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Thank you all for joining. I would like to welcome you all to the Pinterest Third Quarter 2024 Earnings Conference Call. My name is Brika and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Andrew Somberg, Vice President, Investor Relations and Treasury at Pinterest. Thank you. You may proceed, Andrew.

Good afternoon, and thank you for joining us. Welcome to Pinterest earnings call for the third quarter ended September 30th, 2024. My name is Andrew Somberg and I'm Vice President of Investor Relations and Treasury for Pinterest. Joining me on today's call are Bill Ready, Pinterest CEO; and Julia Donnelly, our CFO. 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 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 outlook for Q4, 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 later unless required by law. For more information about risks, uncertainties, and other factors that could affect our results, please refer to our most recent Form 10-Q or Form 10-K filed with the SEC and available on our Investor Relations website. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures is included in today's earnings press release and presentation, which are distributed and available to the public through our investor relations website. Lastly, all growth rates discussed in today's prepared remarks should be considered year-over-year unless otherwise specified. And now I'll turn the call over to Bill.

Thanks, Andrew. Good afternoon, and thank you for joining our third quarter 2024 earnings call. One year ago at our Investor Day, we shared our business vision and outlined the strategic initiatives that we believe will drive long-term sustainable growth. These initiatives include; one, growing users and deepening engagement per user; two, making ads relevant content, which allows us to increase ad load and provide a better user experience simultaneously; three, executing on our lower funnel revenue opportunity; and finally, driving demand through third-party partners, resellers, and international markets as additional levers to growth. We stated that these initiatives, working in tandem, would result in a mid to high-teens revenue growth CAGR and improving profitability, leading to adjusted EBITDA margins expanding to the low 30% range in the next three to five years. One year later, our operating results validate our continued execution against this strategy and commitment to delivering on the targets that we laid out at Investor Day. When we announced our three to five-year financial targets at Investor Day, we had just delivered Q2, 2023 revenue growth of 6%. Since then, on a trailing 12-month basis, as of Q3 2024, we have accelerated revenue growth to 18% and expanded adjusted EBITDA margins by more than 800 basis points year-over-year. Q3 was further evidence of progress against our strategy. As we grew revenue 18% year-over-year, we built out a full funnel ads platform with a particular focus on the lower funnel, which continues to be the fastest growing part of our business as advertisers are increasingly seeing Pinterest as a great place to connect with customers, demonstrating high commercial intent. We're also building a fundamentally better product, focusing on the aspects of Pinterest that make us unique to our audience, the ability to find inspiration, curate, and shop all in one place. We are pleased to report monthly active users of 537 million in Q3, another record high, reflecting 11 % year-over-year growth. Each quarter of record users provides further evidence that we found our best product market fit in years. Today, I'll focus my remarks on discussing themes that are driving progress against the strategy we laid out at Investor Day, starting with an overview about AI and its impact across our business, and moving on to a more specific quarterly update on users, engagement, and monetization. At Pinterest, AI is a core competency and has played a central role in how we have transformed our business over the last two plus years for both our users and advertisers. As we've leaned into this important technology in recent years, we've generated substantial returns from our investments that have fueled growth across our business. Effectively, all content served on Pinterest, including organic and ads, is powered by AI recommendation models that are trained by our unique first-party signal, and AI is only as good as the signal it acts upon. Our AI models generate over 400 million predictions per second, ranking what our users might engage with every time they come to the platform. These rankings leverage hundreds of billions of user actions like searches, saves, and clicks that come from over 0.5 billion logged-in users who are actively exploring, curating, and refining their tastes. This vast data allows us to create highly personalized and relevant recommendations, introducing audiences to new brands, products, and emerging trends. We have distinctive and explicit expressions of intent, like a user searching for and saving outfits to their vacation board. This provides us with real-time insight into what inspires our users and what they're looking to purchase next and provides a holistic understanding of user taste based on their past behavior and other users with similar taste. So, while other platforms may see what their users are looking to purchase today, we see what users are interested in purchasing days, weeks, and even months in advance. This is because the users who come to Pinterest are often undecided, but refine their tastes over multi-session commercial journeys before ultimately deciding what to do or buy. This signal creates a flywheel effect. As users engage with our recommended content through curation actions like saving to boards and creating collages or through clicking and buying behavior, we gather richer data. Incorporating this data into our recommendation algorithms enables us to deliver even more personalized and relevant content, and create a network of product associations unlike any other platform that allows us to effectively recommend content to users with similar tastes. Furthermore, in addition to utilizing our proprietary foundation models in areas where we are differentiated, such as computer vision, we are also leveraging our unique first-party signal to fine tune off-the-shelf large language models for a variety of use cases around organic and ad content serving. This approach has led to phenomenal results, notably a 300-basis point improvement in actionable engagement measured by clicks and saves compared to using an off-the-shelf model not fine-tuned with our data. Our unique user signals and deep understanding of individual interests and tastes also allow us to power monetization with highly relevant ads, making the ad useful content for users. We see this clearly across the platform, including on our search surface, where the average ad's relevance for top ad slots has more than doubled over the past two years. This means when a user searches for commercial queries like, Holiday Home Decor or Fall Boots, they see more ads that are relevant to their query that they can easily shop. Since our users come with commercial intent, these ads do not interrupt their user journey, rather, they enhance it. We also leveraged AI to significantly enhance our ads ranking and delivery systems over the past 18 months, leading to compounding efficiency gains for our advertisers across the platform. Additionally, in moments of high intent, our AI powered whole-page optimization enabled us to flex up ad load to serve more relevant ads to our users, allowing ad load and engagement to grow in tandem. All in all, AI is a core competency at Pinterest and at the center of the significant progress we're making across our technology stack, which is enhancing the experience for users and advertisers alike. With that, let's get into Q3 specifically and discuss our work to grow users and deepen engagement. In Q3, we continued to improve the user inspiration-to-action journey. As a visual search and discovery platform, users come to Pinterest to explore their interests, seek inspiration, and browse items they may like to purchase. They curate and save pins into boards and collages, refining their taste and facilitating future shopping. We've enhanced the actionability of our platform by integrating shopability into all major user experiences and leveraging our computer vision technology to make pins easily shoppable. Users are taking notice of this change, with 66% of weekly Gen

