All right, great. We're gonna go ahead and get started. I'm Doug Anmuth, J.P. Morgan's internet analyst. First, safe harbor. Some of the statements that Pinterest will make today may be considered forward-looking. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. Any forward-looking statements that Pinterest makes are based on assumptions as of today, Pinterest undertakes no obligation to update them. Please refer to Pinterest Form 10-K for discussion of the risk factors that may affect its results. Pinterest is a visual inspiration platform that people around the world use to discover ideas and turn inspiration into reality. It uniquely sits at the intersection of social and commerce. The platform has more than 460 million monthly active users globally with high commercial intent.
We estimate Pinterest is on track for about $3 billion in annual revenue this year. It's our pleasure to have with us, Pinterest CEO, Bill Ready. Bill is coming up on one year at Pinterest. He was previously Google's President of Commerce, Payments, and Next Billion Users for two years. Prior to that, spent six years at PayPal, most recently as EVP and COO. He was the CEO of Venmo and Braintree prior to their acquisition by PayPal. Welcome, Bill.
Yeah, thanks for having me.
Absolutely. All right, let's see. You're approaching close to one year on the job. What have been your biggest learnings so far?
I'd say 10 months in, you know, some of the biggest things for me have been, you know, the... I would say just the headline is the biggest questions on the business that I had, you know, a year ago as I was thinking about coming in, we made even faster progress than I would've expected on those things. A year ago, big questions would've been, you know, after multiple quarters of user decline, can you return to user growth? I think we've answered that pretty emphatically. We've put up 7% year-on-year growth this past quarter. We now have multiple quarters in a row of user growth. I think we've answered that one pretty clearly. The other question was, you know, can Pinterest compete in a world of short-form video?
A big part of what attracted me to Pinterest, especially from sort of the vantage point I had previously, as you mentioned in the introduction, is that, you know, unlike much of sort of the social space that is primarily about entertainment, Pinterest has, you know, really great commercial intent. Most of social is about entertainment, sort of in a lean-back mode. Pinterest has very high commercial intent, which, you know, historically had been pretty under-monetized at Pinterest, and the actionability was lower. That was a big part of the opportunity is like, okay, can we lean into that commercial intent, help users shop and drive better monetization? 10 months in, we've started to make really significant progress on that.
Obviously a lot more to do there, but I think that progress has been, you know, quite significant. You know, I would say, you know, on the broader monetization opportunity, while the ad market has been choppy, we've grown consistently through that. I think we're probably the only ad platform that has grown consistently through it. Even as we're early on, we've been able to start to make some pretty significant strides on the broader monetization opportunity. You've seen that in us making progress on things like, you know, I mentioned, you know, shopping from a user perspective, where we're getting, you know, 30%+ year-on-year growth, engaging with shoppable content, those kinds of things.
From the advertiser side of this, you know, we're seeing that, you know, the largest, most sophisticated advertisers, those that have adopted measurement tools, are really leaning in and accelerating with us. There's a lot of puts and takes across the market, but those sort of hardest to please customers that in past life I've always said, if you can make them happy, you can make anybody happy. You know, we're seeing really great engagement and growth there, largely because as we bring users more actionability on the products they're discovering on Pinterest, not only are users engaging with it, advertisers are seeing it's a great moment for them to engage as well.
Okay, great. You hit on a few of these, but you have outpaced the market for the past few quarters, from a revenue perspective, returned to user growth, increased ad load, brought down pricing.
Mm-hmm.
For marketers. I guess when we think about, you know, all those positive factors, and then your 2Q guide, which suggests more stable revenue growth, maybe you can help us understand what you're seeing?
Yeah.
That gives you the view on some of the caution and just the stable revenue growth in 2Q.
Yeah. I would say, there's a number of puts and takes there, right?
Mm-hmm.
Let me sort of decompose those a little bit. I mentioned one already, which is around adoption of privacy-safe measurement tools. As we've started to create better tools for retailers and advertisers to get measurement of our performance and more product actionability for consumers, if you look at the cohort of advertisers that have adopted our measurement tools, we see that those advertisers consistently, when they adopt our measurement tools, see better performance than expected. 28% lift in conversions is what they tend to see. Their spend with us, on average, has gone up 30%. If you look at those that have adopted our measurement tools, 30% lift year-on-year in spend. We're on an adoption curve, right?
