PINS - NYSE

Good evening.

Thank you for attending today's Pinterest, Inc. Fourth Quarter and Full Year 2025 Earnings Call. My name is Megan, 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. If you would like to ask a question during that time, please press star 1 on your telephone keypad. We ask that you limit yourself to one question. I would now like to pass the conference over to Pinterest, Inc.'s VP of Investor Relations and Treasurer, Andrew Somberg. Andrew, you may proceed.

Good afternoon, and thank you for joining us. Welcome to Pinterest, Inc. earnings call for the fourth quarter and full year ended 12/31/2025. Joining me on today's call are Bill Ready, Pinterest CEO, and Julia Donnelly, our CFO. The statements we make on this call reflect management's view as of today and will include forward-looking statements. Such statements involve a number of assumptions, risks, and uncertainties, and actual results may differ materially. For information about assumptions, risks, uncertainties, and other factors that could affect our results, please refer to our Forms 10-Ks and 10-Q, each filed with the SEC and available on our Investor Relations website at investor.pinterest.com. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to 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 today are on a year-over-year basis unless otherwise specified. I will now turn the call over to Bill. Thanks, Andrew.

Good afternoon, and thank you for joining our fourth quarter and full year 2025 earnings call. Before I get into the quarter, I want to address the moment we are in. AI is changing how people discover, how they form intent, narrow choices, and move from inspiration to action. Pinterest is designed for this shift. When users have intent but do not have the exact words, brand, or product in mind, that is where we win. I am proud of how we have transformed the company over the past three and a half years. We have taken Pinterest from a platform with declining users into a growing AI-powered visual-first shopping assistant and search destination that has now put up 10 straight quarters of record high users. Today, we see over 80,000,000,000 monthly searches on our platform, most of which are visual, and generate 1,700,000,000 monthly outbound clicks. Over that same time period, we have launched numerous performance ads products to build a unique, full funnel ads platform, moving from single-digit revenue growth to consistent mid-teens or better revenue growth, all while significantly expanding margins. All of this combines to make Pinterest a stronger, more profitable business than ever before. We ended 2025 with 619,000,000 global MAUs, up 12% year over year in Q4. User growth accelerated in the second half as we continue to introduce AI-led features for both users and advertisers.

However, we are not satisfied with our Q4 revenue performance and believe it does not reflect what Pinterest can deliver over time. While we absorbed an exogenous shock this year related to tariffs, disproportionately affecting ad spend from our top retail advertisers, this quarter also underscored where we need to move faster. Most importantly, we need to further broaden our revenue mix and accelerate the next phase of our sales and go-to-market transformation. These efforts will be led by Leigh Brown, who joined in late January as our first Chief Business Officer. We are moving with urgency to return over time to the mid to high teens growth or better that we have been consistently delivering. The path forward is clear, and we are laser-focused on delivering the next phase of Pinterest. Our priorities, which I will walk you through today, are to, first, continue building differentiated visual search, discovery, and shopping experience. We have made Pinterest into a highly personalized visual-first shopping destination, and we need to continue to build on our strong momentum with users. Second, keep AI at the core of everything we do, from highly personalized user experiences and new features like Pinterest Assistant, to the advertiser experience through Pinterest Performance Plus, and to optimizing our own internal operations. And third, accelerate monetization through improved go-to-market and sales execution so our revenue consistently reflects the strength of our user activity. With that context, I want to begin where every platform starts, with users and engagement. It is clear that we are in a period of rapid innovation in our industry, with new AI chatbots quickly scaling to hundreds of millions of users. However, competing for user engagement is not new to us, and we have been able to thrive because we are doing something separate and distinct. During that same period when AI chatbots were scaling, we reported 10 consecutive quarters of record high MAUs, 100% of which are logged in, and reached 105,000,000 UCAN MAUs. The Gen