Thanks, Bill, and good afternoon, everyone. Today, I'll be discussing our third quarter 2024 financial results and provide an update on our preliminary fourth 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. Let's start with our third quarter results. We ended the quarter with 537 million global monthly active users, or MAUs, growing 11% and reaching yet another record high. Additionally, we continued to demonstrate user growth across all our reported geographies. In Q3, our US and Canada region had 99 million MAUs, growing 3%. Our Europe region had 139 million MAUs, growing 8%. And in the rest of world markets, we had 300 million MAUs, growing 16%. Moving to revenue, in Q3, our global revenue was $898 million, up 18% on a reported and constant currency basis. The revenue strength this quarter highlights how we are driving value for advertisers across the full funnel, with strength coming from our lower funnel consideration and conversion objectives, which optimize for clicks and conversions. From a vertical perspective, we continued to see broad strength in retail. Additionally, emerging verticals, like financial services, automobiles, and technology, continue to be a source of strength. However, this growth was partially offset by ongoing softness within the food and beverage subsector of CPG, where advertisers continue to navigate broader industry headwinds. Next, as expected, revenue from our third party demand partnerships continue to ramp in Q3, growing sequentially off the revenue base we delivered in Q2, as it continues to complement our growing first party business. Turning to our geographical breakouts for Q3. In the US and Canada, we generated $719 million in revenue, growing 16%. Strength came from retail and emerging categories, including financial services, technology, and automobiles. In Europe, revenue was $137 million, growing 20% on both a reported and constant currency basis. Strength in Europe was driven by retail. Revenue from rest of world was $42 million, growing 38% on a reported basis, or 45% on a constant currency basis. In Q3, ad impressions grew 41%, while ad pricing declined 17% year-over-year. Our efforts to begin serving ads and monetize international markets or previous gaps in our auction have been accretive to net revenue. However, as we started to call out last quarter, the ramp of these initiatives has also naturally led to an increase in ad impressions growth and downward pressure on overall global platform pricing due to this ongoing mix shift. Moving to expenses. Though year-over-year comparisons are becoming more challenging due to the substantial margin expansion achieved in the second half of 2023, we continue to drive adjusted EBITDA margin expansion again in Q3 through effective expense discipline while also allocating resources towards our highest ROI initiatives. In Q3, cost of revenue was $182 million, up 9% year-over-year and up 1% versus Q2 due to increased infrastructure spend related to user and engagement growth partially offset by our continued work to drive cost optimizations on our infrastructure spend. Our non-GAAP operating expense was $478 million, up 15%. The increase was primarily due to R&D, where we are investing in headcount growth with smaller increases in sales and marketing and G&A. Our revenue strength and expense discipline led to another strong quarter of adjusted EBITDA coming in at $242 million with an adjusted EBITDA margin of 27%. This was up approximately 280 basis points versus Q3 last year. Finally, we ended the quarter with cash, cash equivalents, and marketable securities of $2.4 billion. In the quarter, we allocated $466 million towards share repurchases, bringing our year-to-date spend to $500 million for a total of 15.9 million shares. In addition, we have utilized $306 million of cash year-to-date on net share settlement of equity awards. Lastly, we have replenished our buyback capacity by authorizing a new $2 billion share repurchase program intended to be used over a multiyear period to mitigate dilution from stock-based compensation or opportunistically buyback shares. Now I'll discuss our preliminary guidance for the fourth quarter. We expect Q4 revenue to be in the range of $1.125 billion to $1.145 billion, representing 15% to 17% growth year-over-year. Based on current spot rates, we expect the impact of foreign exchange to be minimal. Turning now to our expense guidance, we expect Q4 non-GAAP operating expenses of $495 million to $510 million, growing 11% to 14% year-over-year. Our operating expense guidance does not include cost of revenue. However, we anticipate a more modest level of year-over-year Q4 non-GAAP cost of revenue leverage versus the prior three quarters as we anniversary significant gains from our cost optimization work. The increase in non-GAAP operating expense year-over-year is driven by investment increases in R&D, where we continue to invest in headcount for AI talent and other product initiatives supporting users and monetization. Consistent with our prior commentary, we expect year-over-year adjusted EBITDA margin expansion in both halves of 2024, to at a more modest level in the second half as we anniversary the strengthening adjusted EBITDA margins we drove in the second half of 2023. Overall, we are pleased with our progress in 2024 towards our long-term adjusted EBITDA margin targets. In closing, I'm pleased with our team's performance this quarter, which demonstrates ongoing progress against our strategic plans as we grow users and engagement and continue to strengthen our full-funnel offering for advertisers. With that, I'll hand it over to Bill for some final words.

