Q4 2025 Earnings Call — February 12, 2026
Analyst: Interest? And then Julia just mentioned this, but what's the lag period between when the new team kind of comes together and when it might be generating positive results in the form of share gain? Thank you very much.
Management: Thanks, Ross. So Lee's only been here for a few weeks, but he's already moving quickly and taking decisive action. As with any sales transformation, there can be 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're doubling down on broadening our revenue and consistent with the areas that we've been talking about with you 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've made good progress on this we've doubled the growth rate of our managed SMB business. We expanded with mid market enterprise advertisers and the one to $30 billion 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. Uh, you know, we need to restructure and reallocate resources across those, 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, you know, we're also doubling down on measurement and technical capabilities within our sales team. We've 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's 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 don't own the click or conversion. You'd see this reflected in others talking about, quote unquote, modeled conversions. This is an area where we know we haven't moved fast enough, but we're laser focused on addressing this and we talked about some of the successful pilots that we've already put in place and that we have underway.
So while we expect this to play out over a couple of quarters, we're 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've talked about previously. Thank you, Ross.
Analyst (Ken Gorowski, Wells Fargo): Thanks so much. I want to just follow up a little bit on this last point about broadening the advertiser base. And I know, Bill, you talked about this in the prepared remarks around, you know, 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 and broaden and deepen that advertiser base? That's question one. And just to follow on, on the engagement side, you know, you've seen, it's 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've 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 to see the ad revenues kind of decelerate here. And I understand there are specific pressures, but maybe you could just talk a little bit about the dynamics around, you know, 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 the consumer is less healthy. Thank you.
Management: Thanks, Ken. So, you know, like the rest of the market, we're seeing strong performance amongst our managed SMB business. We actually, you know, it's one of the fastest growing parts of the market and a part of the market that we've been, you know, under indexed to, uh, these advertisers represent approximately 15% of our revenue today. So we are very active there.
But it's a lower percentage than other platforms. Um, 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 of our multi-year period to make us a larger part of the business. And again, we think that's where we see competing platforms having significant growth.
And so that growth we have had there demonstrates that we've got product that can compete there. SMBs who are adopting Performance Plus campaigns to automate and simplify campaign 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 non-adopters.
So the ongoing improvements we're 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's 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'll take time, but Lee 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'll give it to Julie to hit some of the other part of your question there.
Management: So I would just add on to that, and we'll hit Ken. Ken, I think you had a second question on sort of engagement, which we'll go back to. But I just want to add on that to SMB. You know, 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've talked about in previous quarter, right? Other growth drivers include deepening our share of wallet with mid-market enterprises, growing internationally, growing with agencies and UCAN and internationally, and using third-party demand to complement our first-party business.
We're also continuing to drive growth in emerging verticals, including financial services, telecom, 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'll turn it back to Bill for that.
Management: Yeah. On the engagement side, a couple of things I'd note. We've talked about this, that to transform the platform, we need to start with users first, get the shopping behavior and the search behavior. And on that engagement, we talked about the 10 straight quarters of record high users.
I actually think one of the things, we shared this for the first time last quarter, and I don't 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 billion monthly searches that we're doing. To put that in context, 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 billion monthly prompts.
And so we're doing 80 billion monthly searches and generating 1.7 billion monthly clicks. Um, you know, that makes us one of the largest search destinations in the world. And importantly, um, you know, more than half of those searches are commercial in nature, uh, compared to, I think, you know, open eyes share 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 doing, you know, approximately as many searches per month as, 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 measurements so they could see that and lean more into their budgets. If you step back from it, we're 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, you know, the largest ad platforms in the world that have been at this for 20 plus years that we're 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 midsize retailers that we've been talking about and SMBs and international.
And now moving beyond our O and O, just the complexity of that sales organization has increased significantly and the need to have technical, uh, performance selling ability, uh, 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're talking about and where, you know, not only do we think there's 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've shared in my remarks, search is more up for grabs than it ever has been, at least in the last 25 years.
And I'm not aware of another company in the Western world that could claim anywhere close to the search volume that we're talking about, other than us, ChatGPT, or us, OpenAI, and Google. 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.
Analyst (Eric Sheridan, Goldman Sachs): Thanks for taking the question. Maybe building on the answers so far in the call, Bill, 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 industry is moving towards 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'll just ask the one and leave it there. Thanks.