Mm-hmm.
Which of the advertisers have adopted? Well, it's only 10% that have adopted so far. We just launched these tools, right? Again, 10 months in, you know, we've just launched these tools. We've just started the adoption curve. By number, only 10% have adopted. Now, fortunately, those that have adopted are the larger, more sophisticated advertisers, the ones with more spend. That cohort, that 10% that's adopted, is growing revenue 30%+ year-on-year. If you look at the other 90% that have not yet adopted. Revenue from them is declining mid-single digits year-on-year.
The net-net of that is what has had us in this sort of mid-single digit kind of range, which has, you know, outpaced the market for, you know, you know, as many others are seeing year-over-year declines and those kinds of things. We've got to continue managing through that adoption curve and get more. We see this very consistently, so it gives us a lot of confidence in the medium to long-term, is that consistently, when we take an advertiser from that column of not having our privacy-safe measurement tools, where they're a mid-single digit decliner, and move them into the column of now they've adopted, now they have visibility into our performance, they become a 30% grower.
That's what gives us a lot of confidence as we move through that adoption curve, you know, we'll see continued progress. Importantly, you know, we're working through that sort of by the ones, our sales team going in and doing that directly. We're also doing things to go accelerate that adoption curve. That really that is about hooking into the places where a lot of those advertisers are getting or already integrated to measurement tools. LiveRamp and Tealium are examples of that with clean rooms, then Amazon deal, Amazon as ad platform as another example of how we're hooking into larger platforms, or other platforms that advertisers have already implemented measurement solutions. We think that can help accelerate some of that adoption curve.
One final point, just back like the puts and takes in the market. It's also the case that, you know, unlike, you know, some larger platforms that have a much broader diversified base, you know, we're going to skew more towards things like retail, then even with that, we have categories like fashion and home goods that'll be quite noteworthy for us. If you looked at just the retailers that are, I would say, distressed. By distressed, I mean, not the broader macro, I mean distressed as in like bankruptcies, having trouble raising funding, things like that. Those were two full points of headwind for us.
When you sort of look at all those things, the thing that I'm looking at that, you know, gives me a lot of confidence in the medium to long-term is that as we see retailers and advertisers adopting our measurement tools, consistently we see they're seeing better performance, 28% growth in attributed checkouts, 30% growth in year-on-year revenue on average. It's just a matter of us moving that adoption curve and getting to the other 90% that having it adopted so they go from mid-single digit decliners to 30% growers.
Got it. Okay. All right, we're gonna hit on some more of that. Amazon partnership, very interesting, but at the same time, I think a lot of people actually expected a deal with Google.
Yeah.
Just given your.
Yep.
background. Can you talk about the strategy behind partnering with Amazon?
Sure, yeah. Well, obviously, yes, given my background, I've got a lot of partiality. There's a lot of great things, you know, happening at Google. You know, but we did what we were very confident was the best first deal for us. I've been very consistent in saying this, that, you know, in a future state, we'll have, you know, we were one of the only major ad platforms that wasn't ingesting third-party demand. If you look at how this tends to work, even the largest, densest auctions in the world will complement their auction with third-party demand. We see an end state where we're gonna ingest that from many sources. But we felt very confident that Amazon was the best first deal for us.
One, because, not only are we solving for ingesting third-party demand, we're solving for a great shopping experience, right? That's a huge part of the opportunity on our platform. More than half the people on Pinterest are there to shop, but historically, actionability has been low. People find a lot of what they're looking for on Pinterest, but they couldn't take action on much of it. Stated very simply, Pinterest sort of solved digital window shopping, but all the stores were closed. A big part of the opportunity for us is as we open those stores and make it so that not only do you find the thing you're interested on Pinterest, but you can take action on it.
