Quarter 1
Q1 2026 Earnings Call — May 4, 2026
Doug Anmut (JP Morgan Chase): Can you talk more about the drivers of upside in 1Q across the core business, TV Scientific, and FX, and also how you're thinking about 2Q, and do you expect to maintain revenue growth in the mid-teens on an FX-neutral basis in the back half? Thank you.
Executive Name (Title): Thanks, Doug. So, you know, on Q1, the story of the strong Q1 is really two things. First is the continued broadening of our revenue base. And then second, you know, better than expected performance from our largest retail advertisers as we continue to drive improvements to the ad platform. In Q1, revenue growth excluding these large advertisers accelerated relative to Q4 as we continue to make progress diversifying our business across mid-market enterprise, managed SMB, and international. Overall, large retailers remained a headwind to growth, but AI-driven platform improvements, including bidding optimizations we delivered for these advertisers, began to offset some of this headwind later in the quarter. We're seeing strong early results there, including our efforts to link our AI bidding systems directly to advertisers' measurement sources of truth, and we plan to scale that pilot to additional large advertisers later this year. We don't intend to break out TV Scientific's revenue contributions specifically going forward, but I will say for Q1, the TV Scientific contribution was broadly in line with the updated guidance we gave in mid-February.
On looking ahead to Q2, given the change in FX impact in Q2, our guidance for Q2 revenue growth is roughly consistent with Q1 on a constant currency basis. Maybe just to dive in a little bit into some of the color by region. Starting with UCAN, where we generate roughly 75% of our revenue, we achieve double-digit growth in Q1 and UCAN, and we expect to repeat that in Q2. We're really encouraged by the stability we're seeing in that core market. We believe we're on the right trajectory there. International revenue is a smaller portion of our business, but there are a few factors which we expect to moderate international growth in Q2. You know, we're making deliberate leadership and structural changes to our international go-to-market organization to best position for the long-term opportunity, including a new head of international joining soon. As we said last quarter, progress as we rebuild and retool the organization will not always be linear, but that modest disruption is playing out here in our international regions in Q2. And then
as a reminder, in Q2, we're also lapping more difficult comparisons in rest of world and Europe today due to the ramping of resellers last year and elevated cross-border spend following the introduction of U.
S. tariffs. We're still significantly under-monetized internationally relative to the strength of engagement and commercial intent we see on the platform. So our long-term conviction in the opportunity in international is unchanged, and we think the changes that we're making now best position us to fully capture that opportunity over time. I think to your last question on sort of outlook for the rest of the year, we don't guide beyond one quarter, of course. But stepping back, I think, you know, the plans that we laid out last quarter to return to our mid to high teens long-term growth targets, they're proceeding well. And we're encouraged by the early progress here in the first half of the year. And the work that we're doing across the business is focused on returning us to consistent delivery of those targets over time.
Eric Sheridan (Goldman Sachs): Maybe coming back, Bill, to some of your comments about the hiring of Lee into the role in the organization. Just want to go a little bit deeper in terms of his areas of focus, what signal investors should be taking in terms of what that means for your go-to-market strategy, not only in 2026, but longer term. And how should we be monitoring that in terms of what we'll see showing up in the business in the years ahead? Thanks so much.
Executive Name (Title): Thanks for the question, Eric. So first of all, at the platform level, it's really important to remember that today our user engagement and commercial activity continues to outpace our monetization. So while we've made real progress building a full funnel performance ads platform, we the significant opportunity to broaden our revenue base across performance, mid-market, SMB, and international is still largely in front of us. Over the last three years, we've gone from primarily selling upper funnel ads to large US CPG and retailers a few years ago to selling full funnel performance solutions across more verticals, more advertiser segments, and more geographies than ever before. And as those channels have expanded, they've also introduced a higher level of scale and complexity, and that's exactly what Leah's laser focused on addressing. So that scale and complexity, it's a great thing for our business, but clearly a different operating approach for us to go fully pursue that opportunity. So what he's focused on first is bringing more accountability, more consistency, more operational rigor and AI tooling to how we go to market.
