My name is Matt, and I'll be the moderator for today's call. I'd now like to pass the conference over to our host, Andrew Somberg, Vice President of Investor Relations and Treasury. Andrew, please go ahead.

Good afternoon, and thank you for joining us. Welcome to Pinterest's earnings call for the second quarter ended June 30, 2025. My name is Andrew Somberg, and I'm Vice President of Investor Relations and Treasury for Pinterest. Joining me on today's call are Bill Ready, Pinterest CEO; and Julia Donnelly, our CFO. This conference call is being webcast, so we are also providing a slide presentation to accompany our commentary. Please refer to our Investor Relations website at investor.pinterest.com to find today's presentation webcast and earnings press release. Some of the statements that we make today regarding our performance, operations and outlook, may be considered forward-looking, and such statements involve a number of assumptions, risks, and uncertainties that could cause actual results to differ materially. In addition, our results, trends, and outlook for Q3, 2025 and beyond are preliminary and are not an assurance of future performance. We are making these forward-looking statements based on information available to us as of today. And we expressly disclaim any duty or obligation to update them later unless required by law. For more information about assumptions, risks, uncertainties and other factors that could affect our results, please refer to our most recent Form 10-Q and Form 10-K, each filed with the SEC and available on our Investor Relations website. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures is included in today's earnings press release and presentation, which are distributed and available to the public through our Investor Relations website. Lastly, all growth rates discussed in today's prepared remarks should be considered year-over-year unless otherwise specified. And now I'll turn the call over to Bill.

Thanks, Andrew. Good afternoon, and thank you for joining our second quarter 2025 earnings call. Over the past three years, we have made meaningful progress in transforming our product and business to take advantage of the full potential of interest. This means seamlessly enabling our users to have dynamic multi-session journeys to take them from inspiration to action, while allowing advertisers to connect with the user across the funnel and ultimately drive performance outcomes. In order to do this, we're leveraging AI tuned on our unique curation signals to deliver increasingly relevant and personalized content. This drives further curation behavior, which provides us with even greater first-party signal for ever-improving actionability across our app, all while distinguishing ourselves as a place for positivity and belonging. As a result, Pinterest is resonating with our users more than ever before, and we have found our strongest ever product market fit. It's abundantly clear that Pinterest is an AI winner. We've never been more popular or valued by our users and more performant for our advertisers. Our Q2 results clearly showcased that our increased product velocity, combined with our consistent execution against our multiple ways to win, is leading to durable growth. We ended the quarter with 578 million MAUs and an 11% increase year-over-year, marking yet another quarter of record high users. At the same time, we generated Q2 revenue of $998 million, up 17% year-over-year as we continue to be a vital partner for advertisers across a range of verticals seeking to reach our lean to end users. Our consistent performance and ability to take market share demonstrate the effectiveness of our long-term strategy and laser focus on delivering value for our users and advertisers. Pinterest has been at the forefront of visual search and has helped create an entirely new way in which users discover, explore their taste, and ultimately shop. As we have significantly improved the relevance and personalization of our content using AI, we've become a destination for our users to explore their expansive set of commercial journeys. As I've shared before, 100% of our reported monthly active users are logged in and approximately 85% come to our mobile app directly. They are coming for new types of purely visual search experiences, particularly in moments where a user may not have the words to precisely describe what they're looking for or will know it when they see it. The visual nature of our platform is particularly attractive to Gen Z, who's been raised on an Internet of visual content and thus seeks out information differently than other generations. Pinterest offers the ability to visually explore in a more focused way that is distinct from other discovery platforms that are more entertainment-driven rather than intent-driven. Today, our platform is resonating with Gen Z more than ever. I'm excited to share that over 50% of our monthly active users are Gen Z, which speaks to the fact that we've built a platform that is deeply resonating with the next generation of users and shoppers who are influential tastemakers, content creators and a lucrative audience for advertisers to reach. We see that our users, including Gen Z, value our platform for a number of use cases. Specifically, the visual nature of our platform lends itself well to use cases, including fashion, apparel, beauty, food, beverage, and home decor, which are some of the core use cases on Pinterest. While those categories continue to be strong, we find that users across demographic groups leverage Pinterest for a broad range of moments in their lives. At the same time, we're continuing to broaden our audience across generation and gender. For example, we're seeing our male users come to Pinterest for searches like rock climbing aesthetic, which are up 95% year-over-year, whether it be a college student searching for their next winter break travel destination, a new mom looking for parenting tips or even actor Patrick Schwarzenegger creating boards to immerse himself and the characters he's playing on screen, there's something on Pinterest for everyone. As users come to Pinterest for a wide set of use cases to enrich their lives, we gain rich first-party human curation signal at large scale as they find inspiration, curate their tastes, make product associations, and ultimately take action. This proprietary signal is powerful for multiple reasons. First, as I just noted, all of our MAUs are logged in with most coming directly to our mobile app. This means our users express their intent to us directly through what they search, click, or save to a board. Next, our signal comes from the hundreds of millions of users actively curating through boards and collages over