You can click, even if it's clicking to some place to go buy it, that becomes an event that deepens engagement from the consumer side and is very highly monetizable from an advertiser perspective. It actually pays much better than the sort of impression-based advertising and things like that. You know, Amazon clearly brings great shoppability, a very robust catalog, they can, you know, turn a lot more of the content that we have into shoppable content and with a great buying experience. It's a major platform, you know, approaching $40 billion in annual revenue as an ad platform, growing roughly 20% year-over-year. You know, we're growing our supply 30%+ year-over-year, which by the way, is a massive change from where the business was a year ago.
A year ago, Pinterest was a supply-constrained ad platform. Users were declining, supply was constrained. Now we're growing supply 30%+ year-over-year. The broader demand environment has softened, but we're growing supply 30%+. In a constant demand environment, this would've been a 30%+ growth quarter for us. Right? If wishes were fishes, right? You know. That gives us confidence that we've got the supply to go monetize. We need to marry that with a place that has excess demand. As you look across the major ad platforms, clearly Amazon has excess demand, given they're growing 20%+, and a really great buying experience for the consumer. That made them a great first partner.
Again, you know, we've said this consistently, that, you know, an end state for this is that we'll have multiple partners, but given the marriage of sort of excess demand on their side and excess supply on our side, as well as the great shopping experience, it made them a great first partner.
Okay. what's the process through which Amazon will be kind of allocated inventory and like slots on your platform?
This may be a good opportunity to sort of give a little more sense of how I think about the opportunity overall.
Mm-hmm.
When I say Pinterest has been significantly under-monetized, which it has been, there's sort of two components of that. The one component is if you look at just from an ad load perspective. In a commercial context, the opportunity to take ad load up much higher is significant. Which by the way, is back to is a really important difference between, you know, Pinterest and other social platforms. In an entertainment mode, you have a lower ceiling on the ad load that you can show a user, right? Because the user is trying to watch a video, watch a TV show. There's a lower ceiling on how much ad load you can have.
In a commercial context, if you look at the other analogs out there, you would see oftentimes you count the slots on the page, 60%, 70% ad loads in a commercial context. As long as the ads are relevant to the user, then the user, you know, is sort of indifferent as to whether it's an ad or organic. In many cases, if you look at, like our case, you know, what would the user have been seeing before would have been a lot of user-uploaded content. What was better content for the user? Like the user uploaded picture of that pair of Nikes or like the great, you know, ad with Serena Williams or LeBron James wearing those Nikes. As long as those are the pair of shoes that you want, in many cases, the advertised content can be even better content.
You know, if you look at it that way, from an ad load perspective, when I think about what's the theoretical ceiling on what our ad load could be, you know, we tend to be in that, you know, again, count the slots on the page. Even in a commercial context on Pinterest, you see roughly one in five would be ads of 20%. Theoretical limit on that would be 60% or 70%. You know, when I came in, my view was like, okay, you could never sign another user, never get another unit of engagement, and you could multiply the business several times over just by getting the proper monetization per unit of intent. There's a second lever on that even so you could, you know, theoretically triple ad load, provided you have the right relevant content.
Mm-hmm.
There's a second lever on that, which is as you're shifting from upper funnel impressions to more lower funnel conversions, those lower funnel conversions pay much more. In fact, roughly five times more. Not only can you significantly take up the ad load on the page in a commercial context, you can also shift from, you know, impression-based advertising to conversion-based advertising that pays five times more. Coming all the way back to your question around, oh, what's the path on Amazon, I think this is where a lot of folks had questions like, "Oh, why can't you just, you know, why won't that be live next quarter?" Well, if we were just doing like a banner ad implementation or something, like we'd have had that live in a weekend.
What we're doing is satisfying this broader opportunity, which is, you know, really all contingent on you've got to have things that are really relevant for the consumer. You can take that ad load up much further if you have good relevancy for the consumer and a good buying experience. That takes a little bit longer to do, but very clear line of sight into how to do it. If you look back, not to this last call, the call before.
Mm-hmm.
