It's bringing CEO of interest Bill ready for more and Bill, good morning to you. Thank you for joining us here on Bloomberg Technology. Let's start with that guidance, get it done. What were the factors behind the range, which again it's below street estimates.
Sure, yeah, I mean if you look at Q two, you know we put up record user growth.
We hit a new all time high end users.
We came in above our guidance on revenue twenty one percent plus revenue growth with six himesred basis points of margin expansion. So Q two is a really strong quarter. As we look ahead to Q three, we have a five point tougher comps. We're laughing lapping much tougher comps and you saw that from some of our larger peers as well. But when you step back from that, you know we're growing faster than our larger peers that have already reported. We're seeing our best product market fit in years.
Gen Z's our largest, fastest growing audience, and we're winning share of wallet with some of the largest, most sophisticated advertisers out there. So the fundamentals of the business are all really sound and we feel great about those and as we guided forward, it's relatively consistent growth with where we've been once you adjust for currency fluctuations, despite the fact that we have a five point tougher comp So I think you saw that in some of the reactions
on our larger peers. I think you're seeing some of that here as well. But if you pull back from it, the fundamentals of the business have never been better for Pinterest.
Bill.
Something you told my colleagues at Bloomberg News is that historically Pinterest is a great place for windows shopping. But I think the quote is that all the stores were closed helped me understand that.
Yeah, So you know, I came in two years ago and at that time, Pinterest was primarily about browsing and there weren't a lot of clicks and conversions to speak of for advertisers. We've made tremendous progress in making it so that users can actually take action on the things they find on Pinterest, and this has been right at the core of how we've accelerated user growth. Last time I was on the show last quarter, we talked about
seven consecutive quarters of accelerating user growth. We put up consistent performance to that on users again this quarter and at the core of that is that actionability. And not only do users love that actionability, you know, Pinterest is where gen Z goes to shop, but it's great for advertisers.
This is our third quarter in a row of more than doubling the number of clicks we sent to advertisers year on year, which is why you see us gaining share with the largest, most sophisticated retailers out there that are increasing share of wallet with Pinterest. And we're seeing that start to take hold across retail, which we cited as a place of broad strength for us and a driver of our really strong results in Q two, and we're excited by as we look ahead.
Bill, just really quick because you're talking about your user base, right, So we've just shown a graphic that shows the scale. Forty percent of that is gen Z And there's always a question about the actions that audience takes, right, do they actually buy anything having spent time on the platform.
Yeah?
Absolutely, I think this is you know two things I'd say about gen Z one. They're the taste makers for you know, the next generation. So Pintress is really unique and it's not just the people shop on Pinterest. People
curate their tastes on pinterests. It's a completely unique behavior on Pinterest relatives to the rest of social media, where people are planning outfits and planning what they're going to buy long before they do it, and so that gives us really rich signal to feed our AI for recommendations, and so that taste making that happens is not just good for gen Z, but they're the taste makers for the next older generations where we deliver more relevant recommendations there.
And then to your point on gen Z buying, Yes, Penterest is where gen Z goes to shop and we see that same behavior that you know gen Z. Yes, it spans teenagers, but also spans all the way up through you know, recent college grads and people that are in their first jobs and their first apartments, and so we see a lot of shopping behavior there and it's really consistent across demographics on the platform.
Bill Pinterest does not sell political advertisements, are you able to kind of quantify the impact of that policy in terms of a missed opportunity?
Yeah, it's a great question.
You know, we've done a number of things to invest in the positivity of the platform that if you look at them on a short term optimization.
You know, like political ads.
You could say, Okay, there'd be a lot of money spent on political ads over the of the coming quarter. However, we don't take that money because we see that that's an investment in the long term health of our platform. As we're winning with gen Z, one of the top reasons gen Z sites as why they come to Pinterest is they see it as an oasis away from the
toxicity they experience elsewhere on social media. So as we've done things like making pinterest private only for under sixteen, we've actually seen that come through and drive user growth and engagement for us, and we're seeing it cut through with advertisers too, where advertisers also want to be in a brand safe environment. Brands are built on positivity, and brands don't want to show up next to negative, polarizing content.
And so you know, yes, there'll be a lot of money spent on political ads, but we're consciously choosing not to take those because we think that's in the long term interest of our platform for both users and advertisers.
Bill, let's talk about osificial intelligence, but I think some granila is important. So which large language models or partners and you're building on top of and then you were able to give a sense of like the specific AI spend that's related to kind of add targeting and add improvement, bit pricing or something else.
Yeah, this is AI is a core competency for us.
I've talked about on prior earnings calls where when you look at the fact that we're not only growing users at record levels, we're actually deepening engagement per user. A big part of that is on the increasing relevancy of our recommendations, and so I shared on a prior call that through large language models, we saw a ten percentage point lift and the relevancy of our recommendations. That's really really encouraging is why users are coming back to finding
more of what they're looking for on Pinterest. But to your question on spend, we've also delivered really great margin expansion this past quarter, even as we were investing in AI. We delivered six hundred basis points of margin expansion and you've seen that consistently over the last two years. And the reason for that is that we're delivering great user engagement from the AI, but it's user engagement that is
highly monetizable. More than half the users on pinchests are there to shop, So we're turning that AI investment into really great return through higher engagement. And then advertisers want to meet those users where they're shopping, and that's driving acceleration and AdSpend for us.
And so you've seen that in the results.
But we're really finding that we can deliver great return on our AI investments, and we have really unique signal. I think this is one thing that is underappreciated across the industry, and so much like cloud commuting, much like cloud computing, I think everyone have access to basic building blocks, but who has really unique signal? And the curation of shopping behavior on pinterest gives us really unique signal to feed our AI bill.
The stocks down significantly in the session. It's down sort of twelve percent year to date, that big year last year, I think more than fifty percent gain in the stock. You're two years into this job, So what's the biggest action you've taken and one that you want to take.
Yeah, so it's a great question, and I think you.
Know, I certainly you don't like to see volatility, but we've seen volatility before. If you step back from it, we have consider distantly over the last two years demonstrated steady progress and improving the overall health of the business on on top line, on bottom line, on.
User growth and engagement.
You know, so the fundamentals have are sound and improving, and we've delivered a say do ratio of one on these things and we'll look to continue.
To do that.
The things have been the biggest drivers in the business, I would say one really investing in AI uh and the actionability on the platform via that AI so relevancy, actionability, and then positivity in terms of delivering a safe space for our users. State is simply you know, our users go to pinterest because it's a place they can invest in themselves without the sort of comparative performative nature you know that they experience on the rest of social media,
and that's why they're there for that commercial intent. So we're going to continue to invest in those things. They're really working well for us. When you zoom out over the multi quarter period, you know, it's been a fundamental change introductory of the business and we're going to keep investing those things that are working because again, our fundamentals have never been healthier and what they aren't right now
Interesting CEO Bill Ready, thank you for coming back on Bloomberg Technology