PINS - NYSE

Good afternoon. Thank you for attending today's Pinterest First Quarter 2025 Earnings Call. [Operator Instructions] I'll now hand the call over to Andrew Somberg, VP of Investor Relations and Treasury. You may proceed.

Good afternoon, and thank you for joining us. Welcome to Pinterest earnings call for the first quarter ended March 31, 2025. 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're also providing a slide presentation to accompany our commentary. Please refer to our Investor Relations website at investor.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 Q2 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 10-Q and Form 10-K 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 first quarter 2025 earnings call. In Q1, we demonstrated the strength and effectiveness of our long-term strategy and remain laser focused on delivering value for our users and advertisers. We finished the quarter with another record number of users reaching 570 million MAUs globally, reflecting 10% growth year-over-year. At the same time, we generated Q1 revenue of $855 million up 16% year-over-year due to the strong performance we are driving for advertisers across the full funnel. We also grew adjusted EBITDA to $172 million as we continue to focus on driving profitable growth while simultaneously investing in high ROI areas to enable us to reach our longer-term opportunity. Before getting into the details of Q1, I'd like to discuss the current macro environment we're operating in. Our business, including our top-line revenue growth remains healthy. This is an indication that our efforts to build a more engaging and actionable product for our users and a more performant product for our advertisers are working. The strong fundamentals in our business are the result of the strategic priorities we've executed against taking Pinterest from a platform with declining users and modest revenue growth a few years ago into a secular share taker with a more resilient business than ever before. Today, Pinterest is a shopping destination with roughly 85% of our monthly active users coming directly to our mobile app, which is up nearly 10 points from the middle of 2022. As we've made our platform more actionable and generated growing numbers of clicks and conversions, we've become a vital partner for advertisers across a range of categories seeking to reach our high intent users and drive sales. In turn, we are increasingly accessing always on performance budgets, which are larger and tend to be more durable. Furthermore, an uncertain macro environment where consumers are more intentional and discerning with their spend presents an opportunity for Pinterest to deliver differentiated utility for our users. Our users are planners and often come to us for their most considered purchases. As such, our ability to leverage AI to personalize our user's experience is a key differentiator and has enabled us to find our best product market fit in years. It also makes us a highly valuable partner to advertisers that are looking for early signals on how consumer trends may be shifting before it shows up in traditional purchasing data. From where I sit today, I'm proud of our consistent execution, the progress we've made to improve the resiliency of our business, and I remain confident that the strategy we've employed will endure for the long term. With that, I'll now shift to our quarterly update on users and engagement where I'll discuss just how we're delivering a differentiated product experience to ultimately drive deeper engagement with our users. A key driver of our success is our intentional effort to build a better, more relevant platform for our users. One that connects them to styles, products and aesthetics they may not have the words to describe. In fact, according to academic studies, 50% of the human brain is wired for visual processing. The ability for users to explore their interests visually and take action on them is one of our core differentiators and an important reason why users come to our platform in the first place. This is especially relevant for Gen

