Good evening. Thank you for attending today's Pinterest Fourth Quarter and Full Year 2025 Earnings Call. My name is Megan, and I'll be your moderator for today. [Operator Instructions]. I would now like to pass the conference over to Pinterest's VP of Investor Relations and Treasurer, Andrew Somberg. Andrew, you may proceed.

Good afternoon, and thank you for joining us. Welcome to Pinterest's earnings call for the fourth quarter and full year ended December 31, 2025. Joining me on today's call are Bill Ready, Pinterest's 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-K 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. And now I'll 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're 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 don't have the exact words, brand or product in mind, that's where we win. I'm proud of how we've transformed the company over the past 3.5 years. We've 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 billion monthly searches on our platform, most of which are visual and generate 1.7 billion monthly outbound clicks. Over that same time period, we've 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 million 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, which are 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.…

Thanks, Bill, and good afternoon, everyone. Today, I'll 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'll start with our fourth quarter results. We ended the quarter with 619 million global monthly active users, or MAUs, growing 12%, our 10th consecutive quarter of record high users. We continue to demonstrate user growth across all of our geographic regions. In Q4, our U.S. and Canada region had 105 million MAUs growing 4%. Our Europe region had 158 million MAUs, growing 9%. And in the rest of world markets, we had 356 million MAUs, growing 16%. Moving to revenue. In Q4, our global revenue was $1.319 billion, 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've 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 U.S. and Canada was $979 million, growing 9%. Growth came from retail, financial services and telecom. In Europe, revenue was $245 million, 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 our global portfolio due to the same tariff and margin pressure as Bill described earlier. Revenue from Rest…

Thanks, Julia. I want to thank our teams at Pinterest, our advertising partners and all the people that come to Pinterest to find inspiration and take action. And with that, we can open the call up for questions.

[Operator Instructions] The first question will go to the line of Doug Anmuth with JPMorgan.

Can you just talk more about the drivers of 4Q revenue, including the home impact that you saw? And then also how you're thinking about the 1Q guidance?

Sure, Doug, I'll 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 UCAN and Europe. It's 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. So all that's to say we're 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've started that process. Looking kind of even beyond Q1, visibility isn't perfect. And obviously, we don't guide beyond 1 quarter, and we can't predict the macro nor can anyone perfectly. But we're not seeing any new factors today beyond what we've 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've talked about the larger retailer headwinds, which we will start to anniversary in the second half of 2026. For internal factors, we talked about our measurement product releases and sales and go-to-market transformation, which may take a couple of quarters to play out, but we're encouraged by the new leadership we have in place with Lee and the quick actions he's taking there. So all of this will take time, but we're moving quickly to ensure our revenue matches the strength of the users and engagement we're seeing on the platform today.

Our next question will go to the line of Ross Sandler with Barclays.

Great. Bill, can you elaborate on how you and Lee are changing the 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 Julie 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?

Thanks, Ross. So Lee has 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 in the $1 billion 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, 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'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 in claiming credit for outcomes, even when they don't own the clicker conversion. You'd see this reflected in others talking about "modeled conversions. This is an area where we know we haven't moved fast enough, but we're laser-focused on addressing this and have -- 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 as a much larger long-term opportunity, more consistent with the long-term targets that we've talked about previously.

Our next question will go to the line of Ken Gawrelski with Wells Fargo.

I wanted 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 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've seen -- it's kind of rare that we see in this industry where you see really strong engagement trends, at least the third-party data that we follow suggest you've had very healthy time spent increases, both domestically and internationally. And I think that sync up pretty well with your commentary on these calls. But yet to see that the ad revenues kind of decelerate here. And I understand there are specific pressures, but maybe you can just talk a little bit about the dynamics around impression growth and clickouts relative to what you might -- the pressure you might be seeing on pricing and maybe even conversion if the consumer is less healthy.