their multi-session journeys. Together, this network of many billions of associations between pins, searches, boards, products and users on our platform comprise our valuable taste graph, a signal that we believe to be unique in the Western world that allows us to make highly relevant recommendations. And the more we've doubled down on curation through improved board functionality and new content formats like collages, the denser our taste graph has become. In fact, as I've mentioned in previous quarters, our taste graph has grown over 75% over the last two years. And finally, because so much planning and saving activity happens on Pinterest, which is often a leading indicator of purchase intent, our signal provides valuable forward-looking insight. As a result, while some platforms may provide a year-end review recap of what consumers have already done, our data allows us to uniquely publish an annual report called Pinterest Predicts, where we share what is not yet trending but very likely will be in the year ahead based on what users are planning and curating today for purchases in the future. And given the strength of our data over the last five years, 80% of our predictions have come true. The signal we garner from user activity is the basis of our leading-edge AI recommendation systems, which we use to identify and surface personalized and helpful content to our users. AI is a core competency at Pinterest and is deeply integrated across virtually all facets of our business. With our world-class engineering talent in a large data corpus, we've developed our own proprietary AI foundational models for use cases that are uniquely applicable to the visual nature of Pinterest. For example, last quarter, I talked about the launch of our multimodal AI model, powering our new visual search experience, currently live for women's fashion. This new user flow allows users for the first time to search and refine their taste with both image and text inputs on our platform. Our proprietary in-house built multimodal AI model that powers this visual search experience and is trained on our unique data set is 30% more likely to identify and recommend relevant content from our corpus than leading off-the-shelf models. Building off this momentum, this quarter, we launched a proprietary generative retrieval model on our search and related services to drive further improvements to personalization across the platform for our users. This model, built completely in-house, is utilized within the early stages of our content recommendation system and is trained on past user activity across all our surfaces and our taste graph of how users associate our corpus of tens of billions of pins together to generate an initial set of potential pins to show a user. Due to the sophistication of this model and the breadth of content and activity it's trained on, it can recommend more relevant and deeply personalized content for our users while also balancing the distribution of fresh content, given it is more effective at predicting what a user might like to see. Another example of how we integrate AI to enhance the relevance of the content we serve our users is through the use of large language models in our search recommendation algorithm. Leveraging LLM in this capacity, we can ingest complex and conversational search queries, converting them into a format that our models can easily understand and process more effectively, thus leading to better content recommendations for our users. Our investments in driving deeper relevance and personalization for our users has led to cumulative gains across the business. Notably, we observed a 230 basis point lift in our search fulfillment rate year-to-date, meaning we're connecting users with more of what they're looking for when they're searching on Pinterest. Over the past three years, improvements to relevance and actionability have been at the core of our business transformation. The compounding impact of leveraging our rich first-party signal within our AI-driven relevance, combined with our efforts to make it easier for our users to search, save, and shop is reflected in our all-time record users including the outsized strength in Gen Z, I described earlier. As we've improved actionability, we've driven increased value for our users, and we're seeing a greater proportion of our users take action. This is important because the deeper a user engages with the platform, the more likely they are to be retained, and the more effectively, we're able to monetize. We see this particularly clearly in our UCAN region where we've driven the most significant improvement to actionability across the platform. In UCAN, the retention rate of users who take action like a search or save is notably higher than those who engage only in view-based behavior. That retention rate increases even further as a user moves down the funnel and engages in outbound click behavior. And we see a similar pattern of monetization where users who take action drive significantly more revenue than those who do not. We're helping advertisers capture this lower funnel intent on our platform by significantly improving our ads relevancy as well as building the foundational components of a performance ads platform with tools like mobile deep links, Direct Links, and Pinterest Performance+. This has created highly relevant shopping recommendations paired with seamless buying experiences, particularly benefiting our retail and e-commerce advertisers. We are also leveraging AI to continually improve the overall personalization and efficiency of the ads we show users. These always-on efforts are resulting in higher click-through and conversion rates as we optimize our AI models to better understand our users' taste and style. For example, in Q2, we significantly improved the performance of our large-scale conversion models by incorporating more sequences of signals about a user's commercial journey on the platform. By strengthening our training data in this way, we can more accurately predict ads that resonate with our users. In our early AB test, this launch drove a 5% increase in conversion rates for ads on our lowest funnel oCPM bid type. And while we've made tremendous strides in improving relevance and actionability for our users, we see continued runway ahead as we enable new seamless shopping experiences across various categories across our platform. Take food and beverage, for instance, which is an endemic and often daily or weekly use case on Pinterest for users looking for inspiration for recipes, meals, or events. Historically, we lacked the functionality to help users take action on the products they want to buy in this category. To address this, in Q2, we announced a strategic