want to come back more because now I can window shop and get the thing that I wanted. So that is how you get that sort of connection with engagement, and ad load can go much higher. But then there's also a mix shift happening, a pricing shift happening that before we had sort of upper and mid-funnel, but the low funnel was the Achilles' heel. Well, the low funnel pays at a multiple of the upper funnel as well. So not only are we driving to a higher ad load to satisfy that commercial intent, every spot on the page as we drive to the low funnel works harder and harder for us, both in terms of the engagement gains that it drives as well as the pricing that it drives, given that, if you're an advertiser, go talk to the advertiser, they pay a lot more for a clicker conversion than they do for an impression. And before we were selling a lot more impressions as we're shifting that more to selling clicks and conversions, better for the user, better for the advertiser, and every spot on the page is working harder for us. So there's multiple levers there that give us conviction that we've got a lot of runway to go on that, and especially bolstered by the fact that it is not taking away from the user, it is enhancing to the user.

Great. Maybe time for one last question. To what extent do you believe you need to grow the number of MAUs to be able to sustain above industry growth rates in the U.S. and Canada? If so, what steps can you take to grow U.S. Canada user base that still account for a large percent of your revenue?

All right. I'm going to give this one to Sabrina, but it's all about depth of engagement with the user. So Sabrina and her team are driving that. So Sabrina, I'll give it to you to share more about what we're doing to drive depth of engagement. .

Yes. I mean we talked a little bit about how we want to drive that engagement. We talked about personalization, our investments in saving, and then really on that curation side, and we're seeing that resonate with users. We think as we delve into more of these features in these areas, we're really going to build deeper engagement. Look, I think there's a number of different ways we can actually do this. One is actually we see that engagement already working with Gen Z, and we've talked about how that engagement is increasing. Okay, I'll drop 1 fun fact. As actually we look at the content that Gen Z is creating, it's actually the content that resonates the most with all demographics. So I think the key is we all want to be hip and cool. And so what's happening is as we get that engagement from those users, it's -- and that content that they're creating, we're giving them opportunities to create, it's invigorating our entire base. So both that, combined with what we talked about earlier in increasing, developing this content to increase in additional verticals, all of that, we think, is really going to increase the engagement of our existing users.

Great. Well, this concludes our Q&A session. Thank you all for participating. And this also brings our Investor Day to an end. Thank you all for attending. And we really appreciate your interest in our company. We look forward to continuing the dialogue in the future. And we will put that to an end. Thank you very much.