pins,

products, boards, retailers, and brands. A larger taste graph means we can surface more relevant content and make truly differentiated recommendations. Not only do we have differentiated signals, we are also leveraging AI in a highly capital-efficient manner. We are model-agnostic and focus on what delivers the best results for our specific use case, giving us the flexibility to test multiple approaches. As a result, we use a combination of AI models, including our own proprietary fit-for-purpose foundation models, leading third-party proprietary models, and increasingly open-source models that we fine-tune on our unique signal. In 2025, we introduced OmniSage, our core AI model trained on our taste graph to turn those associations into a single high-value recommendation signal used to retrieve and rank content. The application of OmniSage drove a 450 basis point lift in sitewide saves. Additionally, in a continuation of our work to increase context windows and bring a user's full history across all major surfaces on Pinterest, we developed a proprietary foundation ranking model called PinFM. This model distills lifetime user actions into the recommendations on the home feed and related Pins, driving personalization in nearly every impression our users see. This launch brought meaningful sitewide engagement gains, including a 240 basis point increase in saves across the platform. Finally, as open-source models have made tremendous strides in performance, we developed a model framework called Navigator 1, which allows us to leverage visual embeddings built on our taste graph and fine tune open-source models to power our newest AI-driven experiences. This framework reduces latency and delivers approximately 90% reduction in cost versus utilizing a leading third-party proprietary model. These models form the foundation for the next generation of AI-driven discovery experiences on Pinterest. A great example of this is Pinterest Assistant, which we launched in beta in Q4. Pinterest Assistant is a voice-activated, visual-first conversational assistant that will leverage Navigator 1 to expand our multimodal discovery capabilities and seamlessly flow between images, voice, and text. While we are still iterating, we are encouraged by how people are using the product. Compared with traditional text-based search, users are asking a significantly higher share of commercially oriented questions—about 25 percentage points more—when using Pinterest Assistant. Pinterest Assistant also helps users learn the names and terms for whatever they are looking for, making it easier to find similar items in the future. That is exactly the kind of high-intent, high-value engagement we want to enable. We expect to meaningfully broaden access to US users over the coming months. Lastly, AI is at the core of how we are improving efficiencies internally, as roughly 50% of our new code is AI-generated. Taken together, these advances give us confidence that we can keep improving relevance, engagement, and advertiser performance while remaining disciplined on AI spend by leveraging Pinterest's unique first-party data. With that, now I will turn to the fourth quarter and our priorities for the year ahead. As I stated upfront, we are not satisfied with our Q4 revenue growth, and we are moving with urgency to close the gap. Many of the largest retailers have been disproportionately hit by tariffs and have been pulling back on advertising spend across the industry as they seek to protect their margins. Our higher mix of large retailers relative to some of our peers has resulted in us feeling more of an impact. This highlights the need for us to further accelerate our growth with a broader set of mid-market, SMB, and international advertisers with less than $30,000,000,000 of GMV. This is the next phase of our sales and go-to-market transformation. Stepping back, as we were building our performance ads platform, we deliberately started by serving the largest retailers, given that is where consumers do the most shopping and was the fastest way to provide comprehensive inventory and selection to shoppers. This strategy has been effective, as reflected in our user and engagement trends and in our ad supply, with paid clicks to advertisers up roughly fivefold over the last three years. However, this strategy is also what has led to higher exposure to large retailers compared to some other platforms. We saw continued softness from this cohort of large retailers in Q4. While we see opportunity over the long term, the near-term outlook for this cohort on our platform remains pressured given these headwinds. At the same time, the scale of the monetization opportunity we are pursuing has grown significantly. We are now competing for full funnel and performance marketing budgets across a broader range of advertisers and global markets than ever before. We made significant progress growing with a broader set of mid-market, SMB, and international advertisers in 2025, but not enough to offset the headwinds that the largest retailers faced. So we have proven we can serve mid-market, SMBs, and international advertisers, but we need to accelerate our growth within these segments. Also, while we have made progress evolving our sales organization from primarily selling upper funnel brand advertising a few years ago to full funnel and performance marketing, our monetization still does not fully reflect the value of the clicks and conversions we are driving. This quarter made it clear that capturing this opportunity requires a higher level of sales and go-to-market sophistication, with globally scaled selling motions as well as deeper technical expertise, particularly around measurement and attribution. To lead this next phase, we are pleased to welcome Leigh Brown as our new Chief Business Officer with responsibility for scaling Pinterest's global monetization

efforts.

Leigh is a proven business and sales leader with deep experience building and growing advertising businesses at the intersection of technology, media, and commerce. Claudine Cheever also joined us in February as our new Chief Marketing Officer, bringing extensive background with the world's largest online retailer. With this leadership in place, we believe we have the right team to pursue the significant long-term opportunity ahead. Now let me turn to the key levers we will be executing against as we move through 2026.

First, as I have shared,

we are prioritizing broadening our revenue mix with a primary focus on deepening our footprint with both mid-market enterprises and SMB advertisers. These advertisers, who on our platform range from roughly $30,000,000,000 down to tens of millions in annual GMV, continue to represent a significant opportunity for us to scale advertiser demand. Relative to the largest advertisers I was describing earlier, we believe this group has exhibited stronger advertising spending trends in the current environment and has been a strong growth driver for competing ad platforms. By further unlocking this opportunity, we create a powerful flywheel. More diverse advertiser demand allows our models to serve more relevant, highly personalized ads to users. This relevancy not only improves the user experience but drives superior performance for our advertisers and higher yield for Pinterest. While we are seeing healthy revenue growth from this group today, we believe we can accelerate that momentum over time with new leadership and a more sophisticated go-to-market approach, along with the enhancements we are making to Pinterest Performance Plus that I will talk about in a moment. As part of our multiple ways to win, we have also been on a multiyear journey to bring in new sources of demand via multiple third parties to complement our first-party demand. We previously announced the agreement to acquire TV Scientific, a leading connected TV performance advertising platform. This acquisition is an important step toward leveraging our valuable, high-intent audience beyond Pinterest's own surfaces and starting to monetize off-platform supply. Acquiring TV Scientific, which comes after a partner and several years of exploration in this space, supports our roadmap to make Pinterest a full funnel and performance solution across search, social, and, over time, connected TV. It opens up larger and incremental budget pools. We are excited to welcome this outstanding team and to begin helping advertisers reach our high-intent audience on connected TV. Second, we are continuing to advance Pinterest Performance Plus by investing in the next wave of bidding and performance enhancements. Since 2023, we have increased the number of shopping SKUs with a paid ad impression by roughly five times. Over the past year, we accelerated this trend with the launch of Pinterest Performance Plus ROAS bidding in Q1 2025, which adds more granular bidding functionality and allows advertisers to optimize for conversion value, not just the number of conversions. We still see significant opportunity to deepen catalog penetration, as we remain a long way from having bids and budgets against advertisers' full product catalogs. As advertisers increasingly adopt AI-driven automation platforms, the next step is optimizing our bidding system to become more tightly aligned with the advertiser's measurement source of truth. Late last year, we began to pilot integrations with a few of our most sophisticated advertisers' proprietary in-house measurement systems to help us optimize bids to drive more of the outcomes those advertisers value. So far, this pilot has delivered promising results, with one advertiser increasing its bids on Pinterest by more than 30% reflecting the higher value it was seeing from the platform under this new value-based optimization approach. We expect to expand this pilot to additional large, sophisticated advertisers in 2026. To serve an even broader set of advertisers who rely on third-party measurement partners, later this year, we will enable deeper, direct integrations between Pinterest and a number of measurement partners. These integrations will allow automated two-way data transfer so we can continuously train and optimize our bidding models to reflect advertisers' highest-valued outcomes, and thus show up more favorably in their measurement systems. Additionally, these measurement systems are increasingly assigning more credit to events leading up to a conversion, such as view-through attribution. For example, Omnilux, a leader in medical grade LED light therapy, partnered with Pinterest and its measurement partner, Northbeam. After leveraging Northbeam's clicks plus deterministic views model, Omnilux saw a seven times increase in attributed transactions to Pinterest through view-based attribution. For a full funnel platform like Pinterest, this shift should support increased budget allocations over time. As part of our broader effort to give advertisers more control over expressing what matters most to them, and building upon campaign customer groups which we introduced two quarters ago, we recently entered beta for Pinterest Performance Plus New Customer Acquisition. Available exclusively through Pinterest Performance Plus campaigns, this feature helps advertisers efficiently acquire new customers by allowing them to assign their own customized values to different audiences. We can optimize toward that outcome. In initial testing, advertisers saw new customer conversions increase by an average of 64% in campaigns where New Customer Acquisition was enabled compared to control campaigns without it. In closing, this is a moment of extraordinary innovation at Pinterest and across our industry and one that we have been building toward for the last several years. Our user and engagement trends reinforce that our product direction is working, and we know where we need to execute better to drive faster and more durable growth to ensure monetization follows that engagement. Importantly, I am proud not only of what we are building but how we are building it. We have made deliberate choices that put user trust and well-being, especially for young users, at the center of the experience, and we are seeing those choices rewarded as more users than ever come to Pinterest each month. It is clear that parents and regulators around the world are raising the bar for online safety, particularly for teens and kids. We are proud to lead the way by tuning our AI for positivity and giving our users more agency and choice over their experience. This positions us well as these standards evolve. We are creating a positive place on the Internet where people can invest in themselves, and proving that you can build a strong business based on positivity. With that, I will turn the call over to Julia to share more details about our financial performance.

