PINS - NYSE

Good afternoon, and thank you for joining today's Pinterest Fourth Quarter and Full Year 2023 Earnings Call. My name is Kate, and I will be the moderator for today's call. At this time, all lines are in a listen-only mode. And there will be an opportunity for questions and answers at the end. [Operator Instructions] I would now like to pass the call over to your host, Neil Doshi, Head of Investor Relations at Pinterest. You may proceed.

Good afternoon, and thank you for joining us. Welcome to Pinterest's earnings call for the fourth quarter and full year ended December 31, 2023. I am Neil Doshi, Vice President of Investor Relations for Pinterest. Joining me today on the call are Bill Ready, Pinterest CEO; and Julia Donnelly, our CFO. We are providing a slide presentation to accompany our commentary, and this conference call is also being webcast. Please refer to our Investor Relations website at investor.pinterestinc.com to find today's presentation, webcast and earnings press release. Some of the statements that we make today regarding our performance, operations and outlook, may be considered forward looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. In addition, our results, trends and outlooks for Q1 2024 and beyond are preliminary and are not an assurance of future performance. We are making these forward-looking statements based on information available to us as of today, and we expressly disclaim any duty or obligation to update them unless required by law. For more information about risks, uncertainties and other factors that could affect our results, please refer to our most recent annual report Form 10-K and quarterly report on Form 10-Q filed with the SEC and available on our Investor Relations website. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures is included in today's earnings, press release and presentation, which 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, Neil. Good afternoon, and thank you for joining our fourth quarter and full year 2023 earnings call. In Q4, our team executed well against our strategic priorities, growing users and engagement, gaining further traction with our lower funnel advertising offerings and delivering on operational efficiency. Our efforts to grow users and deepen engagement continue to yield strong results. Global MAUs hit another all-time record of $498 million, growing 11% accelerating from last quarter and growing sequentially in all of our geographic regions. Q4 revenue of $981 million grew 12%, marking continued double-digit revenue growth in the second half of this year. And while growing revenue and engagement, we continue to demonstrate operational efficiency and disciplined expense management, resulting in Q4 adjusted EBITDA of $365 million, or a 37% margin up more than 1400 basis points from last year. Our strong product delivery in Q4 and throughout 2023, with investments focused in lower funnel offerings like mobile deep linking, shopping ads, API for conversions and most recently direct links are delivering sustained ROI improvements for advertisers. This is leading to advertisers growing their budgets with us and has resulted in further acceleration so far in Q1, which is reflected in our guidance that Julia will describe in further detail later in the call. Before I discuss Q4, I'd like to reflect back on the progress we made over the past year. We entered 2023 with a backdrop of a challenging macroeconomic environment and a weak digital ads market. However, we delivered strong execution against the strategic priorities we laid out during the second half of 2022, which enabled us to grow through the downturn and get back to double-digit revenue growth in the back half of 2023. During this period, we made significant investments in AI that drove improvements in our overall platform for users and advertisers and we significantly accelerated product velocity across our most important priorities, propelling growth last year and laying the foundation for the future. We focused on helping users find new reasons to come back to Pinterest more often. We also invested in the elements that made Pinterest so-beloved and unique in the first place, like human curation, through saving and organizing content. And as a result, MAUs are growing and users are engaging more deeply with the platform than before. We also made significant advancements on the shopability of the platform. More than half of our users view Pinterest as a place to shop. But historically, it was not easy to click out and go to a merchant site to buy the product you found on Pinterest. Last year, we improved the shopping experience by bringing shopping content front and center into our home feed, search and related services. As a result, we saw engagement with that shoppable content accelerate, as users clicked and save that content at rates significantly higher than in the past. This was clear evidence to us that people come to Pinterest with intent and will take action when we make it easy for them to do so. On the monetization front, the teams innovated across the entire funnel with particular emphasis in the lower funnel as we made it more seamless for users to pivot from inspiration to action through increased shopability. In fact, 2023 was one of our most productive years for ads innovation, as we accelerated product delivery and launched more ad formats, tools and solutions than ever before and continue to drive adoption of our lower funnel solutions for advertisers. These include seamless handoffs like mobile deep linking and direct links, new ad formats like Premier Spotlight, travel catalogs and lead ads and measurement solutions like our API for conversion and clean room integrations. As a smaller player in the overall digital ads ecosystem, adding third-party demand to increase the comprehensiveness of our catalog and the relevance of our ads was a key priority for us. Last year, we announced and launched our first third-party ad partner with Amazon ads, which is scaling well, and we will continue to advance our third-party demand efforts this year and beyond to bring relevant ads that can enhance the user shopping journey. Putting all this together, we were able to achieve year-over-year revenue growth in every quarter in 2023 and get back to double-digit growth in the second half, and we did this while controlling our costs and expanding margins. When we started the year, we laid out a plan to achieve around 200 basis points of adjusted EBITDA margin expansion for the full year. With revenue growth, operational rigor and cost optimization, we were able to deliver 660 basis points of adjusted EBITDA margin expansion for 2023. I believe that constraints bread creativity. And in this environment, our teams are able to deliver better experiences for our users and our advertisers with clarity, focus and discipline. Lastly, with a strong executive team, many of whom joined in 2023, we have the right leadership and a strong foundation to execute against our strategic priorities in 2024 and beyond. Now let's take a closer look at the initiatives we launched in Q4 to advance our strategic priorities. During the quarter, we made key updates along the entire inspiration to action journey to grow our users and deepen engagement. These investments are paying off. We had our fastest global MAU growth since Q1 of 2021, and we're seeing our best product market fit in years, as evidenced by the strong growth in our Gen

