Pinterest, Inc. (PINS) Q3 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the Pinterest Third Quarter Earnings Conference Call. At this time all participants are in a listen only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jane Penner, Head of Investor Relations. Thank you. Please go ahead, Madam.

Good afternoon and thank you for joining us. Welcome to Pinterest’s earnings conference call for the third quarter ended September 30, 2020. Joining me today on the call are Ben Silbermann, our President and CEO; and Todd Morgenfeld, our Chief Financial Officer and Head of Business Operations. Now, I’ll cover the Safe Harbor. Some of the statements that we make today regarding our performance, operations and outlook including the impact of the COVID-19 pandemic, may be considered forward-looking. And such statements involve a number of risks and uncertainties that could cause actual results to differ materially. In addition, our results, trends and outlook for Q4, 2020 are preliminary and may not be an indication of future performance. We are making these forward-looking statements based on information available to us as of today, and we disclaim any duty to update them later unless required by law. For more information, please refer to the risk factors discussed in our most recent Form 10-Q or 10-K filed with the SEC and available on the Investor Relations section of our website. 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 letter to shareholders, which are distributed and available to the public through our Investor Relations website located at investor.pinterestinc.com. And now, I'll turn the call over to Ben.

Thanks, Jane. Hi, everyone. We appreciate you joining today. By now, many of you seen our shareholder letter. So just to offer brief comments that the quarter, Todd's going follow up with some additional details, and then we'll open it up to questions as soon as we can. I'll start by saying that we're happy with our performance this quarter. Q3 started with a lot of unknowns, because of COVID-19. But we were able to focus on what we could control. And that's executing our strategic priorities that we set at the beginning of the year, bringing on the most inspirational content, making Pinterest more engaging and useful, serving and diversifying our advertiser base, and finally making Pinterest more shoppable. All this led to strong results. Monthly active users grew 37% year-over-year to $442 million, and revenue grew over 58% year-on-year. We're seeing a number of our investments paying off, like growing our international presence in places like Western Europe, in our progress with automation to make it easier for small and medium sized advertisers, and finally making Pinterest more shoppable. We also launched a number of new products, like tools to help traders reach new audiences and bring even more inspirational content onto Pinterest. And more recently, a new suite of merchant tools to help retailers reach more customers this holiday season and beyond. Overall, we accomplished a lot. Now obviously, there's still a lot of unknowns in the future because of COVID-19. But I'm confident about our team's ability to innovate in the midst of all this change. And I want to give a quick thank you to the entire Pinterest team for their hard work in an unpredictable year. Apparently the resilience, the team demonstrated and excited about the opportunities that lie ahead. With that, I'll turn it over to Todd who will give more color about our business performance. Todd?