Thanks, Bill, and good afternoon, everyone. Today, I will be discussing our full year and fourth quarter 2025 financial results and provide an update on our first quarter 2026 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. I will start with our fourth quarter results. We ended the quarter with 619,000,000 global monthly active users, or MAUs, growing 12%, our tenth consecutive quarter of record high users. We continue to demonstrate user growth across all of our geographic regions. In Q4, our US and Canada region had 105,000,000 MAUs, growing 4%. Our Europe region had 158,000,000 MAUs, growing 9%. And in the rest of world markets, we had 356,000,000 MAUs, growing 16%. Moving to revenue. In Q4, our global revenue was $1,319,000,000, up 14% year over year, or 13% on a constant currency basis. We saw strength from our conversion objective. Across verticals, growth was driven by retail, though with puts and takes within that as we have described, and driven by smaller but faster-growing categories on our platform, including financial services and telecom. Turning to our geographical breakouts for Q4. Revenue in the US and Canada was $979,000,000, growing 9%. Growth came from retail, financial services, and telecom. In Europe, revenue was $245,000,000, growing 25% on a reported basis or 18% on a constant currency basis. Growth in Europe was driven by retail but was lower than our expectations. We saw a second-order effect on cross-border spend from certain large global retailers who pulled back ad spend in Europe, as well as UCAN, as they recalibrated across their global portfolio due to the same tariff and margin pressure as Bill described earlier. Revenue from Rest of World was $96,000,000, growing 64% on a reported and constant currency basis. In Q4, overall ad impressions grew 41% while ad pricing declined 19% year over year, driven primarily by the continued mix shift impacts from growing ad impressions in under-monetized international markets. Moving to expenses. In Q4, cost of revenue was $221,000,000, up 15% year over year and up 7% versus Q3 due to increased infrastructure spend related to our user and engagement growth. Our non-GAAP operating expenses were $562,000,000, up 13%. The increase was driven by headcount investments in marketing and R&D as we continue to invest in AI initiatives and grow our sales force. Within G&A, expenses grew at a higher than typical rate year over year, primarily due to certain legal costs not expected to repeat, as well as lapping certain insurance proceeds received in the prior year. In Q4, we delivered adjusted EBITDA of $542,000,000, with an adjusted EBITDA margin of 41%, up 20 basis points versus Q4 last year. For the full year 2025, free cash flow increased 33% to $1,250,000,000. This compares to 2025 adjusted EBITDA of $1,270,000,000, representing free cash flow conversion of 99%. Our ability to generate significant free cash speaks to the inherent profitability of our business and asset-light nature of our model. Investors should continue to analyze our free cash flow annually as quarterly free cash flow can fluctuate due to the typical seasonality of our business. We ended the year with cash, cash equivalents, and marketable securities of $2,500,000,000. We made further progress mitigating dilution in Q4 as we deployed $500,000,000 towards share repurchases, bringing our full year 2025 share repurchases to $927,000,000, a total of 30,000,000 shares. In addition, we utilized $399,000,000 of cash in the year on net share settlement of equity awards. Combined, for full year 2025, these actions have driven an approximately 1.6% decline in year-over-year fully diluted share count, which compares favorably to our stated positive 2% to 3% average annual target. Now I will discuss our guidance for the first quarter, which does not include any impact from TV Scientific as we await regulatory approval for closing of that transaction. We expect Q1 revenue to be in the range of $951,000,000 to $971,000,000, representing 11% to 14% growth year over year. Based on current spot rates, our guidance assumes the impact of foreign exchange to be approximately three points of tailwind in Q1. For the first quarter, we expect adjusted EBITDA to be in the range of $166,000,000 to $186,000,000. We anticipate Q1 2026 non-GAAP cost of revenue to grow sequentially from Q4 2025 by low single-digit percent. In Q1, within non-GAAP operating expense, we will focus our investments on our sales transformation and additional R&D hiring to support our AI efforts. Next, I want to share some color about the trajectory of margins throughout the year. Starting with cost of revenue. In 2026, we are making deliberate investments in high-ROI areas, such as GPU capacity to enable key AI initiatives. These investments will allow us to train and serve visual foundation models and our conversation models that advance our capabilities in multimodal search and discovery, as well as Pinterest Assistant. In addition, we will continue to build more powerful AI models that are enhancing full funnel ROAS for our advertisers and ads relevance for our users. We also have been signaling for some time that we have captured much of the benefit from our multiyear infrastructure cost optimization efforts and are now reaching diminishing returns. As a result, we expect modest headwinds from cost of revenue as a percentage of revenue in 2026. That said, we are acting decisively to free up investment capacity elsewhere within the company. In January, we announced a restructuring, including a series of organizational changes to simplify how we operate, reduce layers, and increase efficiency so that we can invest more intentionally in the areas that matter most, especially AI and our go-to-market transformation. The result of these offsetting dynamics is that we expect adjusted EBITDA margins to be roughly in line with 2025. So while we anticipate year-over-year adjusted EBITDA margin pressure in the first half, based on our current outlook, we expect full year 2026 adjusted EBITDA margin to be roughly in line with 2025 at approximately 30%. While the acquisition of TV Scientific has not yet closed, we do expect closing to happen in Q1 or Q2, which we anticipate would cause a roughly 100 basis point drag to adjusted EBITDA margin in 2026, leading to 29% for 2026 overall on a combined basis. To illustrate the potential revenue impact of the acquisition, I will also share that we estimate TV Scientific's Q4 2025 revenue would have contributed less than two points of growth to Pinterest revenue in Q4 2025. Stepping back, over the last two years, we have made meaningful progress toward our long-term margin goals. Adjusted EBITDA margins expanded by nearly 700 basis points from 2023, reaching 30% in 2025, reflecting both operating discipline as well as the inherent profitability of our model as we have scaled. Our margin outlook for 2026 reflects our decision to lean into the high-ROI investment opportunities we see for ourselves in this crucial moment and to capture the full opportunity ahead. However, our fundamental view of the profit potential of the business is unchanged, and we therefore still expect to achieve our adjusted EBITDA margin targets of 30% to 34% over the medium term. Given the strength of our user and supply dynamics, and the organizational actions we are taking to strengthen our sales and go-to-market efforts, we believe our revenue growth should be higher over time, and we continue to have conviction in our ability to reach our long-term targets. We are making the right decisions today to emerge from this period better positioned to compete for the large and growing opportunity ahead. With that, I will hand it over to Bill for some final words.