Thanks, Bill, and good afternoon, everyone. Today, I'll be discussing our full year and fourth quarter 2023 financial results and provide an update on our preliminary first quarter 2024 outlook. All financial metrics, except for revenue will be discussed in non-GAAP terms unless otherwise specified, and all comparisons will be discussed on a year-over-year basis unless otherwise noted. Before I dive into the details of the quarter, I want to echo Bill's sentiments about the progress we made in 2023 and how far we've come in a short period of time. Last year, we generated $3.1 billion in revenue, growing 9% with revenue reaccelerating to double-digit growth in the back half of the year. We've been strategic with our investments that enabled us to invest in high ROI projects such as AI for content recommendation and ads and accelerating the pace of innovation across the board. We did this while driving efficiencies with our infrastructure spend and keeping our total non-GAAP expenses in 2023, roughly flat compared to 2022. This allowed us to deliver $683 million of adjusted EBITDA or a 22% adjusted EBITDA margin, representing 660 basis points of year-over-year margin expansion well above our initial goal at the start of 2023 of 200 basis points. Finally, at our recent Investor Day in September, we shared our long-term outlook with a revenue CAGR in the mid to high teens and EBITDA margins expanding to the low 30s percent range in the next 3 to 5 years. Our recent results and our focus on executing against our strategic priorities sets us up well to achieve these targets over this time frame. Now I'll discuss our fourth quarter results. We ended the year with 498 million global monthly active users, representing 11% growth. This is the strongest growth we've seen since Q1 2021, with MAU growth accelerating versus last quarter and growing sequentially in all of our geographic regions. We believe that our continued investments to help users find their next use case and quickly pivot from inspiration to action and shopping are paying off as we've been able to drive deeper engagement with our users. In the U.S. and Canada, we had 97 million MAUs, growing 2%, up from 1% growth last quarter and adding 1 million MAUs sequentially for the second quarter in a row. In Europe, we had 135 million MAUs, growing 8%, an acceleration from last quarter. In our rest of world markets, we had 266 million MAUs growing 15%, continuing the trend of acceleration throughout 2023. In Q4, our global revenue was $981 million, up 12% or 11% on a constant currency basis. Our fastest-growing objective was our lowest funnel conversion objective buoyed by strength in the retail vertical, including our shopping ad format. This is a testament to the innovative work we are doing to drive more clicks and conversions for performance advertisers and demonstrates that our business is evolving as we are deploying more lower funnel products and getting access to more performance budgets. Our awareness objective was also relatively resilient, with strength from new formats like Premier Spotlight, as this was the first holiday season with this offering. However, this growth was partially offset by headwinds from the food and beverage category, as these advertisers pulled back spending towards the end of the quarter due to challenges from macro headwinds. We estimate that the underperformance in the food and beverage category created roughly 1 percentage point of headwind to total revenue growth in Q4. Turning to our geographical breakouts. In the US and Canada, we generated $778 million in revenue, growing 8%. Strength came from retailers and from emerging categories, including financial services. In Europe, revenue was $162 million, growing 32% on a reported basis or 25% on a constant currency basis. Strength in Europe came from retail and CPG categories. Revenue from Rest of World was $41 million, growing 27% on a reported basis or 25% on a constant currency basis. In Q4, ad impressions, which is composed of ad load and total impressions, including both organic and paid impressions, accelerated to 33% growth driven both by increases in total impressions and increases in ad load. This marks the sixth quarter in a row where we've been able to grow both total impressions and ad load demonstrating that ads can grow in tandem with engagement, especially when those ads are relevant to users. During the holiday season, our continued investments in whole page optimization to dynamically flex up ad load when users express commercial intent enabled us to open up more ad supply, especially when users were leaned in to shop during the holiday season. Offsetting the growth in ad impressions was a 16% decline in ad pricing due to our continued work to drive greater platform efficiency for lower funnel advertisers, which lowered prices and improved return on ad spend for those advertisers. Now, I'd like to turn