Thanks, Julia. 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.

Thank you. We will now begin the question and answer session. [Operator Instructions]. You have the first question on the phone lines from Ross Sandler with Barclays. Please go ahead.

Great. Thanks, guys. Maybe just starting with a macro. Julia, your guide for 4Q looks like a couple-point decel at the midpoint. Could you just talk about what you're seeing quarter-to-date? Any impact from the shortened holiday window, or any kind of category strength or weakness that we would flag here? And then just, generally how are things heading into 2025? Thanks a lot.

Thanks, Ross. So as you noted, we're guiding Q4 at 15% to 17%, which is roughly similar to the 16% to 18% we guided for Q3. And obviously, we came in at the high end of that range in Q3 at 18%. And that guidance for Q4 reflects the continuation of many of the factors that helped drive our growth in Q3 and really throughout this entire year. Lower funnel revenue growth has been the fastest growing part of our business for the past three quarters, driven by the product innovation we've had over the last 18 months. And we expect that lower funnel strength to continue not just into Q4, but into 2025 and beyond. Revenue from third party demand partnerships also continues to ramp sequentially into Q4. However, we've also noted for the last few quarters that we're seeing softness among food and beverage advertisers who are navigating broader headwinds within that category. And we think this trend continues into Q4 as well. I would also call out that as expected, Performance+ is still in the early rollout phase, with many advertisers limiting budget shifts and adoption of new features during holiday peak period. We also have more functionality on the come with Performance+, with ROAS bidding feature expected to be released in Q1 next year, which is consistent with our prior commentary on the timeline. And just like our previous lower funnel product efforts like MDL, Direct Links, and CAPI, we expect the adoption curve and value capture cycle to be multi-quarter, beginning in 2025, and to further compound the gains we are seeing in the lower funnel.

Thank you. We now have Brian Nowak with Morgan Stanley. Your line is now open.