Thanks, Julia. I want to thank our team 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.

Thank you, Bill. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If for any reason you would like to remove your question, please press star followed by 2. Again, to ask a question, please press star 1. We ask that you limit yourself to one question. As a reminder, if you are using a speakerphone, please pick up your handset before asking your question. We will now open for questions. The first question will go to the line of Doug Anmuth with JPMorgan. Doug, your line is open.

Great. Thanks so much for taking the question. Can you just talk more about the drivers of 4Q revenue, including the home impact that you saw, then also how you are thinking about the 1Q guidance? Thank you.

Sure, Doug. I will take that one. So in Q4, our largest retail advertisers created a more meaningful headwind than we expected as they sought to protect their margins in this dynamic environment and pulled back on ad

spend.

We believe this pullback on ad spend from larger advertisers was felt across the industry but impacted our platform to a higher degree given our current revenue mix. We also saw a second-order effect of the same dynamic into Europe as well, with some of these same large global retailers pulling back on spend in Europe as they rebalance across their global portfolio. On the Home category, where there was a new furniture tariff enacted last October, the Home category remains challenged overall, but the performance there was generally in line with our expectations at the time of guidance. Looking ahead to Q1, we expect these headwinds will continue and may become slightly more pronounced in Q1, including in US and Canada and in Europe. It is also worth noting that we recently implemented a restructuring in January and are going through a sales and go-to-market transformation, and that may cause some near-term disruption, which we factored into our guidance to be prudent. All that is to say we are in a moment in time where both of these near-term factors are impacting us, and we know we have a lot of execution to do on the monetization side, and we have started that process. Visibility is not perfect, and obviously, we do not guide beyond one quarter. Looking kind of even beyond Q1, and, you know, we cannot predict the macro nor can anyone perfectly. But we are not seeing any new factors today beyond what we have described that would create more headwinds to our current trajectory. A few things to think about as we go forward to 2026. In terms of external factors, we have talked about the larger retailer headwinds, which we will start to anniversary in 2026. For internal factors, we talked about our measurement product release and sales and go-to-market transformation, which may take a couple of quarters to play out, but we are encouraged by the new leadership we have in place with Leigh and the quick actions he is taking there. So all of this will take time, but we are moving quickly to ensure our revenue matches the strength of the users and engagement we are seeing on the platform today. Thank you, Doug. Our next question will go to the line of Ross Sandler with Barclays. Ross, your line is open.