to expenses. While our Q4 revenue grew double digits, our operating expenses declined double digits as we continue to control our expenses diligently and balance investments for future growth. Cost of revenue in Q4 was $174 million, down 2% due to continued cost optimization work on the infrastructure side, even while MAUs reached an all-time high and engagement continued to grow. Our non-GAAP operating expense was $446 million, down 12%. Our heightened focus on driving operational efficiencies throughout the business showed through again this quarter. All of our operating expense line items declined year-over-year, led by sales and marketing, which declined 18% as we lapped our large brand marketing campaign from Q4 2022. These efforts led to another strong quarter of adjusted EBITDA coming in at $365 million, an all-time high. Q4 adjusted EBITDA margin was 37%, up 1,400 basis points year-over-year. Finally, we ended the year with cash, cash equivalents and marketable securities of $2.5 billion. Now, I'll discuss our preliminary guidance for the first quarter. We expect Q1 2024 revenue to be in the range of $690 million to $705 million, representing 15% to 17% growth and a meaningful acceleration from our Q4 '23 revenue growth. It's also worth noting that our guide implies up to a 500 basis point acceleration on top of a stable comp from last year, since revenue growth from Q4 '22 to Q1 '23 was relatively consistent. I'd like to provide some additional color and context behind this guide for Q1. First, we're in the midst of an adoption curve of our lower funnel advertising products. In 2023, many of our largest and most sophisticated advertisers took advantage of lower funnel ad products like mobile deep linking, shopping ads or API for conversions. These advertisers have seen sustained performance gains with these formats and are growing their budgets with us, the benefits of which we've seen throughout the course of the year and accelerating into Q1, which is off to a strong start, as Bill mentioned. We see multiple of our large sophisticated retail advertisers allocating more of their performance budgets to us after seeing a longer track record of return on ad spend. As a result, we are beginning to garner more meaningful shares of their overall ad budgets, and we see more of this adoption curve yet to play out with many of our retailers. Second, we launched direct links in late Q3 and early Q4 to help drive more clicks and conversions for all of the other advertisers who may not have as much mobile app penetration and were not good candidates for mobile deep linking. We created value for those advertisers by doubling the clicks we drove for advertisers in Q4. However, we believe the value capture from direct links will come over the course of 2024 and beyond as those advertisers use their own analytics to measure attribution from Pinterest and incrementally increase their budgets with us as a result. Third, our Q1 revenue guidance includes an emerging contribution from third-party ad demand. We are pleased with how this is tracking and we'll continue to learn, iterate, optimize and ramp over the course of this year and beyond. Finally, our guidance takes into account a modest impact from foreign exchange rates. Turning to our Q1 expense guidance. We expect non-GAAP operating expenses of $450 million to $465 million, growing 9% to 13%. Our operating expense guidance does not include cost of revenue. However, we plan to continue our infrastructure optimization efforts, and therefore, we anticipate non-GAAP cost of revenue expense to be relatively consistent with Q4. The increase in non-GAAP operating expense year-over-year is driven by investment increases in R&D, where we are investing in head count for AI talent across our business and in sales and marketing, where we will be investing in B2B marketing to advertisers. As we said during Investor Day, we plan to have a steady ramp to the low 30s percent adjusted EBITDA margin range in the next three to five years. Consistent with that, we are anticipating margin expansion again in 2024, but at a more modest level than the 660 basis point expansion we delivered in 2023 as we balance investing in growth and falling profitability through to the bottom line. As a reminder, the pacing of that margin expansion in 2024 is likely to be more front-loaded in the first quarter due to the strengthening adjusted EBITDA margin we saw as we progress through the quarters of 2023. In summary, 2023 was an instrumental year as we built the foundation for our future growth and return to double-digit revenue growth in the second half of the year. Our Q1 guidance implies further acceleration, which shows that we are making good progress towards our long-term goals. As we look to this year, we plan to build on that momentum and continue executing against our key strategic priorities. Now I'll turn the call over to Bill.