Thanks, Bill. Good afternoon, everyone. Today, I'll be discussing our first quarter 2025 financial results and provide an update on our preliminary second 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. Before I get into our first quarter results, I'll spend a few minutes discussing how we're thinking about our broader business strategy. Over the last few years, we've been executing on a durable long-term strategy focused on our key differentiators as a business, including the user commercial intent on our platform, the ability to create a relevant and actionable experience with ads as useful content, and leveraging our full funnel playbook to drive tangible performance gains for advertisers. We have multiple revenue drivers that have allowed us to take share in a competitive environment across a variety of advertiser verticals. The first is continuing to grow our user base and deepen engagement, bringing users back more frequently through our efforts and actionability and curation. As we've stated many times, relevant ads can be great content for our users and additive to the user experience. And as such, we see room to further grow our ad load as we increase monetizable supply through user commercial intent and more efficient ad delivery. Second, we're continuing to drive improved performance throughout the full funnel from spotlight ads on the awareness side to rapid product velocity, especially in the lower funnel with the launch of direct links, CAPI, and most recently, Performance+, which is in the early days of multi-quarter and multi-year advertiser adoption. Finally, we're finding ways to complement our strong and growing first-party business through new sources of demand, including efficient ways to scale our monetization through partnerships such as resellers, which is starting to drive more meaningful revenue contribution in undermonetized and previously un-monetized regions. At the same time, we continue to be thoughtful about expenses and prioritizing investment in high ROI opportunities, which has allowed us to make considerable progress towards our longer-term margin goals. For example, we continue to focus our AI investments towards initiatives that have a near-term uplift to engagement and monetization such as improving our visual search capability as Bill described earlier as well as improving the technology that underpins our ad-serving efficiency, such as Whole Page, Optimization and Performance+. Simultaneously, we're investing in areas which accelerate employee productivity. For example, over 25% of our code is now generated through AI, which is up 10 points since the beginning of the year. Similarly, we've begun testing productivity tools to automate repetitive tasks and standardize content for our sales force, ultimately allowing our sellers to spend more time with clients. Ultimately, as Bill noted upfront, we are confident in the long-term durability of our strategy and the continuation of our steady execution of that strategy through our prudent investment philosophy. Now let's move to our first quarter results. We ended the quarter with 570 million global monthly active users, or MAUs, growing 10% and reaching another record high. We continue to demonstrate user growth across all of our geographic regions. In Q1, our U.S. and Canada region had 102 million MAUs, growing 4%; our Europe region had 148 million MAUs, growing 5%; and in the Rest of World markets, we had 320 million MAUs, growing 14%. Shifting to revenue. In Q1, our global revenue was $855 million, up 16% or up 17% on a constant currency basis. We saw strength across our awareness and conversion objectives. From a vertical perspective, we continue to see broad-based strength in retail. Additionally, emerging verticals led by financial services continue to be a source of strength. As expected, the drag from the food and beverage subsector of CPG lessened slightly to be lapped the full quarter of softer Q1 2024 trends in that category. Turning to our geographical breakout for Q1. In the U.S. and Canada, we generated $663 million in revenue, growing 12%. Strength came from retail and emerging verticals, including financial services. In Europe, revenue was $147 million, growing 24% on a reported basis or 27% on a constant currency basis. Strength in Europe was driven by retail. Revenue from Rest of World was $45 million, growing 49% on a reported basis or 59% on a constant currency basis. In Q1, ad impressions grew 49%, while ad pricing declined 22% year-over-year. As we've discussed for multiple quarters, the sequential acceleration in ad impressions and corresponding decline in ad pricing is primarily driven by international mix shift as last year, we began to serve ads in previously un-monetized or undermonetized international markets, which carry lower ad pricing than our more mature markets. Moving to expenses. In Q1, cost of revenue was $193 million, up 10% year-over-year and up 1% versus Q4 due to increased infrastructure spend related to users and engagement growth. Our non-GAAP operating expense was $494 million, up 12%. The increase was primarily in R&D due to increases in headcount with a smaller increase in sales and marketing. Our robust revenue growth and expense discipline led to another strong quarter of adjusted EBITDA, coming in at $172 million with an adjusted EBITDA margin of 20%, an increase of 300 basis points versus Q1 last year. We also delivered Q1 free cash flow of $356 million. Consistent with prior years, Q1 is seasonally our strongest quarter of free cash flow due to higher Q1 collections following peak Q4 revenue. We ended the quarter with cash, cash equivalents and marketable securities of $2.6 billion. In Q1, we allocated $175 million towards share repurchase -- share repurchases and $94 million on net share settlement of equity awards as part of our ongoing efforts to mitigate dilution. Now I'll discuss our preliminary guidance for the second quarter. Before addressing specifics, I want to acknowledge the current evolving landscape. As Bill noted, our business trends remain healthy overall, and we feel good that the product investments we've made over the last 3 years are working. While we are not immune to the macro environment, we are confident in our multiple revenue initiatives, the steady ongoing execution of our plans and our ability to compete effectively across a number of scenarios. We expect Q2 revenue to be in the range of $960 million to $980 million, representing 12% to 15% growth year-over-year. Based on the current spot rates, we expect a modest impact on foreign exchange in Q2. Moving down the P&L. We expect Q2 2025 adjusted EBITDA to be in the range of $217 million to $237 million. We anticipate Q2 2025 non-GAAP cost of revenue to grow at a similar rate on a year-over-year basis as we saw in Q1. Within non-GAAP operating expense, our primary area of investment in Q2 will continue to be headcount within R&D, which will support our efforts in AI and other product initiatives as well as investing in sales and marketing, which tends to be seasonally higher in Q2 than in Q1 due to the timing of certain marketing expenses. From where we sit today, we expect to deliver adjusted EBITDA margin expansion year-over-year for the full year 2025, though consistent with our commentary last quarter, the level of expansion will be lower than the outsized expansion we delivered in 2024. In closing, I'm extremely pleased with our team's performance in Q1. We're focused on executing against the levers firmly in our control, like growing and deepening user engagement through a better, more relevant product and driving performance for our advertisers, all while balancing investing in the business and driving long-term profitable growth. 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 and take action. And with that, we can open the call up for questions.