Thanks, Ben. I want to give some brief color on the trends that we saw during the third quarter as well as to provide an informal outlook for both revenue and costs going into Q4. I'll begin with a quick summary of the headlines and then we can go into more detail. As Ben mentioned, we grew overall revenue 58% year-over-year, we also generated a positive 21% adjusted EBITDA margin. Monthly active user growth remained strong with all major regions once again growing in the double digits. We did experience a modest monthly active user uplift at the end of the quarter related to iOS 14 updates. Younger users in particular turned to Pinterest to find inspiration for customized backgrounds. We estimate this single use case drove an incremental 4 million monthly active users globally. Looking ahead, we expect these 4 million MAUs are more likely to churn in Q4 given the digital wallpaper is a relatively transient use case. Additionally, we expect our business to maintain its momentum in Q4, with revenue growing around 60% year-over-year. We saw much more demand for advertising services than we expected in Q3. There were three primary drivers of this strength. First, the investments we've made over the past year in technology, and then sales coverage are continuing to pay off. And the returns exceeded our expectations in Q3. Over the past year, we've invested in conversion optimization or OCPM ads, shopping, ads, and auto bidding to help diversify our advertiser base, and we also expanded our sales team in Western Europe to monetize their engagement there. These investments continue to pay off. Specifically, auto bid was a meaningful contributor to the strength in Q3, especially for small and medium sized businesses. And their international business grew 145% year-over-year now representing 16% of total revenue, up from 10% of revenue in Q3 of last year. Given the enormous opportunity ahead of us, we’ll continue to invest opportunistically to best serve pinners, merchants and advertisers. The returns from these investments may not always be linear, but we do believe we have a strong roadmap ahead in 2021 and beyond. Second, beyond our own investments, the macro environment is very supportive in Q3. Advertising demand improved overall, and we saw both brand advertisers and large retailers that have paused spend in Q2 returned to our platform. We also saw continued strength in the conversion oriented small and medium sized advertisers who gravitated to Pinterest in Q2 because of the native, commercial intent of our users, and because of the on-going secular shift toward e-commerce that has been accelerated by the COVID crisis. Our sales team was able to lean into these favorable conditions in Q3 helping to introduce advertisers to new tools and features, and operating with high efficiency overall. Our go-to-market effectiveness has also been bolstered by the unique insights that we're able to provide to advertisers. Advertisers increasingly depend on these insights to understand the leading indicators of consumer demand in this environment, which earns us both mindshare, and outspend. Third, we continue to benefit from marketers who are prioritizing positivity and brand safety. Advertisers tell us that Pinterest is brand safe relative to other consumer internet platforms. And we've benefited from this in Q3. Though, it's still not clear how sustainable this trend will be, particularly after the U.S. election is over. Turning to our informal outlook for Q4, I want to provide some color here as well. We expect that our momentum will continue in Q4 as many of the Q3 drivers persist into the holiday season. These include the positive trends driven by our investments in conversion and shopping ads, automation and international sales coverage. There are also two external unknowns that could impact our business. First, the impact of the COVID situation remains hard to predict both on user engagement patterns, as well as on advertiser demand. In addition to on-going uncertainty related to continued disease spread and lockdowns across the globe, our visibility into Q4 is further limited by uncertainty about the impact COVID will have on seasonal engagement and ad spend. Pinners may likely plan for the holidays differently, and it's hard to know how marketers will respond to these changes. The second unknown is the tailwind we've experienced from the advertiser boycott of social media that began in July. On one hand, this group of advertisers accelerated their spend on Pinterest in Q3. On the other hand, the attractiveness of a positive brand safe consumer platform may wane somewhat after the U.S. election cycle is over in November, so some of that spend may wane too. To be clear, we think the positivity of Pinterest is a long term competitive advantage for many reasons. But it's just difficult to predict near term advertiser behavior, particularly in an election season. Finally, our current understanding of how both of these unknowns will play out is limited given the Q4 advertiser demand is typically back end loaded in the quarter. Finally, before opening it up for questions, I want to touch briefly on expenses. We continue to navigate a more remote working environment while maintaining investments in the long term strategic priorities of the company. We took the steps to end a future lease obligation for the company during the quarter. To put a finer point on this, we believe a more distributed workforce will give us the opportunity to hire people from a wider range of backgrounds and experiences. In Q3, we grew headcount 19% year-over-year at a similar pace to last quarter. As we look to Q4, we expect to modestly grow total non-GAAP operating expenses compared to the third quarter. We will continue to invest in our key strategic priorities, including content, engagement, advertising, diversification, and shopping. Thank you to the teams at Pinterest, our advertising partners, and all the people that come to Pinterest to find inspiration. And with that, we can open it, open it up for questions.

Thank you. [Operator Instructions] Your first question comes from the lines of Mark Mahaney from RBC. Your line is open.

Okay, thank you. You talk about making Pinterest more shoppable. Could you just try to relay that into how that should show up in the financials of the company? Does that lead to, is that something that causes inflation or accelerated growth in Ad rates? Well, how would from a financial perspective what's the impact? How do we see that? Thanks a lot.

So Mark, I think from the financial impact perspective, what we're trying to do right now in shopping is improve the inventory of shoppable products on Pinterest, and then improve the discoverability of those products over time to the investments we've been making. We've talked over the last couple calls about things like our success and ingesting more catalogs to get shoppable content onto the service. We've talked about partnerships that accelerate that work. And then we've talked about high intent shopping surfaces that we've been building and designing to make it easier for Pinners to find not only inspiration, but actually bring those items into their life. That's been the primary focus is the consumer experience. And what we've talked about over the last couple quarters is consistent with the way that we're thinking about it today. We'll eventually monetize that over time, but we're majoring in the consumer experience today and monitoring and leveraged revenue. Shopping oriented revenue is growing quicker than the overall business, but it's just a small contributor to the overall mix. I would expect that to be a driver over a longer period of time.

Okay, thank you, Todd.

Your next question comes from line of Brian Nowak from Morgan Stanley. Your line is open.