The through line across everything he's doing is making performance more visible and measurable and making sure we're executing with greater consistency across regions and teams. Some of the near-term changes I mentioned in my prepared remarks are already underway, including leadership changes across parts of the international and go-to-market organization, accelerating adoption of internal AI tools, and sharpening accountability across the sales force. We're also restructuring and reallocating resources so we can move faster in the parts of the market where we see the biggest opportunity, including mid-market enterprise, SMB, and international. At the same time, we're doubling down on measurement and technical selling capabilities across the organization, and that includes increasing accountability for our technical sales teams by adding product activation and customer engagement targets to how we measure performance. As the industry has advanced on attribution, we know that we need to move faster, and that's an area we're very focused on improving. So stepping back, I have high confidence in Lee and in the team, and we're already seeing good early progress.
The focus now is on building a go-to-market organization that matches the strength of the product foundation that we've spent the last several years putting in place.
Ross Sandler (Barclays): Julia, you mentioned that the small and midsize accounts accelerated in the March quarter. Just curious what you're seeing both in that area and with the large accounts since kind of the conflict started and what the early read is on 2Q. In particular, when do we expect the larger accounts to start to maybe pick up the pace a bit? And any thoughts there? Thank you.
Executive Name (Title): Yeah, happy to take that one. As we said, in Q1, the large retailers remained a headwind, but we did see some strength there later in the quarter, largely driven to add platform and product improvements. And then outside of those large retailers, the rest of the business, which is all the areas we've been talking about in terms of driving growth in, that accelerated, the rest of the business accelerated in Q1 relative to Q4. To your question sort of on macro and Middle East, I'd say broadly the environment that we're seeing in the ad market is relatively consistent from last quarter. You know, those large retailers do continue to navigate some tariff-related margin pressure, though we're seeing some stability there. And we're continuing to focus on how we grow outside of that business, driven by a lot of the product and go-to-market changes that Bill was just talking about and that Lee is really focused on driving. We are tracking the conflict in the Middle East, but I'd say the impact we are seeing so far from that conflict is small on a dollar basis based on what we now know. So we see it most directly in our rest of world region and to a lesser extent in Europe as well, where it's really isolated to certain verticals impacted by higher oil prices. But this has all been factored in as we thought about our Q2 guidance range.
Colin Sebastian (Baird): Maybe as a follow-up to Ross's question regarding the efforts to diversify the advertiser base, Performance Plus now running at approximately 30% of lower funnel revenue. I guess what adoption trends are you seeing within the mid-market and S&B segments? And related to that, given that Performance Plus adopters are growing their spend at, I think, twice the rate of non-adopters, how are you leveraging that? Tools like canvas and to lower those barriers for smaller advertisers. Thank you.
Executive Name (Title): Thanks for the question, Colin. So, as I noted, we're really encouraged by the progress in Q1, our business accelerated in the quarter, and that acceleration was driven by growth outside of our largest retailers. So the diversification we've talked about, we feel really good about the progress we're making there. On SMB, to be very clear, we're referring to advertisers with tens of millions to $100 million of GMV, not really the long tail of mom and pop advertisers. It's also important to remember that Pinterest Performance Plus only reached general availability approximately a year ago. For the first time, we have a product built to serve smaller advertisers that don't have the time, resources, or expertise to manage campaigns across multiple platforms. And we're only about a year into that journey, which we expect to be a multi-year cycle, just as it was for the larger platforms when they deployed their AI-driven automation suites. So early adoption is encouraging.
The 30% of our lower funnel revenue that's now running through Performance Plus campaigns, you know, we feel good about that, but obviously that's still early in the journey of capturing the full opportunity, both in terms of driving continued adoption because there's significant room to grow the adoption, but also because we continue to roll out meaningful performance improvements, a few of which I noted in the call, but we see much more opportunity for that to continue. And we're adding more functionality across bidding, targeting, creative, and measurement over time. And, you know, a lot of that on our in-house capabilities, our taste graph, things that we think we're really uniquely positioned to do and demonstrating that. I'd also mention that mid-market enterprise and international are also still relatively early opportunities for us. So, you know, we made a good start in both areas last year, and now we're focused on building the teams, processes, and the go-to-market motions required to serve a much broader set of advertisers at scale.
You know, the comment on a bit before, you know, that takes a different level of operational rigor than serving a smaller group of large retailers. And that's exactly what Lee's focused on building there. So we feel good about the early progress there. But we, you know, we still have a lot more to go there, a lot more of that opportunities in front of us. So we still very much believe that SMB, along with mid-market and international, can become, you know, a meaningfully larger part of our business over time. And, you know, we have the product and tooling able to do that. We're building on how to go to market to do that. But much more build still in front of us to fully capture that opportunity. But we're encouraged by the early progress. Hopefully that helps.