Thanks for taking my questions. I have two. The first one is, can you – Bill, can you sort of walk us through, just kind of step back and say, your most important 2025 ad innovation focal points, and perhaps how have new Gen AI capabilities sort of changed those over the course of the last year? And then the second one, I'll do a jump off either Bill or Julia. As you sort of think about the ad tech innovation areas, are there any where you really see the potential to just drive durably faster ad revenue growth, sort of hopping into the 20’s or is it just sort of, it's more of a challenge to add that many dollars? Thanks.

Thanks Brian. So, first of all, we feel really good about the levers we have to drive new growth in 2025 as we make further continued progress in building out the full funnel platform with a concerted focus on the lower funnel. If we look back at the initiatives that we outlined at our Investor Day, those all continue to play out nicely. As I noted, we rolled out a number of lower funnel tools and solutions like mobile deep linking, Direct Links, and CAPI, privacy-resilient measurement. They are leading to the increased share of wallet and value capture especially with our largest, most sophisticated advertisers and now increasingly with the next tranche of advertisers as well. So we see more room to grow with both cohorts of advertisers in 2025. And it's worth noting, that for some of our largest advertisers, lower funnel revenue objectives now account for over 80% of their spend with us, which is up significantly over the last two years and significantly higher than the overall mix of lower funnel that we see across the business. A couple of things to note, Performance+ just went GA with value capture still on to come as you go into 2025, especially for mid-sized accounts as Performance+ really helps automate and expedite new campaign creation. And then of course, global partnerships, including third-party demand, resellers, are also an added contributor as we look into 2025. And then, as we've noted on the last several quarters, macro headwinds specifically within the food and beverage category are not unique to us, but we do have more concentration there, and those are somewhat out of our control. So setting those aside, we continue to feel good about our initiatives to grow the business into 2025 and beyond. And it’s worth noting, you asked about – in your second question of getting to growth in the 20’s. If you excluded food and beverage, we grew revenue in the low 20% range in Q3, which really speaks to the strength and the rest of the business on the back of the initiatives that we're driving. And so you talked about durability, I mentioned in my prepared remarks, as we're moving into those lower funnel performance budgets, those tend to be much larger than the experimental budgets where we played before, and much more durable, and that is increasingly where we are gaining share, so that we feel really good about. And again, if you were to exclude food and beverage where there's been a broader macro headwind, and we just have a little more exposure to that, because of the unique use cases on our platform, the rest of our business growing in the low 20% range in Q3. And then finally on engagement, we continue to be excited with the progress there. We're seeing an increasing mix of sessions that include lower funnel actions, and that's really directly aligned with our efforts to improve actionability. And we have more room to go as monetization per unit of intent is still a fraction of what it could be on the platform, but we've really proven out that Pinterest is a shopping platform. And we've talked about winning with the next generation, with Gen

Thank you. We now have Ken Gawrelski with Wells Fargo. Please go ahead.

Thank you very much for the opportunity. On Performance+, could you talk to us about, I know you just rolled out in GA, but could you talk about how we should think about the contribution to ‘25 growth? And over time, do you think that it builds throughout the year, or how do you see clients adopting Performance+ and its contribution in ‘25? And then maybe to follow-up just on the same matter, do you see this as driving greater advertiser adoption or do you see it driving better conversions, and therefore better pricing on an impression level that has already been expanding pretty dramatically? I know it could have both impacts, but I'd love to hear your thoughts on one versus the other. Thank you.