Great. Bill, can you elaborate on how you and we are changing go-to-market team and basically, how is this new organization or reorganized team likely to drive wallet share in digital advertising for Pinterest? And then Julia just mentioned this, what is the lag period between when the new team kind of comes together and when it might be generating, you know, positive results in the form of, you know, share gain? Thank you very much.

Thanks, Ross. Leigh has only been here for a few weeks, but he is already moving quickly and taking decisive action. You know, as with any sales transformation, there can be, you know, some modest disruption in the near term as we rebuild and retool the organization to best position the company for the long term, but we are doubling down on broadening our revenue. And consistent with the areas that we have been talking about with you all, you know, all of last year, particularly across mid-market enterprise and SMB advertisers and closing the monetization gap in international markets, including rethinking how we cover some of these areas. Over the past year, we have made good progress on this. We have doubled the growth rate of our managed SMB business. We expanded with mid-market enterprise advertisers in the $1 to $30,000,000,000 range. And international revenue growth accelerated to 38% versus 25% in 2024, but we believe growth in these areas should be higher, which is why we need to move faster and be bolder. And to do this, you know, we need to restructure and reallocate resources across those opportunities. We need to adapt more quickly to grow within the fastest-growing parts of the market that we see contributing more significantly to the overall growth of competing platforms. So we are also doubling down on measurement and technical capabilities within our sales team. We have made significant progress from where Pinterest was just a few years ago as an upper funnel-only platform and sales team to one that can compete for performance budgets with the largest, most sophisticated advertisers. But we know there is significant opportunity in driving greater performance selling capability across our sales organization and across the segments of the business beyond large advertisers. This is actually really important as the industry has advanced measurement and attribution with large platforms becoming more aggressive and claiming credit for outcomes even when they do not own the click or conversion. You would see this reflected in others talking about “modeled conversions.” This is an area where we know we have not moved fast enough. But we are laser-focused on addressing this and we have, we talked about some of the successful pilots that we have already put in place and that we have underway. So while we expect this to play out over a couple of quarters, we are planning, you know, we are planning prudently around it as we think these changes are essential for us to capture what we continue to see, you know, as a much larger, you know, long-term opportunity, more consistent with the long-term targets that we have talked about previously.

Thank you, Ross. Our next question will go to the line of Ken Gawrelski with Wells Fargo. Ken, your line is open.

Thanks so much. I want to just follow up a little bit on this last point about broadening that advertiser base. And I know, Bill, you talked about this in the prepared remarks around broadening beyond the large retailers. But can you talk a little bit more about how much tech investment beyond just kind of sales and go to market, but more tech investment might be necessary to broaden that advertiser base, broaden and deepen that advertiser base. That is question one. And just to follow on, on the engagement side, you know, you have seen it—it is kind of rare that we see in this industry where you see really strong engagement trends. You know, at least the third-party data that we follow suggests you have had very healthy time spent increases both domestically and internationally. And I think that syncs up pretty well with your commentary on these calls. But yet, you see that the ad revenues kind of decelerate here. And I understand there are specific pressures. Maybe you could just talk a little bit about the dynamics around your impression growth and, you know, and click outs relative to what you might, the pressure you might be seeing on pricing and maybe even conversion, if, if the consumer is less healthy? Thank you.

Thanks, Ken. So like the rest of the market, we are seeing strong performance amongst our managed SMB business. We actually think that is one of the fastest-growing parts of the market, and a part of the market that we have been, you know, under-indexed to. These advertisers represent approximately 15% of our revenue today, so we are very active there, but it is a lower percentage than other platforms. You know? And I mentioned the, you know, the revenue growth rate of this group nearly doubled in 2025 versus 2024. And so we see opportunity over a multiyear period to make this a larger part of the business. And, again, we think that is, you know, where we see competing platforms, you know, having, you know, significant growth. And so that growth we have had there demonstrates that we have got product that can compete there. You know, SMBs who are adopting Performance Plus campaigns to automate and simplify setup with AI are seeing stronger performance and are spending more on our platform. So as we noted last quarter, we see a 12% higher monthly revenue growth rate with these managed SMB advertisers versus nonadopters. So the ongoing improvements we are making to Performance Plus around measurement and attribution will be particularly important for this group as they have leaner teams and often rely on third-party measurement platforms to validate performance. So looking forward, we will continue to focus on driving Pinterest Performance Plus campaign adoption as well as simplifying the advertiser onboarding experience. So there is more for us to build on product, but the product that we have today we know can work and is driving good progress there. And, you know, it will take time, but Leigh and the team are focused on bringing a new level of sophistication to our go-to-market efforts, including how we sell to a broader range of advertisers, particularly with SMBs. And then, you know, I will give it to Julia to hit some of the other part of your question there. So I would just add on to add on to

that, and we will hit—Ken, Ken, I think you had a second question on sort of engagement, which we will go back to. But just want to add on that into SMB. Bill was talking about SMB as obviously a large opportunity for us, but it is sort of one of multiple ways that we have to win, as we have talked about on previous quarters, right? Other growth drivers include deepening our share of wallet with mid-market enterprises, growing internationally, growing with agencies in US and internationally, and using third-party demand to complement our first-party business. We are also continuing to drive growth in emerging verticals, including financial services, technology, and entertainment, all of which we think can help us build a broader base of revenue and more resilient platform over time. I think we had a second part to Ken's question as well, so I will turn it back to Bill for that.