Jason Helstein (Oppenheimer): How are you viewing the impact from AI chatbots with respect to the competitive landscape and emerging visual discovery? And just second, I know you're not guiding for next year, but is there any way to think about how we should be thinking about expenses for next year relative to what may be a higher level of investment this year after the headcount reduction? Thanks.
Executive Name (Title): So, you know, obviously nobody can perfectly predict the future, but you know, we're actually several years into a massive AI adoption cycle. And that means that we can, you know, we can really learn a lot from what people are already doing, given that we're several years into the AI adoption cycle. So I would start first on answering your question. I would start with what we can see and what our users are telling us through their actions already. And it's important to note that at the same time chatbots have grown in popularity over the last few years, we've put up 10 straight quarters of double-digit user growth and deepening engagement per user. Users, including Gen Z, they're engaging with chatbots and Pinterest at the same time, but for very different things. So of Pinterest's more than 80 billion monthly searches, half are commercial in nature, whereas ChatGPT's own data says that only 2% of their prompts are commercial. You're seeing specialization versus generalization play out among the AI models on enterprise versus consumer. But consumer search has historically had significant generalization versus specialization split as well.
And we believe we have clearly carved out a unique and specialized use case on visual search and shopping. Again, as evidenced by the fact that many, if not most of our users have interacted with AI chatbots, but yet are deepening their engagement with Pinterest. And that's really because users come to Pinterest leaned in with intent. And Pinterest offers something that the other platforms aren't built to solve, which is visual search and discovery. We surface relevant, personalized recommendations before the user even knows how to ask what they want. And we connect that to real products that they can act on. So we're solving the I'll know when I see a problem, which is such a significant component of so many consumer shopping journeys. And again, we're seeing this dynamic play out right now, even amongst the largest players, where it's clear that focus has been more successful than others who try to be all things to all people all at once. So Pinterest is a specialized platform, and that's a position of strength.
It's very hard to be a text-based general purpose search platform and simultaneously deliver the depth of visual discovery and taste-based personalization that Pinterest offers. And specialization is where we believe we can win. And in comparison, general purpose chatbot platforms start with a blank screen and a command line interface, and the user has to know what to type, which is a meaningful barrier for discovery and planning use cases because often the user doesn't yet have the words for what they're looking for. And when these platforms generate an image, there's often no path to a real product, brand, or purchase versus Pinterest. On Pinterest, that same journey centers on shoppable content, product comparisons, and real purchase paths, particularly in a primarily visual nature. And on agentic commerce more broadly, you've also seen meaningful strategic pivots from some of the platforms that were most aggressively pursuing that space. That validates our view that the barriers to progress in agentic were likely not technical, but around user behavior and ecosystem incentives.
And we've been clear about partnering with advertisers and not disintermediating their relationship with customers. So hopefully that helps to give a little more color, and I'll give it to Julia on the second part of your question.
Executive Name (Title): Yes, I think it's obviously too early to talk about sort of 2027 margins specifically. However, I will reiterate what we said on the last call about the long-term targets of 30% to 34% adjusted EBITDA margin still being the right ones and still be the ones we're shooting for here in the medium term. Obviously, we laid out those targets at the very end of 2023. We made very quick and rapid progress towards those targets. This year, we're aiming for 29 percent, partially because we're including TV scientific. But if you exclude that, we're basically flat year over year. But I still think those 30 to 34 percent targets are the right ones to be focused on. And we'll have more to say specifically on the exact trajectory for 2027 as we get later into this year.
Justin Patterson (KeyBank): Bill, I wanted to touch on your deepening engagement point a little bit more. What do you see as the core levers that continue doing that? And given UCAN is a more established market, how much more runway do you have to drive further engagement growth here? Thank you.
Executive Name (Title): Thanks, Justin. You know, while we don't, you know, comment on or validate, you know, third-party data, you know, our user and engagement strength continues to be one of the real highlights of the transformation we've driven over the last few years. It's 11 straight quarters of record high users. And it's important to note that 100% of our reported users are logged in and 85% come directly to our mobile app, making Pinterest a clear destination app. We've also had 10 straight quarters of double-digit user growth. As I mentioned before, we see as having effectively turned Pinterest into an AI-powered shopping assistant that operates in a primarily visual manner, which is consistent with large portions of how people actually shop. You know, in terms of how we're deepening the engagement, we're deepening engagement in the areas that matter most, globally and in UCAN. Searches and outbound clicks are both growing. And of our more than 80 billion monthly searches, half are commercial in nature, which is a much more significant skew toward commerciality than you'd see in general search elsewhere or in chatbots.