[Operator Instructions] The first question is from the line of Ross Sandler with Barclays.

Great. Bill, just starting with the guidance. 2Q looks pretty solid, all things considered, just a very modest decel. We know you have Easter in the second quarter this year, which may help a little bit. But just curious, what you're seeing in the pipeline? And are any of the kind of high tariff exposed categories in retail and CPG showing any softness thus far? How do you see this playing out throughout the year?

Thanks, Ross. I'll take that one. So first and foremost, as we noted in our prepared remarks, we're seeing strength in our business, and trends remain healthy both in Q1 and the early signals on Q2. Our products are really working well as we leverage AI to drive gains in relevance, personalization and actionability for users, and drive increasing performance gains for our advertisers across a range of verticals. To your specific question on the Q2 guide, given the situation remains somewhat fluid, our guidance reflects a slightly expanded revenue range. As always, our Q2 revenue outlook factors in both what we are seeing in quarter-to-date trends as well as what we are hearing from our advertising partners directly about their spend expectations for the remainder of the quarter as of today. There have been small pockets of spend that have been impacted by tariffs in recent weeks. For example, like other platforms, we have observed a reduction in spend from Asia-based e-commerce retailers in the U.S. given the change in the de minimis exemption. However, we've also seen a geographic diversification from some of those Asia-based retailers to our European and Rest of World user regions. And that's a theme that has continued to play out over multiple quarters now and continues today. So stepping back, the fundamentals of our business remain strong. Our investments over the past 3 years have -- against our multiple revenue levers have helped us build a more resilient platform, and that's a vital partner to advertisers more so than ever before, and we'll continue to execute on the key strategic initiatives within our control.

The next question is from the line of Eric Sheridan with Goldman Sachs.

Bill, it felt like last quarter and then building a momentum this quarter, there was a shift in you framing where the platform and its products were going in terms of things that were inside of your control. So leaving the macro aside for a minute, I know we'll talk a lot about on this call, but are the things in your control in terms of where you want to take the platform and how you want to evolve products, where do you think you are in that journey? And what is the receptivity across the advertising landscape to what you built so far? And how do you think about what might build as we get deeper into the year?

Yes. Thanks, Eric. As we've talked about, going all the way back to our Investor Day, we see multiple ways to win and multiple strategic initiatives that have been playing out to support the direction we're taking the platform. At the core of that, we've made Pinterest a destination for our user, particularly shopping destination. Pinterest is where Gen

The next question is from Brian Nowak with Morgan Stanley.

I have 2, please. The first one on Performance+. You've made a lot of progress driving adoption of that product with some of your larger advertisers. Is there any way you can talk with us about how to think about a rough percentage lift in same advertiser spend as you sort of rolled that tool out so far? And the second one, Bill, maybe a big-picture one. You continue to really rapid click growth to your advertisers. I remember last quarter, it was 90% plus growth and 100%, et cetera. What do you think is the biggest opportunity to sort of further close that gap between that rapid click growth you're selling to your advertisers versus your advertiser growth -- your advertising dollar growth?