Yeah. You know, on the engagement side, you know, a couple things I would note. You know, we have talked about this, that, you know, to transform the platform, you know, we need to start with users first, get the shopping behavior and the search behavior. And, you know, on that engagement, you know, we talked about the 10 straight quarters of record high users. I actually think one of the things, you know, we shared this for the first time last quarter, and I do not think it got as much discussion on the call. But as we talked to folks across the industry, it has really raised some eyebrows in terms of the 80,000,000,000 monthly searches that we are doing. You know, to put that in context, you know, you can go look at third-party data as to what other platforms are doing. If you ask ChatGPT how many prompts per month ChatGPT does, it will tell you about 75,000,000,000 monthly prompts. And so we are doing 80,000,000,000 monthly searches and generating 1,700,000,000 monthly clicks. You know, that makes us one of the largest search destinations in the world. And importantly, you know, more than half of those searches are commercial in nature compared to, I think, you know, OpenAI has shared that they have approximately 2% that would be commercial there. So not only have we created one of the largest search destinations in the world and are doing, you know, approximately as many searches per month as ChatGPT is doing prompts in a month, more than half of that is commercial. And so we have talked about how we needed to go from winning that engagement to then getting the advertisers behind that and then getting measurement so they could see that and lean more into their budgets. You step back from it, we are still relatively early on in that journey. You know, we only became fully committed to being a performance ad platform just a few years ago, and you have the largest ad platforms in the world that have been at this for 20-plus years that we are competing against. But the growth that we have delivered is really indicative of, you know, how much unique user engagement we have there. But, obviously, we have a lot more of that to do. And I would say our users and engagement are out in front of where our ad platform is. The ad platform has been growing significantly, and the ad platform is out in front of where our sales and go-to-market capabilities are. And as we are—as we have proven out that we can sell not only to those largest retailers, but also to those midsized retailers that we have been talking about, and SMBs and international, and now moving beyond our O&O, just the complexity of that sales organization has increased significantly, and the need to have technical performance selling ability, measurement ability within the sales organization—that has changed significantly as well. So these are the things that are embedded in that sales transformation that we are talking about, and we are—not only do we think there is a gap to cover between our monetization and our user engagement, we think that gap is quite significant and why we feel really encouraged about the long-term potential of our business. I shared in my remarks, search is more up for grabs than it ever has been, you know, at least in the last 25 years. And I am not aware of another company in the Western world that could claim anywhere close to the search volume that we are talking about, you know, other than us, OpenAI, and Google. You know, and, obviously, we have a lot more to do to monetize that, but we have a clear line of sight as to what we need to do to get there.

Thank you, Ken. Our next question will go to the line of Eric James Sheridan with Goldman Sachs. Eric, your line is open.

Thanks for taking the question. Maybe building on the answers so far in the call, Bill. You know, when you think about ChatGPT and their launching their own ad product and you have a lot of ambition for growth across the industry at the same time that the industry is moving more automation and more AI and machine learning, can you bring together your vision for how you see Pinterest broadly fitting into this increasingly competitive landscape for digital advertising budget dollars? I will just ask the one and leave it there. Thanks.

Alright. Thank you, Eric. You know, over time, we believe ad dollars will ultimately flow towards clicks and conversions, and we have that engagement. And, you know, that has continued to grow, including in UCAN, our largest, most mature market. So while this has always been a competitive market, we have a unique curation signal. We have a differentiated full funnel platform. And we have created one of the largest search destinations in the world now with 619,000,000 global users and shopping as a primary use case. We have one of the highest commercial intent audiences of any platform. Again, we are very early on in that monetization journey, but the others that would claim large search volumes are also very early. And so I think that, you know, the ad market is still quite large. You know, there are a lot of dollars still flowing to places that, you know, are not necessarily highly performant. We think there are a lot of dollars still up for grabs. As we deliver high commercial intent, strong performance, there are a lot more dollars available. And so I talked about, for example, the TV Scientific acquisition as one of us now starting to monetize our audience beyond our owned and operated. We think there is a real opportunity in that commerciality beyond just our O&O surface. And this has happened before. You have seen this play out before where those that have high commercial intent are able to monetize that across multiple surfaces, including beyond their O&O. So we think that, you know, again, we acknowledge that the revenue performance we put up in Q4, while pressured by the tariffs and our, you know, our greater mix towards large retailers, while that has presented some near-term headwind, the long-term commerciality of the platform, the very significant volume of search activity that we are getting, the high commercial intent, and our ability to—that we have now proven that we can drive performance advertising budgets—gives us confidence that, really, this is about how we get that performance to a broader set of advertisers through greater sophistication. And we think what we have is quite unique. I shared those stats, you know, again, 80,000,000,000 searches per month, you know, similar to, you know, what ChatGPT would say that it provides in prompts per month, but with a much greater mix of commerciality—50% of our searches being with commercial intent, 1,700,000,000 monthly outbound clicks. You know, there is a lot of that that we still have to monetize. But we have a clear line of sight to do so. We just have to do that across a broader set of advertisers, and we think that is quite unique in the ecosystem, and there is room for multiple winners. So even as, you know, another new search player comes in, I think there is room for multiple to succeed. And what we are doing with the, you know, completely visual-forward nature of our platform—you know, those 80,000,000,000 monthly searches, the vast majority of those are visual in nature—it is just completely different than what anybody else is doing. We think that is a distinct space that, you know, not only are we winning there now, we see the very unique data that we have giving us a sustaining advantage. Even as AI advances, we talked about how we are able to use low-cost, open-source AI and our own internal proprietary models, train that against that data, and then get very different results. I shared on prior calls that our latest multimodal visual search models outperform leading proprietary off-the-shelf models by 30 full percentage points on the relevancy of shopping recommendations. That is really about that flywheel effect of the unique signal on our platform and the AI trained on that unique signal. So those are all the things I would point to that give us confidence that, you know, and I think, again, it is best demonstrated by what we have done over the last 10 quarters of 10 straight quarters of record high users, but also, despite the sort of near-term bumps here, where we see that there is a lot more monetization opportunity ahead even just for the engagement that already exists on the platform today. Hopefully, that helps.

