Pinterest, Inc.

Andrew Somburg, Investor Relations and Treasury for Pinterest Good afternoon and thank you for joining us. Welcome to Pinterest's earnings call for the second quarter, ended June 30, 2025. My name is Andrew Somburg and I'm Vice President of Investor Relations and Treasury for Pinterest. Joining me on today's call are Bill Reddy, Pinterest CEO, and Julia Donnelly, our CFO. This conference call is being webcast, and we are also providing a slide presentation to accompany our commentary. Please refer to our Investor Relations website at .pinterest.com to find today's presentation, webcast, and earnings press release. Some of the statements that we make today regarding our performance, operations, and outlook may be considered forward-looking, and such statements involve a number of assumptions, risks, and uncertainties that could cause actual results to differ materially. In addition, our results, trends, and outlook for Q3 2025 and beyond are preliminary and are not an assurance of future performance. We are making these forward-looking statements based on information available to us as of today, and we expressly disclaim any duty or obligation to update them later unless required by law. For more information about assumptions, risks, uncertainties, and other factors that could affect our results, please refer to our most recent Form 10Q and Form 10K, each filed with the SEC and available on our Investor Relations website. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures is included in today's earnings press release and presentation, which are distributed and available to the public through our Investor Relations website. Lastly, all growth rates discussed in today's prepared remarks should be considered year over year unless otherwise specified. And now I'll turn the call over to Bill.

Thanks, Andrew. Good afternoon, and thank you for joining our second quarter 2025 earnings call. Over the past three years, we have made meaningful progress in transforming our product and business to take advantage of the full potential of Pinterest. This means seamlessly enabling our users to have dynamic, multi-session journeys that take them from inspiration to action, while allowing advertisers to connect with the user across the funnel and ultimately drive performance outcomes. In order to do this, we're leveraging AI tuned on our unique curation signals to deliver increasingly relevant and personalized content. This drives further curation behavior, which provides us with even greater first-party signal for ever-improving actionability across our app, all while distinguishing ourselves as a place for positivity and belonging. As a result, Pinterest is resonating with our users more than ever before, and we have found our strongest ever product market fit. It's abundantly clear that Pinterest is an AI winner. We've never been more popular or valued by our users and more performant for our advertisers. Our Q2 results clearly showcase that our increased product velocity, combined with our consistent execution against our multiple ways to win, is leading to durable growth. We ended the quarter with 578 million MAUs, an 11% increase year over year, marking yet another quarter of record high users. At the same time, we generated Q2 revenue of $998 million, up 17% year over year, as we continue to be a vital partner for advertisers across a range of verticals seeking to reach our leaned-in users. Our consistent performance and ability to take market share demonstrate the effectiveness of our long-term strategy and laser focus on delivering value for our users and advertisers. Pinterest has been at the forefront of visual search and has helped create an entirely new way in which users discover, explore their tastes, and ultimately shop. As we have significantly improved the relevance and personalization of our content using AI, we've become a destination for our users to explore their expansive set of commercial journeys. As I've shared before, 100% of our reported monthly active users are logged in, and approximately 85% come to our mobile app directly. They are coming for new types of purely visual search experiences, particularly in moments where a user may not have the words to precisely describe what they're looking for or will know it when they see it. The visual nature of our platform is particularly attractive to Gen Z, who's been raised on an internet of visual content and thus seeks out information differently than other generations. Pinterest offers the ability to visually explore in a more focused way that is distinct from other discovery platforms that are more entertainment-driven rather than intent-driven. Today, our platform is resonating with Gen Z more than ever. I'm excited to share that over 50% of our monthly active users are Gen Z, which speaks to the fact that we've built a platform that is deeply resonating with the next generation of users and shoppers who are influential tastemakers, content creators, and a lucrative audience for advertisers to reach. We see that our users, including Gen Z, value our platform for a number of use cases. Specifically, the visual nature of our platform lends itself well to use cases including fashion, apparel, beauty, food, beverage, and home decor, which are some of the core use cases on Pinterest. While those categories continue to be strong, we find that users across demographic groups leverage Pinterest for a broad range of moments in their lives. At the same time, we're continuing to broaden our audience across generations and gender. For example, we're seeing our male users come to Pinterest for searches like rock climbing aesthetic, which are up 95% year over year. Whether it be a college student searching for their next winter break travel destination, a new mom looking for parenting tips, or even actor Patrick Schwarzenegger creating boards to immerse himself in the characters he's playing on screen, there's something on Pinterest for everyone. As users come to Pinterest