Yeah, thanks for the question Ken. So we're feeling really good about the rollout of Performance+. As you noted, and I noted in my prepared remarks, that went to general availability just at the beginning of October. So we saw really encouraging results from the beta testing and from our early deployment of that, but it is early, and these are always multi-quarter adoption cycles. And I called out in my prepared remarks that a year ago at our Investor Day, we had just printed 6% revenue growth in the quarter before our Investor Day. A year later, we've done 18% revenue growth on a trailing 12-month basis. That's really because the things that we had launched then, Direct Links, mobile deep linking, those early shopping efforts, those paid compounding dividends over the coming year. And we think about Performance+ similarly, that as we go into next year, that that gives us a next leg of budget gains that we can make with advertisers. And some of the stats I called out, those initial results, we're seeing 50% fewer inputs to set up a campaign. So to your question about getting to more clients, that really helps us get to those sort of mid-size on down advertisers, where setting up campaigns, finding performance had been a struggle for them. 50% fewer inputs to set up a campaign, and a 20% plus CPA improvement for those. So that's going really well in terms of the performance that we're delivering and the reduction in effort, which should get us to a wired swath of advertisers. The creative side of that, I mentioned the Ruggable Case Study on the call. As we're doing AI-generated creative that makes products appear more visually compelling for users, we're seeing really great results there in the Ruggable Case Study, 37% better click-through rate using Performance+ Creative compared to their standard shopping campaigns. So that gives you a sense of just how significant the benefits are, so a lot more to come on that in 2025. Your question about, so I addressed expanding to more advertisers, where we're going from those very largest event, really picking up steam for some time with us now, to the next sort of $1 billion to $30 billion group. Performance+ campaign creation gets us more of those advertisers. But the other part of your question of like, can we get to more of their inventory, more of the advertiser's inventory? And so this gets to how we grow share of wallet, even for our largest advertisers. Things that we've done like SKU level bidding and ROAS bidding, these help the advertiser bid at a more granular level, and see performance across a much wider swath of their inventory, which should bring more advertised inventory onto the platform, and be another source of expansion as we go into next year. So that Performance+ ROAS bidding that I mentioned, that's still in beta with encouraging results and general availability on that to come in Q1. So both those things, all those things together really give us confidence that there's a lot more share of wallet that we can gain. And that's all at the back of the inherent commerciality of our users. Again, we've really proven out Pinterest as a great place to shop. So its early days, but we're really encouraged by what we're seeing there, given the strong performance among the beta advertisers, and we do see incrementality there and early signs of budget shift. So while that broader adoption is more H1, the signs there are encouraging, even though advertisers don't make big shifts during the holiday shopping season.

Thank you. We now have Ron Josey with Citigroup.

Great, thanks for taking the question. Bill, I wanted to follow-up on that question just now around engagement, but specifically you mentioned we're proven out, Pinterest is a great place to shop. So would love your thoughts on this engagement rates on the platform. Aside from MOUs, but just engagement rates around shoppable engagement, and as you think about the benefits from AI, would you say we're in the early days here, that 300 basis points? And then a second question just on the lower funnel products and adoption. With Outbound Click continuing to double here, help us understand just the process of adoption of these tools like Direct Links and CAPI. Does it usually take two or three quarters or how did advertisers see this in terms of adoption, now that we're several quarters in the launch? Thank you.

Yeah, thanks Ron. So, on the engagement question, just to be really crystal clear about this, the significant improvement in user growth and DPA engagement has been a bright spot over the past two years. Those trends continue to be really encouraging as we continue to deepen engagement, while also reaching record high monthly active users. A place you can see that really clearly is in the steady improvement in our WAU to MAU ratio in 2024, even as we bring in record amounts of new users. Oftentimes, bringing in a lot of new users can be dilutive to your engagement per user. But even as we bring on record amounts of new users, our WAU to MAU ratio continues to see steady improvement, which just really gets to how we're driving depth of engagement and how as we bring more relevant shoppable content, including ads, onto the platform, that's driving further user engagement. When you unpack what's driving engagement across the back of activities that we look at, we see that actionability, specifically sessions with curation and clicks, are driving an increasing share of engagement. That's really encouraging as it aligns with the shift of our business model toward the lower funnel and is a higher value activity, both for the user and the advertiser, compared to passive view time alone. So that's really encouraging. And finally, our most mature markets are our most engaged, with engagement per MAU being highest in UCAN, and continuing to grow, and that's consistent with our other developed markets. So we're furthest along in our actionability efforts in these mature markets, but lots of opportunity as we take that further internationally. But these things do continue to build upon themselves. And so you were asking about lower funnel adoption. As we've called out many times, these things are multi-quarter adoption cycles for retailers. But it's also worth noting that, in addition to the multi-quarter adoption cycle, you see compounding benefits to these things. So we've talked about the flywheel effect of, as users come to the platform and curate and take action more, that gives us rich signal to make better and better relevant recommendations. Those more relevant recommendations bring users back to the platform more often and drive more shopping behavior that are there for advertisers to meet those users and create monetization events for us. So we talk about this being the fourth quarter in a row, where we more than doubled the number of outbound clicks to advertisers. Every time we get one of those clicks, that's a shopper that we help find what they were looking for. That feeds us better signal back into what's relevant to bring them back to next time, but also gives us more opportunity to monetize in the future. So that flywheel effect, even beyond the adoption of the product features, that flywheel effect of increasing engagement through relevancy, more shoppable events for more advertisers, bringing more shoppable content onto the platform, more advertised SKUs, those things all compound upon each other. And so we think that while the adoption cycles are multi-quarter, we think the compounding effects are durable and multi-year. So hopefully that helps.