Thank you, Eric. Our next question will go to the line of Colin Alan Sebastian with Baird. Colin, your line is open.

Great. Thanks for taking my question.

I guess, maybe for Julia, but a lot—obviously a lot of moving parts here. But given some of the top-line headwinds, salesforce transition, and the opportunities you have to unlock with some of the reallocation of investments, could you maybe walk through a little more detail the puts and takes on the adjusted EBITDA outlook for the year, just as we move through the year and then you balance some of those, the impacts from some of those various factors? Thank you.

Thanks, Colin. So we anticipate adjusted EBITDA margins, as I said on the call, to be kind of roughly in line with 2025, excluding the approximately 100 basis point drag from the TV Scientific acquisition, which results in sort of 29% for full year 2026 overall. But to get into some of the puts and takes underneath that, we are intentionally investing in cost of revenue, specifically in GPU capacity, to enable key AI initiatives, which I described earlier in my prepared remarks. But we believe this will drive further improvement to advertiser performance and, therefore, advertiser budgets, and continued user and engagement growth. So we expect this cost of revenue investment to be approximately 100 basis points in 2026, similar to the gross margin outlook implied in my Q1 commentary earlier. Moving to OpEx. In January, we took action on a restructuring which we anticipate will generate approximately $100,000,000 of annual non-GAAP OpEx savings. Now, we expect to reinvest roughly half of those OpEx savings primarily in our sales transformation and in AI talent. So as a result, the net impact between the cost of revenue investment and the OpEx savings I just described gets you to roughly flat margins for the stand-alone Pinterest, Inc. business in 2026 compared to 2025. On top of that, we expect the acquisition of TV Scientific, which is, you know, a higher-growth business but also earlier-stage business—we expect the acquisition of TV Scientific to be a 100 basis point headwind to full year adjusted EBITDA margin, including some modest further deleverage on cost of revenue. So we will continue to be responsive to the overall environment and thoughtful allocators of capital. But based on what we see today, these are the puts and takes that get us to our expected 29% adjusted EBITDA margin for 2026. As I said before, we have made significant progress against our long-term targets, reaching 30% in 2025, and obviously this continues to be a very high-margin business, and we continue to have conviction in margins reaching 30% to 34% over the medium and long term. Thank you, Colin. Next question will go to the line of Brian Thomas Nowak with Morgan Stanley. Brian, your line is open.

Thanks for taking my questions. Just to go back to the advertising go-to-market change so we can sort of understand a little bit what you want really change this year, Bill. Can you give us sort of a couple of examples

of your current go to market

with SMBs and international and some tangible examples of what you would like to change 12 months from now, just so we can understand the KPIs and the go-to that you are most focused on, to make this right? And then secondly, with the first-quarter guide, you might have mentioned there is an assumption on some disruption expected in the advertising side. Can you just walk us through sort of, like, practically what are you expecting to be disrupted with the org change? Thanks. Yeah. Thanks for the question. You know, so in terms of, like, how we are thinking about it, you

one, should step back and put things in context for a moment. You know, we only started building a true performance ads platform just a few years ago. Our first true CPC product for advertisers did not go GA until 2023. So we are sort of two years and a partial quarter into even having a platform that drove clicks to advertisers. As we have talked about before, we started with the very largest advertisers. We have been working our way down. Our SMB—the main product that we needed to enable that for SMBs—was Pinterest Performance Plus because SMB advertisers need something that is much more automated, more set-it-and-forget-it. Pinterest Performance Plus went GA at the start of 2025. As we deployed that through 2025, you know, we saw that working well. As I mentioned, we doubled the growth rate of our SMB, our managed SMB population. That is now 15% of revenue. But we know that can and should be much larger. And so, you know, it is a different kind of selling, you know, to those kinds of advertisers. You know, the things that we need to do to run that—also the measurement integrations that we need to do—as they rely on a set of measurement partners different than what the very largest advertisers would. So, you know, that is part of that go to market, which is, you know, how do we have those sellers set up to sell performance, understand the measurement, particularly measurement source of truth that are used by the advertiser, and then how to help that advertiser get the most out of our AI-driven tools like Pinterest Performance Plus to configure those things for performance are some of the things that we are driving through. And, again, you know, Leigh is only a couple weeks in, but, you know, these are things that—we have made progress on this. Again, doubling the growth rate of SMBs over the course of 2025. We have made progress, so we have clear line of sight what to do. We just need to take bigger, bolder steps, and we are confident now with Leigh here, we have got the right leadership in place to go do that.

Yeah. And the second part of your question, you know, on terms of

Q1 and what I was referring to there on the near-term disruption, I think we obviously took the difficult decision to go through that restructuring activity in January. Part of that did impact some of our frontline sellers and on the measurement side as well. And so as we are kind of getting ahead of that and backfilling those roles, obviously it will take a little bit of time for those new folks to come in and ramp up to full productivity. So I do think we are anticipating a little bit of that impact here in Q1, but all of that is factored into the guidance.

Thank you, Brian.

Our next question will go to the line of Justin Patterson with KeyCorp. Justin, your line is open.

Great. Thank you. Bill, you mentioned earlier that Pinterest visual feed brings the promise of agentic commerce to life without having to enter prompts. Can you expand some more on just what agentic commerce means for Pinterest and the steps to get there? Thanks.