Management: All right. Thank you, Eric. Over time, we believe ad dollars will ultimately flow towards clicks and conversions, and we have that engagement. And 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've created one of the largest search destinations in the world now with 619 million global users and shopping as a primary use case. We have one of the highest commercial intent audiences of any platform. Again, we're 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, aren't necessarily highly performant.
We think there's 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's a real opportunity in that commerciality beyond just our O and O surface. And this has happened before. You've seen this play out before where those that have high commercial intent are able to monetize that across multiple surfaces, including beyond their own.
So we think that, again, we acknowledge that the revenue performance we put up in Q4, while pressured by the tariffs and 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're getting, the high commercial intent, and our ability that we've 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 billion 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, 1.7 billion monthly outbound clicks.
There's a lot of that that we still have to monetize, but we have a clear line of sight to do. We just have to do that across a broader set of advertisers, and we think that is quite unique in the ecosystem, and there's room for multiple winners. So even as another new search player comes in, I think there's room for multiple to succeed, and what we're doing with the, you know, completely visual for nature of our platform, you know, those 80 billion monthly searches, the vast majority of those are visual in nature.
It's just completely different than what anybody else is doing. We think that's a distinct space that, uh, you know, not only are we winning there now, we see the very unique data that we have giving us a sustaining advantage of that.
Even as AI advances, we talked about how we're 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 34 percentage points on the relevancy of shopping recommendations.
That's really about that flywheel effect of the unique signal on our platform and the AI, you know, trained on that unique signal. So those are all the things I'd point to that give us confidence that, you know, and I think, again, it's best demonstrated by what we've 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's a lot more monetization opportunity ahead, even just for the engagement that already exists on the platform today. Hopefully that helps.
Analyst (Colin Sebastian, Baird): Great. Thanks for taking my question. I guess, you know, maybe for Julia, but obviously a lot of moving parts here. But given some of the top-line headwinds of Salesforce transition and the opportunities you have to unlock with some of the reallocation investments, could you maybe walk through in a little more detail to put some takes on the adjusted EBITDA outlook for the year, just as we move through the year, and then you balance some of the impacts from some of those various factors? Thank you.
Management: 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're 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 improvements 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 million of annualized 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 standalone Pinterest business in 26 compared to 25.
On top of that, we expect the acquisition of TV Scientific which is higher growth business, but also earlier stage business. So we expect the acquisition of TV Scientific to be an approximate 100 basis point headwind to full year adjusted EBITDA margin, including some modest further deleverage on cost of revenue.
So we'll 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 26%. As I said before, we've made significant progress against our long-term targets, reaching 30% and 25%, and obviously this continues to be a very structurally high-margin business, and we continue to have conviction in margins reaching 30% to 34% over the medium and long-term. Thank you, Colin.
Analyst (Brian Nowak, Morgan Stanley): Thanks for taking my question. Just to go back to the advertising go-to-market change so we can sort of understand a little bit what you want to really change this year, Bill. Can you give us sort of a couple 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-market that you're most focused on to make this right?
And then secondly, with the first quarter guide, I think you might've mentioned there's 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.
Management: Yeah. Thanks for the question. So in terms of like how we're thinking about it, one, we should step back and put things in context for a moment. We only started building a true performance ads platform just a few years ago. Our first true CPC product for advertisers wasn't launched until didn't go GA, uh, until Q4 of 2023.
So we're sort of two years and a quarter, um, you know, two years and a partial quarter into even having a platform that sort of clicks to advertisers. As we've talked about before, we started with the very largest advertisers. We've 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, we went GA at the start of 25. As we deployed that through 25, we saw that working well. As I mentioned, we doubled the growth rate of our SMB, our managed SMB population. That's now 15% of revenue, but we know that can and should be much larger.
And so, you know, it's a different kind of selling, you know, to those kinds of advertisers. You know, the things that we need to do to run that, you know, also the measurement integrations that we need to do as they rely on a different set of measurement partners than what the very largest advertisers would.
So, you know, that is part of that go-to-market, which is how do we have those sellers set up to sell performance, understand the measurement, particularly measurement sources 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.
Those are some of the things that we're driving through. And again, it leaves only a couple of weeks in, but these are things that we have made progress on this. Again, doubling the growth rate of SMBs over the course of 25 years. we've made progress. So we have clear line of sight what to do. We just need to take bigger, bolder steps.