Thanks, Ken. So like the rest of the market, we're seeing strong performance amongst our managed SMB business. We actually think it's one of the fastest-growing parts of the market and a part of the market that we've been under-indexed to. These advertisers represent approximately 15% of our revenue today. So we are very active there, but it's a lower percentage than other platforms. And I mentioned the revenue growth rate of this group nearly doubled in 2025 versus 2024. And so we see opportunity over a multiyear 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 nonadopters. 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+ campaign adoption as well as simplifying the advertiser onboarding experience. So there's more for us to build on product, but the products that we have today, we know can work and is driving good progress there. And it will 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 I'll give it to Julia to hit some of the other part of your question there.

So I would just to add on to that, and we'll hit -- 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 on SMB. Bill was talking about SMB is 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 in 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.

Yes. 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 talk 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 -- that makes us one of the largest search destinations in the world. And importantly, more than half of those searches are commercial in nature compared to, I think, OpenAI has shared that they have approximately 2% that will be commercial there. So not only have we created one of the largest search destinations in the world and doing 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. If you step back from it, we're still relatively early on in that journey. We only became fully committed to being a performance ad platform…

Our next question will go to the line of Eric Sheridan with Goldman Sachs.

Maybe building on the answers so far in the call, Bill, when you think about ChatGPT and they're 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 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.

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 the ad market is still quite large. There are a lot of dollars still flowing to places that aren't necessarily highly performing. 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 tvScientific 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&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 O&O. 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…

Our next question will go from the line of Colin Sebastian with Baird.

I guess maybe for Julia, but obviously, a lot of moving parts here. But given some of the top line headwinds, the sales force transition and the opportunities you have to unlock with some of the reallocation of investments, could you maybe walk through in 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?

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 tvScientific 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 stand-alone Pinterest business in '26 compared to '25. On top of that, we expect the acquisition of tvScientific, which is a higher growth business, but also earlier-stage business. So we expect the acquisition of tvScientific 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% in '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.

Our next question will go to the line of Brian Nowak with Morgan Stanley.

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 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-market that you're most focused on to make this right? And then secondly, with the first quarter guide, I think you might have 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?

Yes. 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 -- we didn't go GA until Q4 of 2023. So we're sort of 2 years in a quarter or 2 years in a partial quarter into even having a platform that drove clicks to advertisers. As we 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+ because SMB advertisers need something that is much more automated, more set it and forget it. Pinterest Performance+, 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 it's a different kind of selling to those kinds of advertisers. The things that we need to do to run that, the -- 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 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+ to configure those things for performance. Those are some of the things that we're driving through. And again, Lee is 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. 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.

Yes. On the second part of your question in terms of Q1 and what I was referring to there on the near-term structure, 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're 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're anticipating a little bit of that impact here in Q1, but all of that is factored into the guidance.

Our next question will go to the line of Justin Patterson with KeyCorp.

Great. Bill, you mentioned earlier that Pinterest 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?

Yes. 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 users don't have to tell us what next step to take. We're meeting them with products that help them along their -- 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 3 years. And in Q4, we accelerated our product even further, introducing Pinterest Assistant, which adds voice as a new modality. So we're seeing very strong…

Our last question will go to the line of Ron Josey with Citigroup.

I wanted to ask 2 really quickly. Just Bill, on tvScientific, you talked about the new sources of demand and highlighted Pinterest third-party partners in the past. But with tvScientific expands beyond the platform, does it talk to us how this acquisition can open up larger budget pools as it just accelerates both tvScientific as well as Pinterest 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 joined not too long ago, but any insights on additional insights on timing and like rebuilding that team?

Thanks, Ron. So on tvScientific, yes, you're exactly right. We've over the last couple of years and bringing in third-party demand. This now is our first foray -- 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 of years now. And we started with a partnership with tvScientific to allow us to sort of understand their technology, their team, and we moved from that to acquisition because they're driving today 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've shared a few times, over 80 billion monthly searches and that being primarily visual, which obviously would align with TV and sort of the visual nature of that. We think there's a lot we can do to together drive more performant connected TV advertising, which is one of the fastest-growing areas of the ad market. So I talked about more exposure to SMB and international, given that those are fast growing. Connected TV is also fast growing, and we think there's a lot we can do to bring performance there. So hopefully, that helps on the tvScientific 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…

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

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

That concludes today's earnings call. Thank you for your participation, and enjoy the rest of your day.