I was getting questions around, "Oh, well, hey, Bill, it's probably 2024 before you all sign a third-party demand deal." I said, "No, I think we'll sign it this year, but, you know, don't change your expectations for revenue this year." I think we've consistently, you know, talked about that consistently and actually pacing ahead of what we had said. I think some folks maybe got a little out in front of us on it, but in terms of, you know, we're doing what we said we would do because it was always the intent. You know, we weren't just gonna go throw up a, you know, slapdash, you know, banner ad implementation. We're really solving for great shoppability on the platform. That takes a little longer, but the rewards are so much greater.
Okay. Will Amazon go through kind of the same bidding platform as other marketers?
You know, in the in-state, yes. You know, in the interim, as we're, as we're working through this, you know, this will be part of what we have to do, is start to bring those auctions together. You know, I think maybe sort of the question behind that question a bit, and I've heard this from, a number of folks of like, "Well, how should we think about, you know, the economic opportunity there?" Right? Obviously, there's a fine line. I can't get into confidentiality of an agreement and things like that. I think at the core of that question is a lot of folks are asking like, "Well, hey, if you're doing this to a third party, did you leave money on the table?" Right?
We feel really good about the economic arrangement that we put in place there. As a general construct, I'd say it's generally comparable to our own cost of selling would be, right? Obviously all things considered, you know, we'd, you know, prefer a first-party relationship, and we have that. As a smaller platform, you know, there's a lot of brands and a lot of products that we just don't have on the platform yet. This can really help us accelerate the brands and the products on the platform and in a way that is, you know, generally consistent with what our own, if you look at it from a holistic perspective, generally consistent with what our own cost of selling would be, so we don't feel like we're leaving money on the table either.
Okay. You kind of framed this as you're confident that Amazon is the best first deal.
Mm-hmm.
which certainly suggests that there will be
That's right.
-others going forward. How do we think about, you know, pipeline and timing for those deals?
You know, given my commentary around, like we really want to make sure we get the consumer experience right and get this, you know, get this working well, because to take the ad load up and to get, you know, the higher dollar, you know, conversions, all those things, you've got to really have the relevancy right for the consumer and the buying experience right for the consumer. We've proven a lot of these things out already, so we've laid a lot of the right foundation.
I talked about in Q4, we launched whole page optimization, which is what really lets us start to take, you know, the whole page and optimize it toward, you know, what's the most relevant thing for the user, and taking an integrated view of between the organic and the ads, if there's a more relevant ad, or an equally relevant ad to be able to show that to a user so it's a monetizable event. We laid that foundation in Q4. Buying experience, you know, we know what that looks like. You know, a lot of this, you know, now that the Amazon deal is public, you know, you could have seen on our platform for a long time Amazon as advertiser. We've talked about things like mobile deep linking, driving, you know, the majority of our growth in shopping ads.
Shopping ads are growing at 40% plus year-on-year. We know what a lot of that buying experience looks like. We're gonna spend, you know, the next, call it six months, really making sure that we get this one really right. We've proven out what these look like. It's really about, you know, doing the implementation, dialing up the ramp, making sure it's working for consumers, sort of adjusting those dials. You know, it's not about, you know, will the dogs eat the dog food or not? We know. We've seen it already. We've proven those things out. We've laid a lot of that foundation, now we spend the next, you know, six months really tweaking the dials, making sure it's working well.
As we do that, then we'll think about, you know, how we expand beyond our first partner.
Okay. Great. All right. Let's shift gears a little bit. Talk about user base. You've seen good progress stabilizing users. You added 13 million users in one Q. I guess there's kind of two questions here. You know, first is, kind of what are the drivers there?
Mm-hmm.
That you've seen? You know, obviously, kind of cycling through some of the COVID pull forward. What initiatives also have driven that stability and growth, obviously?
Yeah.
In the near- term, you are talking about, you know, more stable basically, you know, in terms of net adds.
Mm-hmm.
Just talk about your expectations, where trends are a little bit choppier. I know the seasonality changes, and then you also have some data, you know, birthday collection-
Yep.
Impact as well. If you could talk about that.
Sure, yeah. You know, we're really proud of our return to year-on-year user growth. Again, this is one of the biggest questions on the business. A year ago, there had been multiple quarters of user decline, and we've now had multiple quarters of user growth. When you look at that user growth, you know, we grew monthly active users 7% year on year. Engagement's actually deepening per user, so engagement clearly, you know, consistently growing double-digit plus. If you look at, like, our mobile app users, which mobile app users are More than 80% of our engagement and monetization, those are growing at 16% year on year.