Yeah. Thanks for the question, Justin. You know, the broader promise of agentic has tremendous potential, and we are leaning into the places where we see the most opportunity to solve compelling user problems. So let me start with first the way we think about the broader agentic opportunity and what it really means for users. The promise of agentic is one where users trust AI to help them along a commercial journey, to remove friction, and to find products they love, you know, all without the user having to do as much of the work. That is exactly where Pinterest has been leaning in. Our visual search, discovery, and personalization means that users are instantly met with relevant products that they are interested in when they open up the Pinterest app. We are helping them complete those commercial journeys without having to type in a single prompt. So, you know, that is the agentic nature that we are solving for already, which is the user does not have to tell us what next step to take. We are meeting them with products that help them along their—and recommendations that help them along their commercial journey. In essence, we are helping our users know what to buy before they know what to ask for, which has historically been, you know, one of the biggest problems in search is that people do not have the words to describe what it is they are looking for. So on top of that, we have enabled capabilities that make the purchase in a single tap without ever leaving our site, most notably with Amazon. This has resulted in users, searches, clicks, and overall commercial intent all growing significantly and accelerating over the last three years. And in Q4, we accelerated our product even further, introducing Pinterest Assistant, which adds voice to the new modality. So we are seeing very strong traction in real-world application of this type of experience for users, with our AI capabilities at the core of how we are delivering on it. What we see less demand for in the near term is an experience where agents complete the full shopping journey without the user being involved at all. We see users wanting to be in the loop for the foreseeable future. And in the future, when users, you know, are—well, right now, you know, when users are ready to confirm a purchase, making it very seamless for them to do so. And at whatever point in the future users are ready to actually trust the agent to press the buy button for them, that will actually be one of the easiest parts of the commercial journey to solve, given how many frictionless buy buttons exist in the market today. So I think there has been a lot of discussion of the promise of agentic, and a lot of it sort of goes all the way to “the agent will just go do everything for you.” We are focused on the AI doing the thing that the users need the most help with today, and not getting in the way of the users for the thing that they want to make sure that they verify, which is, you know, the user being in the loop at that last moment saying, “Yep. That is the thing. Ship it to me.” I press a button, and it is on the way. And that is what is happening on the platform today and why, you know, we are seeing the, you know, very strong user engagement trends that we talked about.

Thank you, Justin. Our last question will go to the line of Ronald Victor Josey with Citigroup. Ron, your line is open.

Great. Thanks for taking the question. I wanted to ask two really quickly.

Bill, on TV Scientific, you talked about the new sources of demand and highlighted Pinterest, you know, third-party partners in the past. But with TV Scientific expanding beyond the platform, talk to us how this acquisition can open up larger budget pools as it just accelerates TV Scientific as well as

Pinterest's overall scale. And then on the go-to-market and the revamp that we are planning there in the first half of the year, would love your thoughts—just where are we on the process there? I know, obviously, Leigh just

just joined not too long ago, but any insights on timing and, like, rebuilding that team? Thank you.

Thanks, Ron. So on TV Scientific, yes, you are exactly right. You know, over the last couple of years, we have been bringing in third-party demand. This now is our first meaningful foray into third-party supply. And this is very consistent with what you would see from other high-intent platforms, where you can take the high intent that you have on your own platform and then drive more relevant, more performing ads on other surfaces based on knowledge of that intent. And in terms of—this is an area we have been sort of studying and experimenting in for a couple of years now. And, you know, we started with a partnership with TV Scientific to allow us to, you know, understand their technology, their team, and we moved from that to—because, you know, they are driving today, you know, search-type performance advertising in TV and connected TV, which is very aligned with our approach, and we think we can, when we combine that with our very highly commercial audience and the scale of that audience, as I have shared a few times—you know, the over 80,000,000,000 monthly searches, you know, and that being primarily visual, which obviously would align with, you know, TV and sort of the visual nature of that—we think there is a lot we can do to together drive more performant connected TV advertising, which is one of the fastest-growing, you know, areas of the ad market. So I talked about, you know, more exposure to SMB and international given that those are fast-growing. Connected TV is also fast-growing, and I think there is a lot we can do to bring performance there. So, hopefully, that helps on the TV Scientific acquisition. You know, it effectively turns Pinterest into a full funnel search, social, and connected TV performance solution, opening up larger and incremental budget pools. And, of course, these things take time, but, you know, we are quite excited about the opportunity. You know, on the other part, on the go-to-market revamp, you know, I have commented on that a good bit. And so, you know, the timing and rebuild—you know, these things do take some time. You know, we are in flight on these things already. Again, the way I would characterize this is, you know, looking back at 2025, you know, we talked about diversifying the revenue base all through 2025. We were talking to you all about that on the calls then, of expanding to those midsized retailers, expanding to SMBs, expanding to international. We executed on those things. I would say that we had good execution. We need great execution. And, you know, so all that is to say, you know, we are not starting for the first time on this thing. It is really about how do we learn from the efforts we have had, you know, so far, double down, go faster with greater clarity, you know, with those teams and bolder decisions around what are the different levers needed for those different segments of the business. It is just a more complex selling organization. Again, I think we have got the right leadership in place now with Leigh to go after that, but this time zero is not at this moment. This is really about sort of us finding the next gear in that transformation. We have really good line of sight to that. And I commented that with any of these kinds of things, you can expect at times a quarter or two of disruption as you move through some of those things. But, again, we have got clear line of sight to how, you know, these have already been faster-growing areas for us, and it is really about us doubling down in those faster-growing areas.

Thank you, Ron.

That will conclude the question and answer session. I would now like to pass the conference back over to Pinterest CEO, Bill Ready, for closing remarks.

Thank you 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.