We now have Shweta Khajuria with Wolfe Research. Your line is open.

Thank you for taking my question. I have a question on ad load. So where do you think is a good normal level for ad load on Pinterest? And what in your opinion are the biggest opportunities on the platform? How are you thinking about balancing engagement as you continue to increase ad load? Thanks a lot.

Yeah, thank you. Well, as I was just touching on a bit, our engagement continues to deepen. Our WAU to MAU ratio continues to improve through 2024, and that really is driven by actionability. At the core of that actionability has been shoppable ads. So to your question of what's a normal ad load, I think we are still at a fraction of the monetization per unit of intent on our platform that I've seen in analogs from past life. So I think there's a lot more headroom to go. And the headroom on that is really driven by how much you can bring on the right relevant ads that help the user complete their shopping journey, and we see a lot more of that to go. I talked about how Performance+ is helping us bring on more retailers and letting more retailers advertise, how more granular bidding controls allow us to bring on more inventory from each of the retailers. So these things help drive even more shoppability on the platform. And the more we get the right relevant ads, the more we can take the ad load higher. And again, from analogs I would have from past life and that you can see looking at other sort of highly commercial products, particularly in search and places like that, there's a lot more headroom to go in terms of where ad load can go. We're always looking and making sure that is driving positive engagement. In terms of where ad load can go, we're always looking and making sure that is driving positive engagement. And we see that our WAU to MAU ratio continues to improve, really driven by that improved actionability on the platform. And we've talked about things like whole page optimization, where we do that dynamically. We look at when the user's in a commercial context, and we see there. If we can drive more relevant ads, we'll bring more relevant ads, because the user, if they are in a commercial context, cares less about whether the pin is sponsored or not sponsored, and more about, was it the right product for them in that moment, and as we continue to do better and better on that. I talked about how our ad relevance has more than doubled over the last two years in our search results. That's letting us drive more and more relevant ads, where the ads are synergistic with engagement. And again, you see it in our increasing MAUs and our increasing depth of engagement per user. Hopefully that's helpful.

Thank you. We have the next question from Mark Mahaney with Evercore ISI. Go ahead when you're ready.

Okay. I was just going to ask about the Amazon and Google partnerships, and I apologize if you already covered this early on, but any update on how those are progressing, and especially if we look at the average revenue per user metrics, like is the greater monetization – I think this is more Google than Amazon – but the greater monetization that we're sort of seeing in ROW in Europe, is that at all being impacted so far by Google, or is it still too small to impact that? Thank you.

Yeah. Thanks Mark. So we continue to build upon those partnerships. We see them continuing to improve sequentially quarter-on-quarter and build upon themselves. I noted in the call that with Amazon, we're now expanding that to Canada and Mexico, so we're starting to take the Amazon partnership international. And on our rest of world markets, we have both the Google relationship as well as resellers there. I would say, while we're pleased with our progress and we continue to see sequential results that are improving on that, we are earlier days on the Google and international partnerships, than we are on our Amazon third-party relationship. But with each of those, we talked about how we wanted to see them filling in gaps in the auction. We see them doing exactly what they were intended to do, and continuing to build upon themselves even as we go into international markets. And I think on some of your questions like how that's appearing, it is still relatively early days on that rest of world, but we've seen really encouraging progress there even though it's early days.

Thank you. Your next question comes from Rich Greenfield with LightShed Partners. Your line is open.

Hi. Thanks for taking the question. I guess, Bill, you made the comment about UCAN, about deepening engagement, and I guess if we could just drill down a little bit on that. When you think about engagement, is total time spent – like if you were to look at an individual user, whether it's day, month, week, however best to think about it. But is time spent per Pinterest user in UCAN growing on a year-over-year basis? And could you give us – I think between the product enhancements and the AI that you spent a lot of time on during your prepared remarks talking to. Everyone's trying to understand, like what is happening to that in terms of total time spent per user? Because obviously that creates more inventory, which fuels your ad business. So any way to quantify or give us some direction on what deepening engagement actually means?