Great. Thanks for taking my question. I have two. The first one in the letter, you mentioned that automated bidding for shopping launched in September. I was curious if you could just sort of give us a an early read on what you've seen from the automated bidding from shopping impact, and what is the overall advertising business growing in September. And secondly, you also talk about in fact you talked about sort of the roadmap, you talked about more tools to come in 4Q and in 2021. Maybe this high level, talk to us about some of the still existing friction points that you hope to solve for your advertisers over the course of the next 12 months? Thanks.

Sure. There are a number of things that worked in the quarter. And I think we touched on a number of them in the opening comments, but I'll pause on the first one, which is that ads are working on Pinterest, right now and advertisers are, are telling us that ads are working. And it's in large part due to the investments we've made in technology that make it easier for advertisers to hit their goals on the platform. And so there are really two areas where we're seeing that. The first is around conversion activity. And especially in this environment, what we're hearing is that returns accountable performance formats to drive measurable conversions and online sales, particularly in the mid-market segment, are a sweet spot for us. We've been making those investments, we've talked about the work we've done on tag integration partnerships on making sure the tags are working, what we call tag health, building tools to deliver better insights, things like our Pinterest conversion analysis tool and our conversion insights tool. That work has been incredibly impactful. And we're seeing the results in the growth of our SMB segment, which really drove the ball, a significant part of our growth during the quarter. The second thing, and you touched on this is the vision for automation. You can imagine a world and this will take us a long time to deliver in reality. But the vision is that an advertiser brings us their budget, their goals and their content, and we automate the rest. We started chipping away at this over the course of the last couple quarters with our investments in autobid. It started with traffic objectives, several months ago, and over around 80% of our CPC, or traffic objectives are now running through automatic -- auto bid. We launched auto bid for conversion optimization in July. And we're now at 50 plus percent of revenue through auto bid on that format. And we launched the shopping, as you mentioned, in September and the uptake, there has been quick as well. So I think we've got a great road map ahead. I -- as I mentioned in the opening remarks, I don't know that the returns will be linear on those things. But the vision around making it easier for advertisers to on board and not do as much manual management of their campaigns is something that we think will drive long term returns for us.

Great, thanks.

Your next question comes from the line of Lloyd Walmsley from Deutsche Bank. Your line is open.

Thanks got two questions, if you don't mind. First, here the shareholder letter mentioned that the COVID cohort of users had even higher levels of retention and engagement in 3Q in previous cohorts, wondering if there's enough signal kind of beyond the pandemic factors that give you a sense of whether this is, kind of be durably more engaged, anything you could share there. And then just secondly, you talked about budgets expanding associated with the OCPM spend for automated bidding. Do you feel like there's capacity for those budgets to scale up meaningfully? Or are there kind of limits either an audience size or otherwise to just how much room is left for the kind of existing clients to unlock more budget through optimization, anything you can, you can share? That would be great.

Sure, Lloyd. I can take the first part of your question. What I heard was, how durables we think that the cohort of users that have come on during COVID is what do we know about how they engage with the platform so far? What we know right now is that the people that used the joint Pinterest during this COVID period, and they do tend to engage at higher level across a basket of metrics, and then folks that joined at the same time last year, but there are a few things that we've learned that are kind of worth sharing. First we have seen that engagement tends to increase when lockdown order are in effect and decrease when orders are lifted. And so while we believe that they'll net out in the positive place, we think that there's some effect from people spending more time at home. And the things they're doing at home are often things they've done for years, but in a new way. We talked in the last earnings call about setting up a home office or home school. That even applies to things like seasonal events, where parents are trying to reimagine Halloween, or think about what is what are the holidays look like when, instead of having a lot of families over, it might just be your family for Thanksgiving or Christmas. The second thing that we've observed is that these users often come for a specific purpose. And therefore, use features like search more than more browser features like the home feed. And we think that that offers an opportunity, because search is obviously a high intent service, but it also raises the bar on the relevance of ads that we have to provide. That's why our long term strategy is around relevance. And one of the drivers of that relevance is increasing the number of advertisers that we can serve by making it easy for managed small and mid-sized businesses to work with interest. So I don't know that we have quantitative answer to your question, knowing exactly where engagement will net out, we assume there might be some erosion. But we do think that a lot of the early trends are positive, and we still see upside.

Lloyd, on the second part of your question on capacity, I think Ben hit on the most important point, which is around the high intent that we see on the platform and increasingly seeing search and related things activity, it's being an opportunity for us to bring more medium sized advertisers, more advertisers overall, but specifically, small and medium sized advertisers on the platform to continue to deliver relevant advertising against those interests. But to be even more kind of tactical about your, your question, what we're seeing right now is definitely more efficient spend through on existing budgets. So we're taking the manual nature out of campaign management and automating it to better returns for advertising partners, and better clearing existing budgets. And we're seeing early returns on those budgets increasing, but I would say it's too early to have a specific and clear answer to your question about where the limits would be on that.