Thanks, Julia. I'm proud of all we were able to achieve in the last year, and I'm even more excited for the year ahead. I want to thank our teams at Pinterest, our advertising partners and all the people that come to Pinterest to find inspiration in the shop. And with that, we can open the call up for questions.

Thanks so much for taking the question, and thanks for all the details in the prepared remarks. I want to go back to some of the comments more broadly on the advertising environment because I think generally investors and analysts have heard a variety of messages about the health of brand advertising and direct response advertising and certain geographic exposure over the last sort of two weeks. Can you just go into a little bit more detail on what you saw in Q4 and how you sets you up for cumulative advertising budget conversations into Q1 and through the remainder of 2024? Thanks so much.

Yeah. Thanks, Eric. So we also see the broader ad market as stable to improving. For us, Retail was the fastest growing segment. And we're seeing across the entire ad industry, performance matters more than ever, and we're winning on that front. We're driving more performance to advertisers than ever before. As I mentioned in my remarks, large advertisers are opening up their performance budgets for us. Doubling our clicks sent to advertisers year-on-year, a strong indicator of not only the value that we have already created, but of how much more value capture is still left in front of us on that. So we also see that improvement, but performance is the name of the game, and we've made a major progression on performance over the last 18 months. And so those are the comments I'd make offer because Julia wants to add any more on some of the other things that we saw in the market there.

I'd say the only other thing we called this out in the script, Eric, is we did see not a significant impact from the Middle East, if we talked about on the prior earnings call. So that was a very temporary impact to us. It was fully recovered by the time we got on the last call. So that to us was not a major headwind, given the fact that we are making this transition to more performance budgets, as Bill alluded to. We did see a little bit of tail off in December from the food and beverage category, which is consistent with the public commentary that we've seen elsewhere, we're seeing that headwind continue into Q1. But in general, Q1 is off to a really, really good start, and we feel very confident in the acceleration that we're seeing and guiding to in Q1, which is a result of a lot of the lower funnel investments that Bill was alluding to earlier.