for a wide set of use cases to enrich their lives, we gain rich first party human curation signal at large scale as they find inspiration, curate their tastes, make product associations, and ultimately take action. This proprietary signal is powerful for multiple reasons. First, as I just noted, all of our MAUs are logged in, with most coming directly to our mobile app. This means our users express their intent to us directly through what they search, click, or save to a board. Next, our signal comes from the hundreds of millions of users actively curating through boards and collages over their multi-session journeys. Together, this network of many billions of associations between pens, searches, boards, products, and users on our platform comprise our valuable taste graph, a signal that we believe to be unique in the Western world that allows us to make highly relevant recommendations. And the more we've doubled down on curation through improved board functionality and new content formats like collages, the more dense our taste graph has become. In fact, as I've mentioned in previous quarters, our taste graph has grown over 75% over the last two years. And finally, because so much planning and saving activity happens on Pinterest, which is often a leading indicator of purchase intent, our signal provides valuable, forward-looking insight. As a result, while some platforms may provide a -in-review recap of what consumers have already done, our data allows us to uniquely publish an annual report called Pinterest Predicts, where we share what is not yet trending but very likely will be in the year ahead, based on what users are planning and curating today for purchases in the future. And given the strength of our data, over the last five years, 80% of our predictions have come true. The signal we garner from user activity is the basis of our Leading Edge AI recommendation systems, which we use to identify and surface personalized and helpful content to our users. AI is a core competency of Pinterest and is deeply integrated across virtually all facets of our business. With our world-class engineering talent and large data corpus, we've developed our own proprietary AI foundational models for use cases that are uniquely applicable to the visual nature of Pinterest. For example, last quarter, I talked about the launch of our multimodal AI model powering our new visual search experience, currently live for women's fashion. This new user flow allows users, for the first time, to search and refine their tastes with both image and text inputs on our platform. Our proprietary in-house built multimodal AI model that powers this visual search experience and is trained on our unique data set is 30% more likely to identify and recommend relevant content from our corpus than leading -the-shelf models. Building off this momentum, this quarter we launched a proprietary generative retrieval model on our search and related surfaces to drive further improvements to personalization across the platform for our users. This model, built completely in-house, is utilized within the early stages of our content recommendation system and is trained on past user activity across all our surfaces and our taste graph of how users associate our corpus of tens of billions of pins together to generate an initial set of potential pins to show a user. Due to the sophistication of this model and the breadth of content and activity it is trained on, it can recommend more relevant and deeply personalized content for our users, while also balancing the distribution of fresh content, given it is more effective at predicting what a user might like to see. Another example of how we integrate AI to enhance the relevance of the content we serve our users is through the use of large language models in our search recommendation algorithm. Leveraging LLMs in this capacity, we can ingest complex and conversational search queries, converting them into a format that our models can easily understand and process more effectively, thus leading to better content recommendations for our users. Our investments in driving deeper relevance and personalization for our users has led to cumulative gains across the business. Notably, we observed a 230 basis point lift in our search fulfillment rate year to date, meaning we're connecting users with more of what they're looking for when they're searching on Pinterest. Over the past three years, improvements to relevance and actionability have been at the core of our business transformation. The compounding impact of leveraging our rich first-party signal within our AI to drive relevance, combined with our efforts to make it easier for our users to search, save, and shop, is reflected in our all-time record users, including the outsized strength in Gen Z I described earlier. As we've improved actionability, we've driven increased value for our users, and we're seeing a greater proportion of our users take action. This is important because the deeper a user engages with the platform, the more likely they are to be retained, and the more effectively we're able to monetize. We see this particularly clearly in our YouCan region, where we've driven the most significant improvement to actionability across the platform. In YouCan, the retention rate of users who take action, like a search or save, is notably higher than those who engage only in view-based behavior. That retention rate increases even further as a user moves down the funnel and engages in outbound click behavior, and we see a similar pattern of monetization where users who take action drive significantly more revenue than those who do not. We're helping advertisers capture this lower funnel intent on our platform by significantly improving our ads relevancy, as well as building the foundational components of a performance ads platform with tools like Mobile Deep Links, Direct Links, and Pinterest Performance Plus. This has created highly relevant shopping recommendations paired with seamless buying