And we're confident now with Lee here, we've got the right leadership in place to go do that.
And the second part of your question, you know, in terms of Q1 and what I was referring to there on the near-term disruption, I think, you know, 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're kind of getting ahead of that and backfilling those roles, obviously, you know, it'll take a little bit of time for those new folks to come in and ramp up to full productivity. So I do think we're anticipating a little bit of that impact here in Q1, but all of that is factored into the guidance. Thank you, Brian.
Analyst (Justin Patterson, Key Corp): Great. Thank you. Billy, you mentioned earlier that Pinterest's visual feed brings the promise of agentic commerce to life without having to enter prompts. Could you expand some more on just what agentic commerce means for Pinterest and the steps to get there? Thanks.
Management: Yeah, thanks for the question, Justin. The broader promise of agentic has tremendous potential, and we're 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, all without the user having to do as much of the work. That's exactly where Pinterest has been leaning in. Our visual search discovery and personalization means that users are instantly met with relevant products that they're interested in when they open up the Pinterest app.
We're helping them complete those commercial journeys without having to type in a single prompt. So that is the agentic nature that we are solving for already, which is the user doesn't have to tell us what next step to take. We're meeting them with products and recommendations that help them along their commercial journey.
In essence, we're helping our users know what to buy before they know what to ask for, which has historically been one of the biggest problems in search is that people don't have the words to describe what it is they're looking for. So on top of that, we've 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're seeing very strong traction and real-world application of this type of experience for users with our AI capabilities at the core of how we're 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. In the future, when users are, well, right now, 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'll 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 again, I think there's 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're 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's the thing. Give it to me. I press a button and it's on the way.
And that's what's happening on the platform today and why, you know, we're seeing the, you know, very strong user engagement trends that we talked about. Thank you, Justin.
Analyst (Ron Josie, Citigroup): Great. Thanks for taking the question. I want to ask, too, really quickly, just, 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, it expands beyond the platform. Just talk to us how this acquisition can open up larger budget pools as it just accelerates both TV Scientific as well interest overall scale and then on the go to market and the revamp that we're planning there in the first half of the year would love your thoughts just where are we on the process there I know obviously Lee just doing not too long ago but any insights on additional insights on timing and like rebuilding that team thank you.
Management: Thanks, Ron. Uh, so on TV Scientific, uh yes you're exactly right, you know, we've we've you know over the last couple years 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 performant ads on other surfaces based on knowledge of that intent. And in terms of – this is an area we've been sort of studying and experimenting in for a couple years now – um, and you know, we, uh, we started with a partnership with TV Scientific, uh, to allow us to sort of understand their technology, their team.
Uh, and we moved from that to acquisition because, uh, you know, they're driving today, you know, search type performance advertising in TV and connected TV, uh, which is very aligned with our approach. And we think we can, when we combine that with our very highly commercial audience.
As I've shared a few times, you know, over 80 billion monthly searches, um, you know, in, in that being primarily visual, which obviously would align with, you know, TV and sort of the visual nature of that. We think there's a lot we can do to, uh, together drive more performant connected TV advertising, uh, which is one of the fastest growing, you know, uh, 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's a lot we can do to bring performance there. So hopefully that helps on the TV scientific acquisition.
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 we're quite excited about the opportunity.
On the other part, on the go-to-market revamp, I have commented on that a good bit. And so the timing and rebuild, these things do take some time. We are in flight on these things already. Again, the way I would characterize this as looking back at 25, we talked about diversifying the revenue base all through 25.
We were talking to you all about that on the calls then of expanding to those midsize 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 so all that to say, we're not starting for the first time on these things. It's really about how do we learn from the efforts we've had so far, double down, go faster with greater clarity with those teams and bolder decisions around what are the different levers needed for those different segments of the business?
It's just a more complex selling organization. Again, I think we've got the right leadership in place now with Lee to go after that. But time zero is not at this moment. This is really about sort of us finding the next gear in that transformation.
We have a 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've got clear line of sight to how these have already been faster growing areas for us, and it's really about us doubling down in those faster growing areas. Thank you, Ron.
Management: That will conclude the question and answer session. I would now like to pass the conference back over to Pinterest CEO Bill Reddy for closing remarks.
Management: 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. That concludes today's earnings call. Thank you for your participation and enjoy the rest of your day.