Okay, thank you.

Your next question comes from line of Ross Sandler of Barclays. Your line is open.

Hey, guys, nice job on the quarter. So Todd, it seems like retail is really cranking right now. And you're seeing a lot of adoption of tag and auto bidding and some of the new features. Can you parse out? I don't know if this is even possible. But you look at the growth rates that you were seeing before 3Q. And then, the growth rates that now you're seeing in, 50%, 60% range in third quarter after July? How much of that is because of some of these, new feature sets that are in the ad stack, versus just kind of a recovery and budget from macro conditions? And similarly, if we look at brand advertisers like in CPG, are they increasing budget because the overall environments better? Or are there also tools that they're using in the Pinterest ad stack to unlock that higher run rate, any color will be helpful?

Yes, I mean, Ross, it's really hard to parse. I mean, I would love to be able to disaggregate that and say, we're getting X amounts from the technology investments we've made. We're getting Y amounts on demand returning from a macro perspective, or insights give us a certain amount and the brand safety equates to the remainder, in reality it’s the combination of all the above. Ads are working. I think we went through this a little bit on Brian's question, but making it easier for especially medium sized advertisers to on-board and automate spending their budgets effectively against their desired online conversion and sales objectives has been a big driver for us. It's been driving our advertiser count up, and it's been a significant component of our growth story. We've seen a major impact just around brands CPG, advertisers and brand advertisers returning to the platform after a pause in Q2 and the return of retail, especially the larger omni channel retailers that have paused in Q2. We’re seeing a lot of interest in the insights that we're bringing to advertisers. The notion that our commercial intensive our users translates into a leading indicator of where demand is going to go is really resonating. We're seeing that without advertisers like Hershey around Halloween at home, is as a trend. I think Ben may have mentioned that before. We had great conversations with Miracle-Gro around home gardening trends that enabled them to deliver much more effective advertising campaigns, powered by the insights that we delivered. Welch’s is another example around summer celebrations and back-to-school where we were able to help them with their campaign management and creative to deliver a much more performance advertising campaign. So those insights are really differentiating and are causing a lot of traction with advertisers. And then finally, this brand safety concept, especially post July and the boycotts that we saw, I would imagine that we're seeing a sustained benefit just due to the election season. But I think it's a secular trend where advertisers want to be around positivity as they build their brands, and that that's contributing to our growth as well. That's what we're hearing. So it's a mix of product and technology, macro recovery, the insights that we're able to deliver, and the brand safety and positivity that Pinterest uniquely brings and the world of social media.

Your next question comes from line Eric Sheridan from UBS. Your line is open.

Thanks so much for taking the question. Maybe two if I can. On international ad revenue, definitely, we've made a lot of investments in the last 12 to 24 months, can you talk a little bit about when we should be expecting sort of yields from both investments and how the international opportunity on the monetization side continues to evolve versus what you've seen on the user and engagement side of the equation. And it turned out to an earlier question in the newer cohort of users, which seem to be younger skewing and interviewed during on the product or the engagement forum to keep those users engaged to keep that cohort evolving, just want to come back to see if there was any active management and sort of notification from our engagement that the company might be doing to sustain some of that? Thank you.

Thanks, Eric, I can take the first part. And then Ben can probably speak to the second. On international, I would say we have started investing more aggressively about a year and a half ago, to staff out offices in Western Europe and get direct coverage on the ground, beef up our teams and in English speaking countries outside of the U.S. And those efforts scaled in terms of the investments over the course of last year and then too early, the early part of this year. And I would say we're seeing those results. 125% growth in revenue in international markets is being driven really by a handful of English speaking countries outside of the U.S. and Western Europe, or from the world from 10% of revenue in the year ago, quarter to 16% of revenue now from international on this quarter. And the momentum we're seeing there has been remarkable. We're still staffing those, we're still hiring to staff those offices out as we believe those markets have presented a lot more upside even from where we are today. And so I feel very good about what we're doing from an execution standpoint. The teams are doing a terrific job building relationships with advertisers and delivering great results. And so that's been remarkable. And I you know, I see a lot of other opportunity for us beyond those markets. As we move forward, we're hoping to begin monetizing in the next region, Latin America in the first half of next year. And I think there's a lot more that we can be doing across our existing monetized markets outside of the U.S. and into new regions as the next few years unfold.