We've really shifted, sort of the direction on users and even more importantly on engagement. Coming back to the question on, you know, so I think this, there's some question after our commentary, you know, in the quarter. You know, we said then we expect the year-on-year growth trends, you know, that return to year-on-year growth to continue. There is seasonality in the business. We are calling that out. More important to look at the year-on-year than the quarter-on-quarter because we measure in the last month of the quarter.
Mm-hmm.
June is, you know, people are getting out of school. It's start of summer and so you have some seasonal patterns there with, you know, people getting out of the house and doing things. By the way, when you get into Q3, it flips out the other direction and it's back to school, and people are shopping and so you see a seasonal lift there. It's just important to look at the year-on-year on those things. From a year-on-year perspective, you know, we've clearly returned to growth year-on-year and we commented on the call, we expect that to continue. I think the birthday collection, you know, we were getting out in front of a regulatory requirement in Europe.
In fact, we went broader than that, even doing it in the U.S. because we thought it did some really good things to let us bring safety for our users. At the time of the call, we were much of the way through it, but not all the way through it. We're all the way through it now. It's not of consequence. It's behind us. We feel really good about sort of how all that's playing out, both in terms of, you know, continued growth in users and engagement, as well as, you know, getting out in front of some of the regulatory things that were coming later down the road and really leading the way on user safety, in doing that, not just in Europe but in the U.S. as well.
Okay, great. Let's talk about margins. Pinterest has been committed to meaningful margin expansion.
Mm-hmm.
We kind of think about that as like 200 basis points or so.
Yep.
Your guide for 2Q implies kind of stable to slight deceleration in revenue growth. The street now modeling a little bit over 100 basis points of margin expansion for 23. A little bit below kind of, some of that communication. Do you still have confidence?
Yeah.
In that meaningful margin expansion and 200 basis points.
Yeah.
This year?
Absolutely, yes. I've commented on each of the last calls that we're committed to that margin expansion, and even in this last call reiterated that as well. Maybe I need to state it even more clearly, which is, you know, in any state of the world, we're committed to that margin expansion on the order of a couple hundred basis points. You know, what gives us really clear line of sight to that, you know, when I came into the business, you know, partway into Q3 last year, there had been a big acceleration in expense growth in the first half of the year, which sort of locked. It was accelerating the first half of last year.
Mm-hmm.
Sort of locked in what our expense growth would be in the back half. We started to immediately put cost controls in place. We started, you know, when I came in in July, we started pausing hiring. You know, we started putting in controls on infrastructure spend. You know, you saw this from us the last two quarters. Even as user engagement is accelerating, normally, you'd expect infrastructure spend to grow at some discount to user engagement. Previously, infrastructure had been growing much faster than users. Now we're in a place, now that we've started really focusing on efficiency there, engagement's growing faster than what it was a year ago. Users are growing faster than what they were a year ago, but infrastructure spend is reducing.
When you look at, you know, our back half for this year, you know, we'll start to instead of right now we're lapping a lot of that sort of increase in spend that was happening in H1 of last year. As we get to the back half, we now start to lap, you know, the period where we had started to put in a lot of operational rigor and cost controls. That's what gives us confidence that, really in any state of the world, we can deliver on the couple hundred basis points that we talked about.
You know, that's effectively, you know, say that we continue on at sort of the revenue growth rate that we are, we have clear line of sight to how we would go deliver that couple hundred basis points. Even a modest revenue acceleration, you know, we could see double that on the margin side. You know, we feel really confident in our ability to go control the costs and drive operational efficiency in the business, and not in ways that hinder our growth, like the infrastructure example where we've accelerated user growth, we've gotten better on our AI tools even as we controlled infrastructure spend. There's a lot of these things. I've said it pretty consistently.
You know, I'm a big believer that constraints breed creativity, and that's what you've seen us doing. Even as we put in cost controls, we've been accelerating the business, and we think we can continue to do that.