experiences, particularly benefiting our retail and e-commerce advertisers. We are also leveraging AI to continually improve the overall personalization and efficiency of the ads we show users. These always-on efforts are resulting in higher click-through and conversion rates as we optimize our AI models to better understand our users' tastes and style. For example, in Q2, we significantly improved the performance of our large-scale conversion models by incorporating more sequences of signals about a user's commercial journey on the platform. By strengthening our training data in this way, we can more accurately predict ads that resonate with our users. In our early A-B test, this launch drove a 5% increase in conversion rates for ads on our lowest funnel OCPM bid type. And while we've made tremendous strides in improving relevance and actionability for our users, we see continued runway ahead as we enable new seamless shopping experiences across various categories across our platform. Take food and beverage, for instance, which is an endemic and often daily or weekly use case on Pinterest for users looking for inspiration for recipes, meals, or events. Historically, we lack the functionality to help users take action on the products they'd want to buy in this category. To address this, in Q2, we announced a strategic partnership with Instacart. Through this collaboration, Pinterest ads will soon become directly shoppable via Instacart, allowing users to complete a purchase in just a few clicks. Practically, this means we can make a recommendation to a user for a great cocktail recipe based on our knowledge of their taste, and the user can immediately order the necessary ingredients for delivery to their door. This provides CPG advertisers with a powerful, performance-driven, and actual way to connect with Pinterest users. The partnership also empowers brands advertising on Pinterest to leverage Instacart's rich first-party retail purchase data to effectively reach high-intent shoppers. We also anticipate rolling out additional -to-cart and buying functionality for CPG advertisers in the coming months, which will further enable products to be purchased directly on partner retailer websites. At the same time, we are continually innovating on our AI-powered Pinterest Performance Plus Suite to drive greater efficiency for advertisers after our initial launch in Q4 2024. In Q2, we entered beta testing for Pinterest Performance Plus Creative Preview, which allows advertisers to preview modifications made by our creative tools, including generative backgrounds and image resizing, directly within the campaign setup flow. They can also easily regenerate any pins that they wish to change. This helps advertisers maintain control over the creative generation process to ensure the content aligns with their brand, while improving transparency and building confidence with the product. In the second quarter, we also launched our Campaign Customer Groups Beta within Pinterest Performance Plus Campaigns. This new functionality allows advertisers to combine their audience data with Pinterest data while utilizing AI trained on our unique signal of user tastes and preferences. This offers advertisers further granularity over their campaign setup to align with their business goals and drive incrementality, for example, by bidding more to reach new customers. Finally, we continue to complement our robust first-party sales efforts with a diversified partner strategy. This approach aims to capture additional sources of demand, ultimately improving auction density and further enhancing the relevance of our ad demand. This includes integrations with partners like Smartly, an AI-powered platform assisting e-commerce advertisers in campaign management and optimization. We are also investing in our relationships with agencies, whom we view as vital partners within the ads ecosystem, and actively leveraging other complementary demand sources, including international resellers and third-party demand partnerships. Through countless discussions that I have had directly with the CEOs and CMOs of our top advertisers, I am more convinced than ever that Pinterest is offering unique value as a platform within the ads ecosystem. Advertisers are increasingly recognizing our speed of execution and our consistent ability to deliver on promises with differentiated, data-driven insights and expanding global scale. More than ever before, advertisers now view Pinterest as a powerful search platform capable of driving significant lower funnel performance. Lastly, our fundamental ethos of positivity and belonging continues to be a critical differentiator for our platform. This ethos of positivity has also cemented us as a platform for self-expression in the broader cultural zeitgeist and has attracted creators who wish to align themselves with our messaging and uplifting content. For example, we teamed up with Emma Chamberlain, a popular Gen Z influencer and Pinterest power user, to launch our first ever co-branded global product with her brand, Chamberlain Coffee, whose packaging and branding was inspired by the Fisherman aesthetic 2025 Pinterest Predicts trend. We prioritize maintaining our inspirational platform and unwavering commitment to positivity and brand safety, which is upheld through policies such as private by default settings for users under 18 and supporting focus during class time. We also continue to invest heavily in our inclusive AI tools that help users see themselves represented in the content they interact with on Pinterest. I'm incredibly proud that our advertising partner Dove recently won the CanLines Media Grand Prix for their Real Beauty Redefined for the AI Era campaign, which ran exclusively on Pinterest and levers our inclusive AI tools and data insights. Overall, I'm proud of our team's sustained execution and commitment to delivering for our users and advertisers. With that, I'll turn the call over to Julia to share more details about our financial performance.