Yes. Thanks, Brian. So in terms of how we think about the uplift from Performance+, I shared some stats on the call around the uplift and rollouts from different components. It's important to know, it's a suite of products, but we've also given the ability for advertisers to adopt a la carte. And so what we're seeing is that -- those that have adopted, they're seeing really strong performance that when paired with our measurement tools that we've rolled out is leading to share shift and budget gains for us with those advertisers. And while we've not broken that out what's the percentage of lift from that, again, given that sort of advertisers can either take the whole suite or sort of choose a la carte, we are seeing quite consistently, as I noted in the 80% of the campaigns on Performance+ outperformed traditional campaigns, we are feeling really good about that progress even as we still have a lot more functionality that we are building there. So again, we feel like the progress is quite strong, but a lot more ahead. As we've talked about with all these things, just think about these as sort of compounding effects that build on those, creating longer-term durable growth, no hockey sticks are sort of onetime federal results, but these are like steady builds that just make us a better and more performant add platform for advertising and getting extend more of those always on performance budgets that tend to be much more durable. So we feel really great about those things. More to go there. But when you see things like 80% of campaigns on Performance+ outperforming, that's quite strong. The beta test results that we mentioned, 20% CPA improvements on shopping campaigns, these are things that are leading to -- when you look at our growth rates overall being strong relative to the industry, these are reasons why we become a secular taker, but we think we have a lot more runway ahead of us than behind us, both in adoption as well as in the dollar share shift. And then to your question on the click growth, sort of closing the gap between the click growth and the ad dollar growth, what I would say is that we are seeing that drive spend change. The 2 things we've talked about pretty consistently have been getting better implementation of measurement tools. So we've called out many new partnerships, meeting advertisers where they are. I called out 2 new ones in my prepared remarks that, again, are just part of our ongoing efforts to meet advertisers where they are integrate into their ad systems because even for driving the clicks, if it's not showing up in their performance measurement systems, it won't lead to the share shift because we've been driving more and more implementation of privacy-centric measurement, meeting advertisers where they are. We see that helping. There's more of that to go. And then the other is around making campaign creation easier and easier. So we've talked about with Performance+, that cutting down campaign creation time as much as 50% or more, that's making it easier and easier for the advertisers to bring new campaigns on. If you just step all the way back from it, where we only just went into GA with Performance+ late in the year last year, and direct links was a year before that. So if you look at sort of throughout 2024, we were -- we had launched direct links that was driving clicks and conversions. Then we are pushing conversion API, measurement tool integration is making so the advertisers can measure it, so then they could see the clicks and conversions. Then late in the year last year, we started to address the ease of campaign creation and optimization through Performance+. And so those are really sort of the legs of this tool. And they've only just all come together. But even with that, you see us taking share given the unique value proposition of what we're doing for our users. So again, I think that will continue to help us demonstrate that durable growth in our business that you've been seeing from us. Hopefully, that helps.

The next question is from Shweta Khajuria with Wolfe Research.

We've seen some press reports about you testing with multiple partners. Can you please give us an update on your strategy for third-party demand?

Yes. Thank you. I appreciate the question. So first thing I'd say is that nothing about our programmatic or third-party advertising strategy has changed. We've always said that our first-party demand that comes from our internal sales force would be the primary driver of our business. And that we would seek out demand from third parties as a complement to our first-party business really to round out gaps in our auction. As such, we've -- we're instantly and constantly testing and iterating within our business to find the right sources of demand around our gaps or auction and drive greater actionability for our users. And we've been consistent about having envisioned multiple partners. And you saw us start with some of the largest players, Amazon and Google. But there are also a number of smaller players that can bring incremental demand to the platform. In service of that, we've been testing with multiple providers to open up access, and we've decided to work with Magnite, a leading SSP, as our next partner to help us aggregate smaller sources of demand. While there's been some speculation out there, there are no additional SSPs that we plan to scale with in the immediate future, but we think this helps us to aggregate more of those sources of demand from other players through our Magnite partnership. And I view this as a steady progression and build of the business, which is consistent with what we've outlined. So just like prior efforts, these things take time to integrate and plan a thoughtful go-to-market launch and scale. So again, don't expect any big-hockey stick moment, but it's part of the ongoing build of the business. I wouldn't think of this as immediate change in revenue trajectory of the business, but as part of that compounding effect of just making it easier and easier for advertisers to reach really great commercial intent on our platform and us meeting advertisers more and more where they are.