You know, we've also talked about how we're winning with Gen Z. Over 50% of our platform and our fastest growing cohort with Gen Z is. And not only are they coming to Pinterest to shop, but they also value our platform as a more private, positive space committed to their well-being. Our intentional choices to prioritize safety and positivity are really resonating with Gen Z specifically, as well as other generations that we track. And, you know, we continue to see growth across generations, including with millennials today. And I just say longer term at the heart of our engagement strength is how we continue to leverage AI to drive better personalization and relevance. Our ongoing improvements to the platform, including the launches we highlighted this quarter across search ranking, content recommendations, and creative generation are all pointing in the same direction, which is a more relevant and personalized experience that gives users more reasons to come back and anticipates what they're looking for next.
And all that built off of our proprietary signals and that unique curation behavior, which I've talked about consistently since joining Pinterest, that curation behavior that occurs on Pinterest, which we see as completely unique in the Western world, gives us a highly differentiated signal that we can use to train AI in ways that others without that signal can't. And that's why Gen Z, who are obviously very familiar with chatbots, are coming to Pinterest in larger and larger numbers and with increasing depth of engagement per user as they clearly get something very different from Pinterest than they get from chatbots. One other thing I'd just add on user and engagement trends, I think it's just worth a quick reminder that Q2 is typically our seasonally softer period for quarter-to-quarter sequential user growth, particularly in Europe. You know, we measure monthly active users on a 30-day look back from the last day of the quarter. So as we get into the summer months, users tend to travel and spend more time outside. So we often see a seasonal pattern there in Q2.
But overall, as Bill said, we feel really great about where the user engagement trends for the business are heading right now.
Rich Greenfield (LightShed Partners): Apologies for the technical difficulty.
Your next question comes from the line of Ron Josie from Citibank. Please go ahead.
Ron Josie (Citibank): Great. Thanks for taking the question. Two, please. Bill, as part of the sales reorder that we talked about, I believe you talked about having ad sales closer to clients. So I just wanted to talk just a little bit more about how the sales force is now structured going forward. Are we looking more regional versus vertical sales? Many insights about go-to-market would be helpful. And then teeing off on your latest comments there around personal assistant and how shopping assistants gain greater adoption. We're seeing consumers do that. But talk to us about how retailers are preparing for this going forward. And as you look out maybe, you know, one to three years and we hear about the personal assistant on pins, you know, how do you envision that future going forward? Thank you.
Executive Name (Title): Thanks for the questions, Ron. So on the first one, on the sales reorg, we've had regional focus previously, really around the segments that report versus UCAN, Europe, rest of the world. And so we've had regional focus before. The most notable thing over the last few years, I mentioned in my prepared remarks, is that a few years ago, we were primarily regional in upper funnel ads platform that really went to market with a smaller number of large CPG and retailers both in the US and in Europe and international. And as we've built a broader set of user engagement that allows us to now engage with a much broader set of advertisers, there are different things required for a very large enterprise versus a mid-market advertiser versus an SMB. And we really just got the ad product that would let us start to go beyond those largest retailers into mid-market and SMB that really went GA approximately a year or so ago. And so over 2025, we saw good early progress in that, but we also saw that we need to have more specific efforts around those different segments of advertisers.
Then we'd need to target our sales and go-to-market approaches differently for a mid-market or SMB than, say, the largest retailers, which is where more of the approach had been focused in the past, as well as as you do more and more performance selling, you have more to do around that. So it's not just about organizing around those customer segments within the regions, but also about more technical selling. You know, we talked about measurement and the things that we're doing around measurement and getting more technical sales capabilities around getting the right measurement implementation. As I mentioned, know we've more than 5x the number of clicks we send to advertisers over roughly the last three years, but obviously our monetization hasn't increased nearly at that rate which means there's a lot more monetization or there's a lot more shopping activity that we're driving than what our monetization currently reflects and part of that is, you know, driving deeper measurement integrations to get credit for that so that is part of the go-to-market motion the technical selling capability is a really important addition.