Great. All right. Commerce initiatives, you know, have clearly been a key priority for the platform. You've made some good strides, but at the same time it still feels pretty early. Maybe you can talk about some of your latest initiatives just to improve shopping on Pinterest and where you see this going over time.
Yeah. Yeah, great question. This is another big question a year ago. July last year when I came into the business, Pinterest's approach, like some others had been to address shopping by having a separate corner of the app, like a separate tab in the app that you would go to, rather than doing it on the main surfaces of the app. We completely shifted that strategy, both in terms of instead of it being a separate place in the app that you would go to, which very few people would do.
Mm-hmm.
really integrating into the core experience of the app. More than half the users say they're there to shop. A year ago, the question would've been, well, hey, you know, surveys say that users wanna shop on the platform, but until you put it in front of the users, like, you know, you don't know if the dog's gonna eat the dog food until you put it in front of them, right? As we've built out those products, as we've built out those experiences, even though we're early days, we've started to bring shopping into the main surfaces of the app. Our home feed search results, those places where the primary engagement to the app happens. As we've been doing that, we're seeing fantastic results from users. 35% plus lift in engagement with shoppable content.
You know, for the advertiser side of this, those merchants and advertisers that are integrating their product catalogs are seeing 30% plus lift, in the, in the checkouts that they're getting, the conversions they're getting, from our users. Really great value on both sides of that for the consumer and the merchant. We are early days. We, we, you know, came in in July, you know, we, you know, really started leaning into that, building out through sort of late Q3 and Q4, really starting to ramp that into Q1. You know, we're past the biggest part of the question, which is like, will the dogs eat the dog food?
Clearly, the users like it. Now we just have to continue to manage that ramp and bring on more quality inventory for those users, which again, we're finding great ways to do that, like our deal with Amazon.
Okay. Related, but maybe you can talk about some of the initiatives on mobile deep linking and whole page optimization and kind of what the feedback has been?
Yeah.
-advertisers.
Yeah. Whole page optimization, I think this is, this one is really, really significant, and maybe not fully understood. Maybe let me try to like break this down, and give like sort of a before and after kind of picture. Pinterest a year ago, users would've found a lot of what they were interested in but had very low actionability, because they would've found user uploaded pictures, things like that. It's like, "Oh, I found the pair of shoes I'm interested in. What are those pair of shoes?
Well, I'd have to go hunt through, you know, comments and see if somebody had made a comment or put in a description, like what those shoes are called. You know, the user would oftentimes have to go search someplace else, or even worse, do like a reverse image search to figure out what those shoes are. You know, from that as a world before, you know, we're bringing much more actionability so that the user can, you know, increasingly not only know what that pair of shoes are, but like click to a place to go buy those. Which again, deepens engagement, 'cause when they had to go someplace else, that was leaked engagement, but also leaked monetization. From a year ago to today, much more of that content is becoming shoppable.
We still have more of that ramp to go, but much more is becoming shoppable than what it was a year ago. A year from now, what you should expect to see is that not only are more of those slots on the page actionable, more and more of those ought to be paid content and paid content that is highly relevant to users. Coming back to whole page optimization, the big unlock with whole page optimization that we proved out is that we could grow ad load in a way that was enhancing to the user, that was engagement positive. Again, a lot of people, especially in social media, think of ad load as being sort of a trade-off with the user.
The more you take the ad load up, the more it hurts your engagement because the user's ultimately there for some other purpose to watch, you know, to watch a funny video or look at pictures of their friends. The more you took them away from that thing, you know, the more you sort of traded off engagement for monetization. We took up our ad impressions 30%+ with engagement growing double digits. Part of that is the engagement growth being double digits.
Mm-hmm.
Took the ad impressions up 30%, much faster than the growth of engagement overall, while also increasing engagement, which means the relevancy is good, which means we've proven out our ability to go swap in more sponsored content in a way that is enhancing to the user. That's a huge unlock. We launched that in Q4. That really is the foundation I've been talking about how we get more sponsored content in, that we can put in in a way that is actually enhancing to the user, not sort of taking away from the user. Like mobile deep linking, you know, this was also a question for Pinterest of, you know.