The next question is from Ken Gawrelski with Wells Fargo.

Could we talk a little bit about the accelerating impression growth and the associated kind of price declines on a per impression basis? Could you talk -- I know that's a global number, and you referred to earlier some of the mix shift to international and adding, I think, you said 8 additional territories. Could you talk a little bit about what you're seeing in UCAN, kind of your most mature area and you're most well developed, could you talk about the trends there, what you're seeing from an impression basis? And also maybe potentially on the price per impression basis, are you seeing -- are you starting to see some pricing leverage in UCAN?

Ken, yes, thanks for the question. So we've said for many quarters in a row now the dynamics that we're seeing in terms of global ad impression growth and global pricing decline is primarily driven by international mix shift. As you'll recall, last year, we began to serve ads and monetize previously un-monetized or previously undermonetized international markets. And so naturally, these international markets have lower total addressable market and also have lower cost per impression or eCPMs on average. So this international mix shift puts downward pressure on global pricing, but it's clearly been a positive to net revenue overall. And importantly, you're seeing that show up in the accelerating revenue trends in our Rest of World market for the last several quarters. To your question on sort of UCAN specifically, it is worth noting, if you were to look at kind of UCAN impression growth and pricing alone, it would tell a very different story, and the trends are far less pronounced because the primary driver on a global level really is this mix shift impact due to international growth.

The next question is from John Blackledge with TD Securities.

Great. Just any further color on the broader macro volatility impacting ad spend, particularly with the more brand-oriented advertisers? And is the introduction of Performance+ helping drive and kind of tie together that full-funnel campaign dynamic that you referenced earlier in the call?

Yes. Thanks for the question, John. You're spot on with your question in the ability to tie together that full funnel. That's been -- Pinterest has talked about that for years, but I think now that our lower-funnel business has become very compelling, it's really helping us bring the promise of the full funnel to life. And I shared that stat in my prepared remarks about how advertisers that do both upper- and lower-funnel objectives with us see 2x the click-through rate. This is really what CMOs have always known is that great CMOs know that the whole decision doesn't get made just in those last 3 seconds before the last click. It was just the thing that was most measurable. And they knew they needed to be able to tell more of their story to differentiate their brand, to connect with customers, but that wasn't very measurable for them. With us having both the upper funnel and middle and lower funnel all in the same surface, same consumer experience, we are able to tie that together for our users and our advertisers. So the user is getting a seamless shopping experience from upper-funnel inspiration all the way through to the click and the conversion, but it is exactly as you alluded to in your question, we're helping us deliver on that full funnel. I actually think in this moment where, as we go through periods of uncertainty, if you talk to CMOs about past times of uncertainty, when they get that call from the CFO to ask them to focus their spend, of course, that would all rush to the low funnel, but then they'd feel like they had left something on the table by not being able to tell their brand story, which is how they really ultimately connect with the customers to eventually get to that last click with what we're doing in the full funnel, we're really giving them a twofer. They can do upper funnel and lower funnel, but then that CMO can turn to their CFO and say, see, when I did the upper funnel with the lower funnel on Pinterest, it was double a click-through rate. So my upper funnel does perform. And therefore, that CMO can still tell our brand story even while driving lower-funnel last click on our platform. So we think that is quite compelling and I think is, again, another example of how we've been building in a way that is long-term durable, but I think even in a moment of uncertainty where we have unique offerings that we can come forward with for both our users and our advertisers.

The next question is from Ron Josey with Citigroup.

Great. Maybe another 1 on -- 2, please. And so the first one is just on advertising. Bill and Julia, we've been talking about strength in the emerging verticals for a few quarters now actually since Analyst Day, and before, we mentioned financial services. So I wanted to hear more about these additional verticals that Pinterest is seeing success in, maybe talk about some of the use cases and why Pinterest is a good fit for these advertisers just given the focus on retail and commerce. And then, Julia, you highlighted in your comments, 25% of code is generated by AI. That's up 10 points in the quarter, I think you said. But would love to hear your comments on the benefit tier. Is it product -- I mean, everything, right, but benefits around product velocity, time to market, but also cost savings as well?