So those are some of the things in terms of just going a little bit deeper on the go-to-market there. And then the second part of your question on shopping assistance and AI, a few things I'd say. We launched Pinterest Assistant in beta in Q4 of last year. And as we continue to have strong user engagement trends, we're really being intentional and taking our time on getting the product market fit right with Pinterest Assistant and incorporating important learnings into our core user experience. I think you've seen some false starts from others in the space that they had to then sort of, you know, pare back. And we have such really great commerciality and, you know, great traffic that we're driving to advertisers. We want to make sure we're doing this in a way that deepens the relationship between the user and the advertiser.
So as we've been testing over the past couple of months, we've been able to really materially advance capabilities of the underlying model, you know, powering the Pinterest assistant, due to both advancements in the underlying open source model, as well as our ability to post train that model with our unique data and integrate it into our suite of in-house models. The power of that assistant. And so as we bring that to market, you know, we're actually growing our excitement about being able to solve more of the shopping journey, but in a way that more deeply connects the user to the advertiser, you know, basically for our brands and retailers, we want them to gain a customer, not just a transaction. And we've been really successful in doing that over the past few years. And we want to make sure we continue to do that with our assistant. And we're seeing good ability to do that, but more to come in terms of how we'll continue to ramp that over the coming months and quarters. And then last thing I'd say on this point around the models is that it's worth really just commenting a bit on what's happening with these models across the industry.
The industry is converging on a conclusion that we reached here at Pinterest relatively early on. The unit economics of relying on large proprietary third-party LLMs does not make sense or may not make sense for many use cases as companies end up paying a significant premium for what might be an over-engineered, generalized capability that's not necessarily optimized for company-specific problems. So it's becoming increasingly clear that the narrative that you have to rely on only one of the largest proprietary models to get significant benefits from AI isn't really holding up. You know, our approach has been deliberate from the start. We build compact fit for purpose models trained on our proprietary data for our most unique and core use cases, such as visual understanding. And we've seen these consistently produce better results at far lower costs for the majority of what our product does. And for the more generalized LLM capabilities, we use suitable open source models running in our own cloud environment within our cloud infrastructure when they're the right tool, and then we post-train them on our own proprietary data, and that has multiple advantages.
Since it runs in our environment, it's more secure. It has much lower latency. Since it's been able to be trained on our unique data, it delivers better performance than off-the-shelf proprietary models, and it's a fraction of the cost. And that's all, you know, enabled by the unique feedback loop that we get from the curation on our platform. So, you know, Pinterest data sets fundamentally different from, you know, what these other third party models have been trained on. And so as we think about advancing our assistant, you know, taking that combination of our fit for purpose in-house models have been so great at visual understanding and driving commerciality and driving great recommendations, pairing that with some basic LLM capabilities, but then post-training that in the places that can be helpful to the user, we think that unique combination can really help a lot there. And we can do some differentiated things there. And the last thing I'll mention is just in terms of the incredibly valuable assets that we have with our data and our taste graph and how much that lets us do unique things with AI, I'd point you to what we're doing with TV Scientific.
It's a very tangible example of what we can do with that data beyond our Pinterest app, where we've been able to achieve a 27% increase in the outcomes and a 65% increase in purchases by leveraging our taste graph on top of TV Scientific's algorithms. So, you know, that's one tangible example that, you know, we talked about in the call of how we can use our data on top of algorithms to get even better outcomes. And part of what we're doing with, you know, AI models, generally both what we build in-house and those where we retrain open source models. So I know that I expanded on quite a bit there, but hopefully gives you a sense of how we're thinking about the assistant and just the advancement of the AI landscape overall.
Shweta Kajaria (Wolf Research): Could you please talk to your view on the evolving regulatory environment and the focus on online safety for younger folks, and perhaps the opportunities or risks from the pending and or proposed regulations? Thanks, Bill.
Executive Name (Title): Thanks, Shweta, for the question. You know, we're seeing a clear trend where parents, policymakers and governments are raising the bar on online safety for young people. And this is a conversation we have long pushed for. We believe social media companies should compete on their safety record the same way car manufacturers compete on their safety ratings. And we've proven that prioritizing safety is not only the right thing to do, but it also builds trust with our users and advertisers. We are committed to ensuring that our platform remains a safe space for all users, especially younger audiences.
Quarter 2
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.