While Pinterest has been building toward a full-funnel, and I think really in the Western world, the only true full-funnel from a consumer experience, we have the consumer in sort of upper mid and lower funnel. You know, while that has been the case, the low funnel has been the Achilles heel of the platform for years, right? As we've been leaning into these lower funnel experiences that help the user take action, we're finding really good success with those. Mobile deep linking is a good example. You know, our Shopping ads, growing 40%+ year-over-year, the majority of that growth being driven by our implementation of mobile deep linking, which again, was late last year that we launched that.
It's been a hugely successful launch, which is really proving out, you know, 'cause this was another question in the business, like, "Well, the users come there for window shopping. Are they going to take action?" Well, mobile deep linking is like we're taking the user from, they see a product on Pinterest, they click, and we drop them straight into the checkout, with the retailer. It's a really fantastic buying experience. Really getting to this was other shift that we made in the shopping strategy that previously Pinterest had been going down the path of being, you know, sort of Pinterest as a retailer.
We've shifted that to clearly Pinterest as ad platform, but solving for a really great buying experience in a way that lets the consumer connect directly with the retailer, which is great for the consumer because, you know, if you need to make a return, where are you gonna go, all the support after the sale, but also great for the retailer. Retailers love it because they get a customer, not just a transaction. By the way, you know, if you're an advertiser, which one are you going to pay more for, a customer or a transaction? The customer's worth a lot more. Really great proof points on, you know, both the unlock of whole page optimization and our ability to get the consumer all the way down to, you know, taking action on the product and getting you the buying experience.
That point on retailers wanting a customer, not just the transaction. I mean, when you, when you came in early, it seemed like you kind of pivoted the business from, you know, the transaction and shopping directly.
That's right.
On Pinterest, right? I mean, is that really the driver?
Absolutely, yes.
Does that effectively mean you think you can monetize it better?
Yes. I mean, in past life, I did side-by-side comparisons, you know, between sort of ad model and commission model and went to the ad model because it performed better. I also think you just, you know, public information, go look at what have been the largest commission-based platforms, and they have effectively moved to ad-based platforms, right? That, you know, and you see this two ways. You know, go do a query on those larger commission-based platforms that have a lot of third-party sellers, and you'll see that, the first, most of the content you see when you query is gonna be sponsored. Which effectively means that even they still have commissions are the floor of the auction.
The, you know, the auction is still ultimately setting the price. The reason for that, the reason the auction outperforms is that if you have a static commission, you are perpetually either overpriced or underpriced. If you're overpriced, you're missing inventory that the consumer would want. If you're underpriced, you left money on the table, so the auction just outperforms. Yes, that was a clear shift in strategy, and we've seen it help accelerate our efforts there quite a bit.
Okay, great. All right, we're gonna wrap up with a quick word association.
All right.
So first thing-
Dangerous.
Not dangerous. First thing that comes to mind. shopping.
Conversion.
Macro.
We'll get through it.
Google.
It's a great ad platform.
MAUs.
Growing.
AI.
Huge opportunity.
Amazon.
Great partner.
Ad tech.
you know, huge opportunity in AI there. If I can give you more than one word on that.
Nope.
We didn't talk about AI, you know. Maybe I'll spend just a second on that. You know, there's a lot of talk about AI and what it can do. You know, we have had years of investment in AI. A lot of our gains are coming from that. Like our personalization, you know, we've already started implementing next gen AI capabilities. For example, we're now using recommendation models that are 100x larger than our prior models because of the switch from CPUs to GPUs and next gen AI technology. When you look at, you know, us making better and better recommendations, in fact, 95% perceived relevance by users, a lot of that is leaning into next gen AI technologies. Same thing on our ad stack.
I think there's just a huge amount of productivity and sort of increased opportunity from that, even without the, what are you doing on, you know, like generating new images. There's a lot of cool stuff you can do there, but those probably take a while to play out. There's immediate benefits that you're already seeing in our business from that.
Okay. All right, great. We'll leave it there.
All right.
Thank you, Bill.
Thanks for having me.