Great. Thank you.

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

Thanks, guys. Question on the Google partnership. So Bill, everybody can see that the ARPU gap between Europe and U.S. for you guys is about twice as big as Meta. So can you talk about, I guess, the difference between the Google partnership and what you have going with Amazon right now? And is the mix of categories outside of retail that Google brings to the table going to - could that be more meaningful in terms of your ARPU improvement? And are you allowed to use any of those non-retail categories in the U.S. from Google or not? Thanks a lot.

Thanks, Ross. Great question. And as we've talked about on the international front, we see Pinterest significantly undermonetized across the board. But the most undermonetized internationally. We have approximately 80% of our users outside the US, but only 20% of our revenue. So as we shared at our Investor Day, we think that's a meaningful opportunity for us to increase that ARPU internationally. At Investor Day, we talked about how we would leverage both 3P, as well as resellers and other partnerships to help us advance there. So, we're quite excited about the partnership with Google as particularly for those unmonetized markets, we think it can help us to accelerate the ARPU journey for those markets and bring more relevant content and actionable content to users in those markets. As we've demonstrated that our users have a commercial intent on our platform, the ads can be great content. You've seen that in our increase of impressions, ad impressions, while also increasing engagement, demonstrating that the ads can be great content when they use it in a commercial context, we think it will also be additive from that perspective as well. Your question on Amazon, we feel really good about the way the Amazon partnership is scaling also. And there are international markets that can be in play there as well. So as we've talked about the 3P strategy overall, we think about 3P as a way to fill in gaps in our auction and bring more relevant content to our users. And so we're quite pleased with the way the Amazon partnership is progressing. And the Google partnership with the focus on our unmonetized or undermonetized international markets, we think will be quite additive as well.

Thank you. The next question will be from the line of Rich Greenfield with Lightshed Partners. Your line is now open.

Hi. Thanks for taking the question. I'm seeing more and more video ad units when I'm on Pinterest, just scrolling through the feed. I guess the question, Bill, is when you talk about AI and machine learning, I guess, how should we think about how your algorithms and systems are figuring out whether to deliver a static image ad or a video ad for each available ad opportunity. And then just any comments on sort of the conversion of ROEs [ph] that you're seeing for video ads versus the static ads, any trends? Or any color you can give us would be really helpful? Thank you.

Sure, thanks. Thanks, Rich. So video remains more than 30% of our revenue. It's been a bright spot for us on the platform that we are driving really great monetization on video. And we've talked about how much AI is a core competency for us and how much that has driven increases in relevancy on the organic side, as well as improvements on the ad side as well. Our model being 100 times larger than they were a year ago, as we talked about last quarter. And so one of the things we're seeing from that AI-driven improvement in relevancy is a really good ability to discern what's relevant for which user at the right moment in time, and that includes both video and still images. And so we're seeing that work quite well in our fee, the balance between video and still imagery and I think you see it reflected quite well in our progress with users that we just put up our best user growth quarter since Q1 of 2021. We're deepening engagement per user. Gen

And when I look at Gen

Gen

Thank you.

Thank you.

Thank you. The next question will be from the line of Doug Anmuth with JPMorgan. Your line is now open.

Thanks for taking questions. I have two. You talked about doubling down on momentum in '24. I was just curious if you can talk about any key priorities for the year that really stand out? And is there any change to how you're thinking about profitability in '24? And then just quickly on China advertiser spending. Any color on exposure levels and perhaps how it trended in 4Q? Thank you.