Thanks, Ron. Maybe I'll take the first one just to start out here on emerging verticals. And you're right, we've called out financial services for many quarters now as one of several categories where we're seeing strong growth. Some of the others that we've mentioned over time have been technology, telecom, entertainment, which includes streaming services. So we're certainly underpenetrated in these categories with lots of room to grow. In terms of sort of use cases, Pinterest attracts users during key life moments like when starting a family, buying a car, remodeling a home. These are times when consumers are often seeking new financial services such as insurance or credit cards. This makes Pinterest an ideal platform for these advertisers who want to connect with their audience undergoing these significant life events. Advertisers are also value interest insights into consumer trends and spending habits, which inform their content and messaging strategies, particularly with Gen

The next question is from Rich Greenfield with LightShed Partners.

I was listening to a D2C marketing exec at Kitch on the Chew on this podcast recently. And the woman was talking about ROAS across various digital platforms. And she gave some specific commentary around Pinterest from her experience and for relationships in the business. And one of the things he sort of said was that it's a long game because when you talk about ROAS on Pinterest, it's a long game because consumers pin things and then they come back, and they do buy them, but they buy them later. I was wondering how you react to that comment from a marketer and how some of the changes you've been making to the product to make it easier to shop and more visible from a shopping standpoint, how that narrative may be changing or whether you disagree with it entirely. But I just would be curious how you react to it.

Yes. Thanks for the question, Rich. What I would say is I think that commentary is half right. And half right in the sense that like, yes, we do see consumers coming to Pinterest when they have sort of a kernel of an idea, a beginning of an intent, but haven't yet decided what to buy, which, again, is a magic moment for the advertiser to meet that consumer. Historically, Pinterest had that, but didn't have that last click, didn't have the conversion. We absolutely are delivering the clicks and conversions now, and I've shared that. Some folks that may not have looked at them more recently or may not have adopted all of our tools or maybe were not yet integrated into their measure solution, which is why we had so much focus on those things, that sort of illustrates a little bit of -- there's an earlier question around how do we bridge the delta between the extremely strong growth in clicks and conversions relative to the revenue growth, that gets to a little bit of that, that from a user perspective, the users absolutely are clicking and buying on the platform in addition to what they used to do, which was curate sort of planning ahead. Now it is all of those things, it truly is the full funnel. But as we've noted before, we're working through an adoption cycle with our advertisers. And the largest, most sophisticated advertisers have -- this way I've talked about them coming on the most quickly because they integrate through APIs, they're the most sophisticated, they see the arbitrage very quickly. And that's where we saw our strength first. Then we talked about that next group down in the sort of $1 billion to $30 billion in sales range is the group that we're starting to penetrate more and more with Performance+ and with our work to go meet the advertiser where they are through their measurement solutions, but we see that continuing on to more and more advertisers as we make it easier and easier to engage there. The last thing I'd say is, again, in this moment, one of the things that we are uniquely equipped to do is that there are places, or if you're using third-party cookies things like that, where people can see what users clicked and bought. We're able to see what users are planning to do before they do it. And in moments where you may have uncertainty, where there may be rapidly shifting consumer trends, we get insight into that well before it shows up in third-party purchasing data or those kinds of areas, and that makes us a great partner to advertisers, particularly those that are savvy enough and fleet-of-foot enough to go respond to rapidly shifting consumer demand. So again, that's an emerging area of strength for us that's just core to how our platform is unique in the industry with truly now having that full funnel. But again, I think that commentary speaks to where we still have perception to shift, but those that have been astute and, on more sophisticated, didn't have gold up quickly, but we've got to make it easy for everybody else to access the too. And so we're doing that work to make sure we meet them where they are. And we're well down that path, but again, a lot more of that runway ahead of us. Hopefully, that helps.

The next question is from Doug Anmuth with JPMorgan.