Thanks, Bill, and good afternoon, everyone. Today I'll be discussing our second quarter 2025 financial results and provide an update on our preliminary third quarter 2025 outlook. All financial metrics except for revenue will be discussed in non-GAAP terms unless otherwise specified, and all comparisons will be discussed on a year over year basis unless otherwise noted. As evident by our results this quarter, we're continuing to execute on our multiple ways to win, which are growing users, deepening engagement while simultaneously increasing ad load with relevant ads as content, driving performance for advertisers with lower funnel product innovations, and complementing our first party business with new sources of demand. In doing so, we're taking share in a competitive but growing end market by building a strong business with sustainable revenue growth, profitability, and free cash flow generation. We're seeing record high users driven by our efforts to improve the relevance and personalization of the content we show our users through incorporating AI deeply throughout our product. At the same time, we're also seeing continued revenue growth from our efforts to drive greater performance through AI driven ad stack improvements and automation, along with deeper actionability to our lower funnel ad formats. The compounding effects of these initiatives, combined with our consistent execution, has resulted in a more resilient business than ever before, and there's certainly more to go as we continue to execute on our strategy. Now let's move to our second quarter results. We ended the quarter with 578 million global monthly active users or MAUs, growing 11% with another quarter of record high users. We continue to demonstrate user growth across all of our geographic regions. In Q2, our US and Canada region had 102 million MAUs, growing 5%. Our Europe region had 146 million MAUs, growing 7%. And in the rest of world markets, we had 329 million MAUs, growing 14%. Shifting to revenue. In Q2, our global revenue was $998 million, up 17% on a reported and constant currency basis. We saw strength across our conversion and awareness objectives. From a vertical perspective, we continue to see strength across our retail vertical, as well as in financial services. Turning to our geographical breakouts for Q2. In the US and Canada, we generated $745 million in revenue, growing 11%. Strength came from retail and financial services. In Europe, revenue was $191 million, growing 34% on a reported basis or 29% on a constant currency basis. Strength in Europe was driven by retail. Revenue from rest of world was $63 million, growing 65% on a reported basis or 72% on a constant currency basis. In Q2, ad impressions grew 55%. As a reminder, the number of ad impressions on our platform is a factor of both the number of total impressions on our platform, whether paid or organic, as well as the percentage of those impressions that represent ads or ad load. This quarter marks the 12th consecutive quarter since the middle of 2022, with our ad impressions growth being driven synergistically by both total impressions and ad load. At the same time, ad pricing in Q2 declined 25% year over year. The primary driver of the sequential acceleration in ad impressions and corresponding decline in ad pricing continues to be the growing mix shift from ad impressions in previously unmonetized or under-monetized international markets, which carry lower ad pricing than our more mature markets. Moving to expenses. In Q2, cost of revenue was $197 million, up 10% year over year and up 2% versus Q1, due to increased infrastructure spend related to users and engagement growth. Our non-GAAP operating expense was $555 million, up 14%. The increase was due to increases in sales and marketing and R&D, as we continue to invest in teams across AI and other product initiatives, as well as enterprise sales and support. Our revenue outperformance, combined with ongoing cost discipline, led to another strong quarter of adjusted EBITDA, coming in at $251 million. This resulted in an adjusted EBITDA margin of 25%, an increase of approximately 310 basis points versus Q2 last year, which exceeded our expectations and was driven by the incremental flow through from the revenue outperformance. We also delivered Q2 free cash flow of $197 million. We ended the quarter with cash, cash equivalents and marketable securities of $2.7 billion. In Q2, we allocated $106 million toward net share settlement of equity awards and $53 million toward share repurchases as part of our ongoing efforts to mitigate dilution. These dilution mitigation efforts have driven a 1% decline in year over year fully diluted share count versus Q2 2024, which compares favorably to our stated positive -3% average annual target. Now we'll discuss our preliminary guidance for the third quarter. We expect Q3 revenue to be in the range of $1.033 billion to $1.053 billion, representing 15% to 17% growth year over year. Our guidance assumes the impact of foreign exchange to be approximately one point of tailwind based on current spot rates. Moving down the P&L, we expect Q3 2025 adjusted EBITDA to be in the range of $282 million to $302 million. We anticipate Q3 2025 year over year leverage on non-GAAP cost of revenue to be approximately half of what we delivered in Q2 2025. Within Q3 non-GAAP operating expense, our primary area of investment will continue to be headcount growth within R&D to support our efforts in AI and other product initiatives, as well as our global enterprise sales team. Looking ahead, we expect to deliver adjusted EBITDA margin expansion in the second half of 2025, though the level of expansion will be lower than the more elevated expansion we delivered in the first half of 2025 as we continue to invest in revenue driving initiatives. In closing, I'm proud of our team for yet another strong quarter of results as we execute against our strategic plans. We are delivering for our users and advertisers, while our multiple ways to win are driving durable revenue growth. With that, I'll hand it over to Bill for some final words.