And Eric, to answer your second question. It hasn't shown it’s opening remarks that we saw a particular surge of young users following the iOS 14 release, as a lot of young people look to customize their phones. But that trend of users under the age of 25 joining and growing at a faster rate than users over the age of 25 is something we've seen for a couple quarters continuously. When we talk to these users, what they tell us is they're excited to have a place where they can get inspiration. They feel well served with wonderful tools they can use to keep in touch with their friends and follow celebrities. But Pinterest offers them something different, which is a chance to get inspiration on everything from what they wear to hobbies that they might have to future plans. Your question was what we're doing for these users in particular? We're doing a few things. First, the top priority for the company has been to make sure Pinterest is the hub for inspiring content. In previous calls, we talked about a really significant increase in video and young users really expect video is the primary way they get inspiration and we've seen a really fantastic growth in viewership of both organic and paid video. This quarter, we introduced new tools for people to publish videos stories and to capitalize on that trend. And then we also have some experiments that are in place. This week, we launched an iOS widget, which lets people take that inspiration, whether it's inspiring quote or inspiring styles and put it directly onto their phone. And we'll continue to try things to see how we can make the integration as useful and relevant, accessible to the Chinese as possible. So we do think that we pay close attention to that under 25 cohort, we don't see significant divergence of behavior, but they are they tend to be trendsetters. And so we monitor them closely and see what we can learn.

Great, thanks so much.

Your next question comes from the line of Michael Levine from Pivotal Research.

I mean, I know there were a couple questions before guys around shopping traction. I'd love to hear maybe a bit of an update of how much of this is really seeing the big unlock around shopping partners like Shopify versus some of the internal efforts that you guys have made regarding catalog ingestion? And I guess the secondary question to that is, are you learning things from working with Shopify, that's actually allowing you to get smarter, as you're, you basically are doing more to on-board on your own?

Sure, Mike I can, I can start and Todd can feel free to -- feel free to add on more. So, we've outlined for several quarters in a row that our shopping strategy really has two major goals. One is improving our inventory of reliable products. And so as you mentioned on improvements that we've made to retail its ability to upload their catalog, those do indeed have a really, really big impact. This quarter, we've released UI improvements to make it simpler, and we've increased the speed of uploading. We've also introduced things like scheduling, and all of those things really are about building a base, very, very high quality inventory, some trustworthy retailers with accurate pricing information. And Shopify has been part of that story. Shopify is home to some of the most inspirational retailers. And so we're really excited to be able to partner with them and really remove the friction from retailers that want to upload their catalogue to the audience on Pinterest that are really looking for inspiration. And do it with just one tap. So that's kind of that first part about inventory. And then the second part of the strategy is taking an inventory, how do we improve the discoverability of those products? And on Pinterest, we have a little bit of a different approach than what some people might call spearfishing. People on Pinterest start with something they want to achieve a scene of a living room, a scene of a look. And then they work backwards into the products. And we've been building dedicated shopping surfaces. So you can take that inspirational image, and then see that great catalog and inspiring inventory, some of which might come from Shopify or any of the other versions that we're working on. And that's been something that's been going really well, although we still have a long way to go. Over the last six months, the number of Pinners that are engaging with their shopping surfaces; it's grown more than 85%. So really, really significantly. And we're really working to balance and make sure that we start with inspiration. And then when you're ready to go ahead and make that purchase, you can do it really easily. The last thing I'd add is that we think that that trend ultimately will be global. And we just took our very first step internationalizing that in Q3 when we launched shopping in the U.K.

Your next question comes from the line of Mark Shmulik from Bernstein. Your line is open.

Yes, hi. Thanks for taking the question. I know that press release yesterday called out, inspiration led digital shopping. We've certainly talked on this call a lot about kind of some of the new features, brand pages, etcetera. So a lot of changes to the consumer product. If we think about some of the kind of loyalist users are the longer you know, the older vintage users, any color you can share and how they're adapting to all the product changes. I know the 85% number on shopping but any color and how they're engaging would be very helpful. Thank you.