I just want to ask about capital allocation. You repurchased about $175 million of stock in 1Q and I think have $1.7 billion authorized. Can you just talk about how you're thinking about capital allocation strategy currently in light of valuation, but then also the current macro backdrop as well?

Thanks, Doug. Yes. So we noted in Q1, we did buy back $175 million of shares, as you called out. In addition, we also utilized $94 million in net share settlement of equity awards. So these 2 actions together combined led to a 2.2% decline in year-over-year fully diluted share count. So we're clearly more than offsetting dilution in a meaningful way here. We do have $1.7 billion remaining under our share repurchase authorization. And we have the discretion to determine the timing and amounts of any buybacks under that program, and we will use that discretion thoughtfully over a multiyear period, particularly when the stock is trading at an attractive valuation level. Our overall capital allocation framework hasn't changed from what we laid out at our Investor Day in late 2023. We have lots of potential uses for our cash, stock buybacks, certainly being one of them that you've seen us use here multiple times to mitigate dilution. We're always looking at ways to optimize our balance sheet, preserving flexibility for opportunistic and disciplined M&A, and obviously, first and foremost, investing in our product and technology innovation, as you've seen us do for many quarters now. So that overall capital allocation philosophy remains consistent with what we laid out at Investor Day.

Our final question on today's call will be from Justin Patterson with KeyCorp.

Great. Bill, you've had great engagement gains over the past 2 years, but we're also now in a world where there's more uncertainty on how AI is impacting search. As a business that's had the intersection of search and social, could you expand a little bit more on how visual search and other product initiatives can keep that engagement going?

Yes. Thanks for the question. We think we have a really unique space in this because, yes, we're at this intersection between not only social and search, but also commerce as well. And I shared on the call, I've talked about this extensively since I joined the company that the curation signal at Pinterest just gives us really, really unique signal to do something very different with the AI. I've long had the view that AI, just like cloud compute, would become basically building blocks available to everyone, but then it thrives on feedback loops, and so who has unique feedback loops in their business to do something special with it. The really, really unique feedback loop that Pinterest has that, again, I don't believe exist any place else in the Western world, is users curating their purchases before they make the purchase. And doing that in a purely visual format gives us really, really rich signal. So when I shared on the call that our multimodal model that powers our visual search is 30% more likely to identify and recommend relevant content from our corpus than leading off-the-shelf models, that is both a great credit to the fact that AI is a core competency, and we've got some amazing AI engineers at Pinterest, but it's also about that curation signal that we get. So there's also, I think, a broader discussion of a group of sort of very large general purpose models. But then also, you're seeing now more fit-for-purpose models that can be smaller, focused, solve individual use cases better than the general purpose model. And I think this, again, is an example of that. But at the core of your question of how do we compete, if you look at search generally, search has been fragmenting for quite some time and federating for quite some time. And while you still have some amazing players that are thriving and doing well in the sort of general purpose search arena, there's also been great growth in those that are going after specific areas of that. And so I think with Pinterest, our focus on purely visual, our commercial intent, the unique curation, again, I think as a user experience, that doesn't exist elsewhere. And we talked about 85% of our users come to our mobile app directly. They're all signed -- all of our mobile are signed in users. So we have history and intent in curation and rich signal that, again, I think, is a durable advantage for us in terms of what experiences we're able to deliver versus other experiences that don't have that or more focused on general purpose. And again, I think there's so much growth here that many can thrive. We're not in the game of general-purpose search. But I think in our use case, which I think applies across many categories, shopping is our first category, we've talked about other emerging verticals that are very visual as well where this can be highly applicable also. So I think that is allowing us to bring more and more adjacencies in. And again, even as you've seen great innovation across the industry, I think the best comfort I could offer you around this is even as you've had amazing general-purpose chatbots, great advances in search we’re large, we are putting up all-time highs in users, all-time highs in depth of engagement as reported in our 10-K. And again, I think that is reflective of that really unique curation behavior of our users and what that allows us to uniquely do with AI based on that signal that we just couldn't do with the very best off-the-shelf models.

Thank you. That concludes our Q&A session. I'll hand the call back over to Bill Ready, CEO, for closing remarks.

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