Yeah, thanks Rich. So this is a really great question, because one of the things that has been a fundamental shift in our business over the last two plus years is that we shifted from being, a couple of years ago, a platform that was chasing entertainment-based use cases, where time spent would have been the right measure. And we shifted from entertainment-based use cases to really driving search-related use cases. Search is two-thirds of our business. So if you look at how our usage breaks out, it's basically a third on home feed and then a third on search and a third on related, which is really just a purely visual search. So two-thirds of our business is search. And when you think about the right way to measure a search business, you would never measure a search business on time spent. In fact, the more time spent in search, oftentimes means you did a worse job of getting you to the right answer. So as we do things like getting the user more relevant results. Talking about the two times improvement in the relevancy of ads, the more than doubling clicks year-on-year for the fourth quarter in a row, those are things that say we're getting our users to the things they were looking for in a better, more compelling way than we were previously. And if you are looking at search, you would never say like, oh, the user found the results on the first – at the top of the first page, instead of having to tab through four pages. Well, time spent went down, so your product's worse. You would never think of it that way. You would say, ‘oh, it's a great thing that you got the user the right answer faster.’ So we don't look at time spent, but what we do look at are those measures of actionability. And to the question of depths of engagement per user, again, I think the best way to look at that is our improvement in the weekly active to monthly active ratios. Because as we do a better and better job of making great relevant recommendations to our users, helping them find the things they are looking for in a faster, more compelling way, the more we see them coming back. And that's reflected in that improving WAU to MAU ratio, even as we bring on record levels of new users to the platform. So hopefully that gives you some sense. I talked about clicks and saves and actionability really being in our basket of measures. The things that are improving the most, which is exactly what you'd want to see in a search-driven business in a commercial context. Hopefully that's helpful.

Thank you. We now have Colin Sebastian with Baird on the line.

Great. Thanks. I have a couple of questions, if I could. I guess first off, you guys have talked about the potential contributions to growth from new advertisers, as well as increasing budget allocations from existing advertisers, and you talked about the two tranches of large advertisers. But any way to break out the contributions from new advertisers this year in terms of the growth rate? And then as a follow-up on, I guess Q4 and what it sort of implies for 2025, it looks like monetization rates were a little bit lower in Europe on a sequential basis. So just curious if there's anything geographically to call out, that could be a headwind to Q4 growth. Thank you.

Thanks Colin. I'll take the first part, and then I'll give the second part to Julia. On the new advertisers versus existing, we've not broken that out, but we are seeing growth in the total number of active advertisers, and we're seeing a really nice share of wallet gains, particularly with existing enterprise accounts, both with the largest, most sophisticated advertisers and that next tranche of mid-tier advertisers that have revenues in the $1 billion to $30 billion range. And so I've talked about this adoption curve, where as we were looking to make the platform more shoppable. We started with the largest, most sophisticated advertisers, those that could engage with us with the API, and those that had much broader swaths of shoppable inventory. That's really where we saw those largest, most sophisticated advertisers leaning in first, and we've gotten now to 10% plus of digital ad spend with a number of those. That was the first wave of adoption, and we continue to see more opportunity to gain share there, and we see that happening as we give more of these granular controls around item-level bidding and those kinds of things. But we are, as we've noted the last couple of quarters, we're seeing that broaden out into the next tranche of advertisers. First in that $1 billion to $30 billion revenue range, and as we introduce tools like Performance+, that's making it so that smaller and smaller advertisers can in a very simple way see performance from our platform. Really as simple as, give us your seed creative, give us an objective and a budget, and we'll go deliver you great results. And so we see that being a continuing trend as we roll out more and more of these AI-driven advertising tools.

And then Colin, to your second question on Europe specifically, I would just call it, you know Europe, we saw really good growth in Q3 at 20%. This was down slightly versus 25% in Q2, but that's really in the back of a much tougher comp in Europe last year. Our comp last year went from 12% to 33% and from Q2 to Q3, so that's really the primary driver there. Despite this tougher comp, we're seeing really nice strength in retail in Europe. We expect that to continue. We're also starting to see a mix shift in some of our cross-border spend, which is benefiting the European region this quarter. However, our general strength in retail in Europe is really broad-based and not just driven by one particular advertiser. So we're feeling really strong about Europe in general.