Thanks for the question, Mark. So I think there are two ways of looking at that question. The first is our new users engaging and using some of the new features we're launching. And the answer in general is a lot of the features we're building are things that our users have been asking us for, for years and years. So the number one user request for years is I see something, it looks great. I'm all ready to buy it, and then I can't find it and that's what's really driving our investments in shopping. Similarly, as the web has become more visual and more video based people have wanted a richer and more immersive way to experience those. And so while things like storage bins are very new, we're optimistic given the success we've seen. I did mention earlier that one thing we're observing is that some of our newer users use Pinterest more for search based. So it's still inspiration and visual discovery, but they're actually searching for specific things. And so if there was a difference, I would say, particularly the COVID cohort, in the more recent cohorts have been engaged more deeply in search. And so we're always looking to think, how do we take the areas that users are engaging with a lot and amplify them, but also share with them and parts of this service, they may not yet have had a chance to experience.

Your next question comes from one of Colin Sebastian from Baird. Your line is open.

All right, thanks. Appreciate the time. With the concurrent trends of brand advertisers returning to the platform, as well as the launch of some of the more shopping or action related ad formats and tools, wondering what the rough split is now between brand and direct response. And then maybe as a quick follow up to a few of the earlier questions on catalog ingestion. I guess, given what appears to be an earlier start to holiday shopping this year, and it concerns around delivery. Does that mean that the newer shopping ads and OCPM are getting perhaps some unseasonal boost here in September, October than what you might otherwise expect in a normalized year? Thanks.

Thanks, Colin. I appreciate the question. So on the first point on brands, versus performance advertising. We've long been majority performance oriented meaning traffic conversion optimization and shopping versus awareness advertising. We mixed a little bit more toward performance in the quarter. But in general, this is across the board strength, across our brands or awareness objectives all the way through performance. And I think that highlights one of the unique aspects of the platform that we often hear from advertisers is there's value in the full funnel experience going from inspiration and finding a new idea all the way through a transaction is something that's a powerful mix. And I think we're seeing the results of that. To your point on the shopping experiences, it's just really hard to, to know in this tough environment, how things will play out. And our Q4 has typically been pretty back end loaded in the month of November and December. We're definitely seeing shopping happening a little earlier probably than last year. But, it just remains to be seen how the rest of the quarter plays out and how the seasonal moments and they adapt. And if you think back to last quarter, we talked about back-to-school being a risk in Q3 and we ended up seeing a fair amount of back-to-school spend. It just happened in slightly different verticals and at different times, and a little bit more dynamically than what we had typically seen. So even in Q4 right now, the planning cycles, the dynamism around spend, and the flexibility and nimble nature that advertisers are bringing into this season is a little bit unprecedented for us.

Alright, thanks, Todd.

Your next question comes from line of Doug Anmuth from JPMorgan. Your line is open.

Great, thanks for taking the question. I have two. First, just want to get some more color on the trend in ad load. I know you're more demand constrained and supply constrained, but how do you think about ad load in terms of where you are now versus where you could be over time. And then second, just on expenses, and kind of how this leads to 4Q EBITDA. [Indiscernible] to clarify Todd that you said expenses will only be up modestly 3Q to 4Q and with that am I wrong in thinking that your near-term margins could be significantly higher than your long term targets that you laid out last year, which I believe are 25% to 29%. Thanks.

Thanks, Doug. So on the – I’ll take both of those. On the admin [ph] point. We saw a mix of contribution from impressions and price globally in the quarter. So it was much more balanced in terms of the impact of price and volume on revenue performance. That’s one way of thinking about your question. I think overall, the message is still consistent with what we started with when we went public, which is, this is a platform where ads if they're delivered to the right person at the right time can feel like content. And we're more constrained by relevance and advertising, then messaging or social media where ads are attacks on the experience. So for us, it's mostly about how do we how do we deliver relevant advertising content that speaks to the interests and the commercial intent of our users. One of the benefits of having high intent shopping service surfaces as an example is that we're better equipped to serve a higher density of advertising. If you're -- if you're on Pinterest to find home decor items, you probably welcome advertisements that are from a retailer that you trust with an aesthetic that matches your tastes, etcetera. So, I think we're, we're a little bit further along in the U.S. than we are globally, there's a ton of room globally on ad mode, we're probably a little closer to our guardrails in the U.S. than we are on a global basis. But there's a lot of upside, if we can continue to get more advertisers on the platform, continue to deliver high intent shopping surfaces, and through our technology, make sure we're serving the right ad to the right person at the right time. On expenses. When I thought about long term margins, we were thinking about them on an annualized basis. And you can imagine, in a seasonal business like ours, where Q1 revenue is quite, a small contribution relative to the annual amount and Q4 is much larger. As we go into Q4 that will typically be the highest margin quarter for the company over the course of the year. You're right that in a world where we grow our expenses, modestly, that margins would expand in Q4. And it's probably worth calling out to that even in the year ago quarter, we did some brand marketing tests to the tune of nearly $10 million of spend that we won't be doing this year. There's a lot of those sorts of investments that in this current environment we will revisit going into next year when we think they can be effective again. But things like travel, events, marketing spend over the last few months have just been expenses we haven't had to deal with in this environment. And we're looking for ways to continue to invest going in the next year that would be an items that we had deferred through this COVID period and marketing in particular was one of those. So yes, the margins can be higher, but on an annualized basis, we'll still be below our long term targets.