Sure. Thanks for the question, Doug. I'll take that one. So overall, we're feeling really good about the progress that we're making on our 3 to 5 year outlook, and we talked about at Investor Day, having a steady ramp to that low 30-ish percent EBITDA margin range in the next three to five years. As I said in my prepared remarks, we do intend to expand margin again in 2024, but at a more modest level than the 660 basis points that we delivered in 2023. So we are planning to drive more margin expansion and see operating leverage in the business in 2024. On an absolute dollar basis in terms of where the areas where we're increasing our levels of investment, we plan to focus in our R&D area, tying to head count additions primarily in AI, both for - to benefit our users and our advertisers. On the sales and marketing line, we also anticipate adding to our sales organization with a focus on enhanced technical selling capabilities and also expansion of some frontline sellers in our international markets as well. To your question about China-based e-commerce retailers, we are seeing some benefit from that category of advertiser in Q4. That is a nice contributor for us. But it is by no means the only contributor. We are seeing strong growth in the retail category that is broad-based, including several other major retailers aside from those categories in China. And so we think we're a great fit for those retailers. And I don't think we're as exposed there as some of our other peers may be.

Got it. Thank you, Julia.

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

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

Thanks for the question, Mark. As we talked about at our Investor Day, we've got multiple ways to win here. We've talked about driving better lower funnel performance. We are driving forward on that, performing quite well on that front. We talked about international in 3P. We see those contributing quite nicely as well. And so it is very much a multipronged approach, and we see really solid performance across each of those very much in line with the plans we laid out at our Investor Day. So, in the same way that we talked about multiple ways to win at Investor Day. We see progress on every single one of those fronts, and we see it as a balanced approach, and we continue to see that way as we look into Q1 and next year.

Thank you, Bill.

Thank you. The next question will be from the line of Ron Josey with Citigroup. Your line is now open.

Great. Thanks for taking the question. Bill, I wanted to ask maybe bigger picture. You talked about larger retail advertising, just to allocate advertisers allocating more performance budgets to the Pinterest as you evolve from experimental. Just talk to us about the process here to get to more performance ad budgets to be that line item and how this fits in your commentary on working with agencies and incentives? And then a quick follow-up on just Mark's call, just Mark's question, just there, Julia. Any insights on just Easter adding extra -- with Easter being earlier this year and/or the extra day in the quarter? Thank you.

Thanks for the question, Ron. So as we've talked about before, we've been on a major transformation from a primarily brand ad-driven platform a couple of years ago to a performance-driven platform today. And we shared at Investor Day two thirds of our revenue now coming from the lower funnel. So we are well down that path on that transformation. At the same time, we are continuing to launch major improvements to our performance ad product and we're on an adoption curve there. So for example, we launched Mobile deep links to GA sort of middle of the year last year. And then we are still seeing more and more retailers not only adopt that, but then shift budget to us as a result of that. With direct links, we launched that as we were right into the holiday shopping season when most of the retailers are sort of hunkered down and that really making major shifts. So we're able to deliver that without the advertiser doing work, and we doubled the number of clicks we sent to advertisers year-on-year. And as we're going into Q1, we're seeing that now start to show up in budget allocations moving to us. But we think we have a lot more of that to go. And to give you a little bit more sense of this, if you looked at our lower funnel performance tools, things like conversion API, mobile deep links, direct links, clean rooms. At the start of last year, we had roughly 2% of our revenue coming from those who have at least three of those lower funnel tools. By Investor Day, that was 13% of our revenue coming from those that had at least three of those lower funnel tools. By the end of the year, it was 23% of our revenue coming from those who had at least three of those lower funnel tools. So that gives you a sense for how we're making strong progress, but also to my comments around how there is a lot more of the value capture still in front of us from products that we have already launched that we know are performing well. And of course, we are continuing to innovate there as well. So a lot more to come on that.