Thank you. Your next question comes from Doug Anmuth with J.P. Morgan.

Thanks for taking the questions; one for Bill, one for Julia. Bill, you've double-clicked the advertisers for the past four straight quarters and you talk about the shift from value creation to value capture. Just curious if there's any specific hurdles in your view that keep you from closing the gap more here. And then Julia, on rest-of-world advertiser spending, I think it was down slightly sequentially. Just wondering if there's any comments that you have there or in particular related to APAC advertising. Thanks.

Thanks, Doug. On the first part of your question there, that value creation, value capture, exactly as you noted, we started out -- Q4 of last year was our first quarter where we were doubling the number of clicks to advertisers year-on-year. And we said then that we had rolled that out in a way that they didn't have to do work to get it, but they'd have to do work to be able to measure it, and they don't shift budgets until they measure it. And so that has been a big focus throughout the year. This year is driving privacy resilient measurement across our advertiser base. I noted in my prepared remarks that we now see more than half the revenue on our platform with privacy resilient measurement. And more than two-thirds of our lower funnel revenue with privacy resilient measurement. So we've continued to see the same trend that we've talked about before, that more than doubling the number of clicks, as we then come behind that and get the advertisers to implement measurement tools, we see consistently that that leads to wallet share shift to us, particularly in those larger, more durable performance budgets. So that trend continues, and we feel really encouraged about the progress that we made this year on getting our advertisers on to privacy resilient measurement, doing a lot to meet them where they are on their ad tools, on clean rooms, on those kinds of things. So while we've made tremendous progress, there is still more of that value capture to go. I've noted that as half of our revenue is on privacy resilient measurement, two-thirds of our lower funnel. That means there is more of that to go. And even for those that have implemented measurement, they are now getting more of our AI-driven advertising tools that I noted in the Performance+ remarks. So there's more of that value capture to come there through the automated bidding, the automated campaign optimization, all those things will lead to more value capture as well. So the raw material, at the end of the day in our business we sell views, clicks, and conversions, and the clicks and conversions are far more valuable than a view. The volume of increase in clicks and conversions has just been a tremendous bright spot. So that raw material continues to be really, really encouraging as we now come behind that and give better measurement, better AI tools for campaign creation and optimization. We see that value capture happening, but there's still a lot more of that in front of us than behind us.

And Doug, then to the second part of your question on the rest-of-world part of our business, we're actually seeing good acceleration there quarter-over-quarter, year-over-year, both on a constant and reported, constant currency and reported basis. So that's where you are really starting to see the growth contribution from some of our week and ongoing partnerships with retailers that we're launching and early contribution from some of our third-party demand partnerships internationally. So we're actually seeing good growth there.

Thank you. We have our final question on the line from Dan Salmon with New Street Research. Please go ahead.

Great. Good evening, everyone. Thank you for the question. So I want to follow-up on your third-party partnership strategy. You obviously talked about how you are expanding with Amazon. You've talked a lot about kind of the synergy in some of the emerging markets of working with the Google platform, but also having the resellers in there. Does it make sense for you to have more partners? Just curious how you think about that on both, a short-term and long-term basis, maybe some that could bring you demand from different verticals you are underexposed to, maybe in certain markets. Just would love to hear your thoughts on that. Thanks.

Yeah. Thank you for the question. As we've built a plan – I said this from our very first partnership, that we were building our ability to ingest third-party demand in a way that could allow for many partners. And so we started with Amazon in the U.S., but we always said we would have multiple. We then went to Google on international. We're now expanding Amazon beyond the U.S. We're working with resellers, but we've always intended that we would work with multiple. So while we don't have any new partnerships that we're announcing at the moment, we've built the platform that way, you've seen us expand it that way, and as I mentioned earlier, like we are still significantly under-monetized as a platform relative to the amount of commercial intent on the platform. So as we look at how we bring more advertiser demand to meet that commercial intent, there's a tremendous amount we're doing with first-party, with things like all of our AI-driven performance suite, Performance+. The things that we're doing to bring that in through third-party, the things we're doing to bring it in through resellers, and certainly we expect that we'll have much more that we do there, even though we don't have anything new that we're announcing at the moment there. That is our long-term intent. Hopefully that's helpful.

Thank you. I would now like to turn it back to Bill for some final remarks.

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