Understood, very helpful. Thank you.

The next question comes from line of Justin Post from Bank of America. Your line is open.

A couple of questions. First, can you help us understand if the category strength has been broad based or has been really concentrated in things like home? Or, cooking or something like that? Could you just kind of think about sustainability? And then second, you give an outlook for 60% in Q4, but that sounded like you're somewhat conservative in the back half. Is it fair to say you put some deceleration in your outlook as the quarter progresses? Thank you.

I can take the first part of the question, Justin. We did see kind of engagement across a number of our core verticals, food, home beauty, style. Predictively, there were some use cases that were less popular than they have been in the past. Things like people planning for big outdoor events, although, interestingly, we've started to see some uptick in that, as people might be looking forward to the future. So as I mentioned a couple times before, we're monitoring closely, the sustainability of engagement and how particularly that cohort of users who joined during the COVID period of engagements with the service, but we don't see a massive category shifts from that cohort in particular.

Your next question comes from the line and Rob Sanderson from [Indiscernible]. Your line is open.

Yes, thanks for taking the question. Congratulations on the momentum. Positives for you, you spoke about several factors that limit your visibility into Q4, your back end loaded quarter. Not sure about the permanence of the benefit from brand safety, etcetera. Can you help us reconcile that with your guidance for about 60% revenue growth? Are you growing faster than that through October and forecasting some slowdown? Or how are you thinking about, those unknowns in the fourth quarter? And then also, any thoughts on the impact of having a few more shopping days during the peak part of the season this year? I don't think there was anything that slowed you down and last year having fewer days. But what was that? How are you looking at that that dynamic this year versus a year ago? Thank you.

Thanks. And I know we skipped over the second part of Justin's question. But I think that was very similar to the one you, you just asked about the back end loaded nature of the quarter and momentum that we're seeing. And the reality is we're – and I think I can answer both of those. And then we can talk about shopping days. In general, we're seeing a lot of the same drivers in Q4 that we saw in Q3. As I mentioned before, the ads are working, our investments in technology and product are working around conversions and automation. We are seeing kind of the return of retail and continue to strengthen CPG advertisers. We're seeing a lot of appetite for the insights that we're delivering, which is sustained through Q3 into Q4, this brand safety narrative has continued to be you know, we talked about it on the last earnings call, we didn't really know if it was going to be a July phenomenon only or if it was going to persist. And if it persisted, would it persist past the election? It's persisted. And it seems to be something that's important to advertisers. But we'll see post-election how it plays out. And then the international strength that we've been seeing has been a source of upsides when we've talked about for a long time and then been investing in but it's played out nicely. So I'd say, we're seeing a lot of the same drivers that we saw through Q3 play out into Q4 and hopefully we'll, despite this weird environment that we're in, hopefully we'll see it play out. But those risks around how COVID impacts seasonal moments, how shopping behavior changes, how people celebrate those moments, how advertisers respond to them. Whether advertising around the an election that may be quite a quite a new cycle here in the next few weeks. How that plays out. Those are those are just uncertainties for us right now. On the shopping days point. We talked about that last year being a headwind and it didn't really play out that way. So I'm hesitant to call it in the other direction this year is upside. And so we'll see how it plays out. I do think we've seen shopping behavior start a little earlier this year. And I would expect that given that that maybe it doesn't matter how many, how many days are in the official shopping period between Black Friday and the end of the year.

Your next question comes from the line of Rich Greenfield of LightShed Partners. Your line is open.

Hi, thanks very much. In the letter, you talked about the robust growth of video content on the platform. But wanted to kind of think about as you offer, and you talked about think how younger users kind of expect or table stakes is having more video content, how does that play into video advertising and sort of the CPMs that you can get for video ads and sort of what have you done in terms of early work around video ads, as you introduce more and more video content into the platform. And then just sort of stories that know you rolled out recently. I think it was mentioned sort of in passing in the letter, anything more you can add in terms of sort of early learnings or uses and just what are people doing with it that you know, excites you or how you're evolving the product?