And then maybe I'll just add to that. As Bill was talking about, we're seeing nice growth from retail, in particular, and that's really kind of already capturing some of the value from some of the investments that we made over the course of 2023. One additional stat I'll share, this is on an updated version of a stat that we had last year, which is that those who have adopted our API for conversions are actually seeing retailers who adopt our API for conversions are actually seeing year-over-year growth in the 30% range compared to non-adopters of our API for conversions who are declining mid-single digits. So another further data point to support the growth that we're seeing and the budgets that are coming our way as we're delivering sustained ROAS [ph] performance. To your question on Q1 and kind of puts and takes in Q1. Just a reminder again that our acceleration that we're guiding to in Q1 is off the back of a stable comp from last year. There are kind of small puts and takes and a small tailwind from timing of Easter or addition of leap day this year, but those are by no means the major driver. The major drivers are the strength that we're seeing in the retail category tied to large advertisers, the emerging contribution from 3P and some of the other factors that we've discussed today on the call. So overall, this is us doing what we said we would do at Investor Day and delivering on some acceleration in capturing value from all of the investments that we've made over the last year, and we feel really good about the growth that we're seeing, the sustainability of that growth and the progress that we're making against those goals.

Thank you, Julia. Thank you, Bill.

Thank you.

Thank you.

The next question will be from the line of Dan Salmon with New Street Research. Your line is now open.

Great. Thanks. Good afternoon, everyone. So maybe could we dig in a little bit more on your accelerating monthly active user growth this quarter. You talked about success with Gen

Certainly, on Gen

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

Very helpful. Thank you.

Thank you. The next question will be from the line of Kenneth Gawrelski with Wells Fargo. Your line is now open.

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

Okay. Maybe I'll take the first part of your question, Ken. So it is not mix. It is more acceleration and ongoing acceleration from retail and an emerging contribution from 3P. So we do see continuing headwind from food and beverage, but it is more that it's being even more offset by other positive growth factors that are driving our Q1 acceleration.

And on your question on the value capture versus value create. There's always a lag between these things. Advertisers need to see the performance sustain and you see it flow through into their models and their measurement. And so the thing we feel really great about is that, that value - the value create is the hardest part and has to happen first, and we're seeing that as we drive more users with more intent to those advertisers. So that's really fantastic raw material for us. And we've only really just started the value capture on that. And what comes ahead in that is some of that is just advertisers see that bake into their own models of performance. Some of that is about getting advertisers on to privacy safe measurement. Julia talked about, and we started talking about this Q1 - late Q1, I believe, of last year around adopters of API for conversions as a cohort growing at 30%, approximately 30%, those that had not adopted being mid single-digit decliners. That trend continues as we drive that adoption. So as I mentioned in my comments, the performance doesn't matter to the advertisers if they can't see it through their measurement. So driving that adoption curve on measurement matters quite a lot as well. But we're seeing - again, we're seeing that budget shift toward us continue. We saw that through the year this past year, doubling our growth rate from the beginning of the year to the end of the year. We see further acceleration as we look into Q1 as reflected in our guide. And we think there's a lot more of that to go as we continue to drive through that adoption curve. I hope that helps.

Thank you, both.

Thank you. The next question will be from the line of Colin Sebastian with Baird. Your line is now open.

Thanks, and good afternoon. A couple, I guess, for me as well. Bill, maybe a follow-up on the MAUs. Are you saying that there is a faster conversion of maybe those occasional users maybe quarterly or semiannual users to monthly users? Or are you seeing just users who are new to the platform overall. And then secondly, in highlighting the improvements you've made in relevancy and recommendations of ads and cons in the platform. I know there's a lot of work with machine learning behind all of that and using signals from users. So I guess I'm just curious, how far along do you think you are in really optimizing that level of personalization and hitting those key advertiser objectives like conversion rates? Thank you.

Yes. Thanks for the question, Colin. So on your first question around MAU, we are seeing progress both in bringing new users to the platform. We talked about Gen

Thank you. That is all the time that we have for questions today. And with that, I will turn the call back over to Bill for some final closing remarks.

Thanks again to all of you for joining the call and for your questions. We look forward to keeping this dialogue going. As always, we hope you enjoy the rest of your day.