Rich, can you restore [ph] on that second part of the question. I missed the second part of the question.

Sorry, on stories, as you kind of rolled out the story pins like, what do you see, I mean, it you sort of mentioned it in the release as a new format. But you can go into a lot of detail wondering if there's anything in terms of early learnings or what people are doing with it encouraging or what you need to change etcetera?

Yes, I can I can start. So, yes, if we think that video is an ideal format for getting inspiration. And I think that what we've heard is a lot of merchants are really excited about having a richer platform to tell their stories. So on the organic side, we continue to see, really strong growth in just video views. And then we're also seeing a really strong growth in the number of videos uploaded to Pinterest, we had seven experts and videos uploaded year-on-year. And how does that apply to advertisers? Well, we've made some investments to really improve the video advertising experience for advertisers. For example, in the last quarter, we introduced a carousel format, you can now have a video cover on that on that carousel. And we see that video is taking up a larger portion of our revenue over time, just again, because it's a great format. And it applies not only to brand, but there's also different performance based objectives that can be served with video. A great example of this was [Indiscernible] kind of personal favorite of mine, because I like ice cream. And they wanted to introduce people to kind of new product lines. And they ran a video ad campaign as well as standard ads. And they just saw really great results 3% lift in sales, and two extra on adspend as measured by Nielsen Catalina. So the second part of your question was really about stories. And you correctly point out this is really early, but we're excited about it, that we begin to be able to innovate on video format. So some some stories that I've been excited about, we see people teaching folks how to how to cook recipes. And we launched a campaign called, “Chefs at Home”, where we have a lot of restaurant tours, and Chefs cooking recipes at their house and teaching people how to do it. We've seen people create videos for fitness story pins, showing people how to do exercise routines. We see things like DIY, there were a lot of videos on how to make your own mask. And we're starting to also bring on more talent that's more familiar with how to produce great video content. So we hired one of our first hires in the company that came from the media publishing, [Indiscernible] we've also added some expertise on to our board. In the last quarter, we mentioned the addition of Andre Wishom, who worked with Oprah, more recently on the Roku Salam who came from Disney, but also was the president of style. So overall, we think we're really early there. We think the opportunity to use video to deliver inspiration is a big one. And we're eager to learn what people find most inspiring and most useful on the platform.

Thanks a lot for taking the question. Appreciate it.

Your final question comes from the line of Heath Terry from Goldman Sachs. Your line is open.

Great, thanks. You've mentioned a couple of times, including in the letter, the return on adspend that your advertisers are seeing. I was wondering if you could dig into that just a little bit deeper for us. I'm sure you've got other anecdotes are either quantitative or qualitative, that you might be willing to share just on what you're seeing in the return on adspend that, that advertisers are recognizing, especially as it's trended over time through the pandemic, because you've got more advertisers on the platform, and presumably driving up prices to a degree. But also, as you've innovated on the technology side to improve targeting and measurement ways that, that's likely improving that, that return on adspend, as well. So any insight into the trends that you're seeing there would be helpful?

I can start here, and Todd kind of may add more color. I mean in general we've seen advertisers see great returns across a variety of different objectives. We've given some examples about brand objectives. But we've also seen great results from people pursuing traffic or conversion objectives. As he pointed out, some of that has been driven by improvements in our ability to measure transactions. And we've talked over I guess, the last three quarters about investments we're making to make sure that people can really understand the unique value that Pinterest brings through first party measurements through better conversion tools. And what's especially important for us is that people come to Pinterest, and they often don't specifically know what they're looking for. And so they might have a longer conversion window, before they actually make a purchase. And so we really focused on helping people tell that story from the moment of inspiration to the ultimate purchase. That was -- those really benefit those and then the other big benefit is come as we talked about before from automation, making it less on the advertiser themselves to actually customize all the different parameters. They set that objective, and then we figure out the best way to utilize that budget. And we've seen just great returns on both of those fronts. Todd, anything to add there?

No, I thought that was, that was great. Thank you.

Great. Thank you.

Thank you. I will now turn the call back over to Jane Penner.

Thanks so much, everyone. I'm actually going to turn the call back over to Ben so he can close it out.

Well, thanks everyone for joining the call and for your interesting questions. We look forward to keeping the dialogue going. And please enjoy the rest of your day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.