partnership with Instacart. Through this collaboration, Pinterest ads will soon become directly shoppable via Instacart, allowing users to complete a purchase in just a few clicks. Practically, this means we can make a recommendation to a user for a great cocktail recipe based on our knowledge of their taste, and the user can immediately order the necessary ingredients for delivery to their door. This provides CPG advertisers with a powerful, performance-driven and actionable way to connect with Pinterest users. The partnership also empowers brands advertising on Pinterest to leverage Instacart's rich first-party retail purchase data to effectively reach high-intent shoppers. We also anticipate rolling out additional add-to-cart and buying functionality for CPG advertisers in the coming months, which will further enable products to be purchased directly on partner retailer websites. At the same time, we are continually innovating on our AI-powered Pinterest Performance+ suite to drive greater efficiency for advertisers after our initial launch in Q4 2024. In Q2, we entered beta testing for Pinterest Performance+ creative preview, which allows advertisers to preview modifications made by our creative tools including generative backgrounds and imagery sizing, directly within the campaign setup flow. They can also easily regenerate any pins that they wish to change. This helps advertisers maintain control over the creative generation process to ensure the content aligns with their brand while improving transparency and building confidence with the product. In the second quarter, we also launched our campaign customer groups beta within Pinterest Performance+ campaigns. This new functionality allows advertisers to combine their audience data with Pinterest data while utilizing AI trained on our unique signal of user tastes and preferences. This offers advertisers further granularity over their campaign setup to align with their business goals and drive incrementality. For example, by bidding more to reach new customers. Finally, we continue to complement our robust first-party sales efforts with a diversified partner strategy. This approach aims to capture additional sources of demand ultimately improving auction density and further enhancing the relevance of our ad demand. This includes integrations with partners like Smartly, an AI-powered platform assisting e-commerce advertisers in campaign management and optimization. We are also investing in our relationships with agencies who we view as vital partners within the ads ecosystem and actively leveraging other complementary demand sources, including international resellers and third-party demand partnerships. Through countless discussions that I have had directly with the CEOs and CMOs of our top advertisers, I am more convinced than ever that Pinterest is offering unique value as a platform within the ads ecosystem. Advertisers are increasingly recognizing our speed of execution and our consistent ability to deliver on promises with differentiated, data-driven insights and expanding global scale. More than ever before, advertisers now view Pinterest as a powerful search platform capable of driving significant lower funnel performance. Lastly, our fundamental ethos of positivity and belonging continues to be a critical differentiator for our platform. This ethos of positivity has also cemented us as a platform for self-expression in the broader cultural zeitgeist and has attracted creators who wish to align themselves with our messaging and uplifting content. For example, we teamed up with Emma Chamberlain, a popular Gen Z influencer and Pinterest power user to launch our first-ever co-branded global product with her brand, Chamberlain Coffee, whose packaging and branding was inspired by the Fisherman Aesthetic 2025 Pinterest Predicts trend. We prioritize maintaining our inspirational platform and unwavering commitment to positivity and brand safety, which is upheld through policies such as private buy default settings for users under 18 and supporting focus during class time. We also continue to invest heavily in our inclusive AI tools that help users see themselves represented in the content they interact with on Pinterest. I'm incredibly proud that our advertising partner, Dove recently won the Cannes Lions Media Grand Prix for their Real Beauty Redefined for the AI Era campaign, which ran exclusively on Pinterest and leveraged our inclusive AI tools and data insights. Overall, I'm proud of our team's sustained execution and commitment to delivering for our users and advertisers. With that, I'll turn the call over to Julia to share more details about our financial performance.

Thanks, Bill, and good afternoon, everyone. Today, I'll be discussing our second quarter 2025 financial results and providing an update on our preliminary third quarter 2025 outlook. All financial metrics, except for revenue will be discussed in non-GAAP terms unless otherwise specified, and all comparisons will be year-over-year unless noted. Our results this quarter reflect our ongoing execution on our strategies, which include growing our user base, enhancing engagement while increasing ad load with relevant ads, delivering performance for advertisers through product innovations, and bolstering our first-party business with new demand sources. This approach is helping us capture market share in a competitive but expanding environment, reinforcing our business with sustainable revenue growth, profitability, and cash flow generation. We are achieving record-high user numbers driven by efforts to improve content relevance and personalization using AI throughout our platform. Simultaneously, we're experiencing continued revenue growth from enhancements in our AI-driven advertising stack, which includes improved automation and actionable lower funnel ad formats. The cumulative effects of these initiatives, along with our consistent execution, have led to a more resilient business than ever, with further opportunities for growth as we continue to implement our strategy. Now, let’s review our second quarter results. We concluded the quarter with 578 million global monthly active users, marking an 11% increase and another quarter of record-high users. User growth is evident across all our regions. In Q2, the U.S. and Canada had 102 million MAUs, growing 5%; Europe boasted 146 million MAUs, up 7%; and in the Rest of World markets, we reached 329 million MAUs, growing 14%. Regarding revenue, our global revenue in Q2 was $998 million, up 17% both reported and in constant currency, with strengths in conversion and awareness goals. From a vertical perspective, we noted strong performance in both retail and financial services. In the U.S. and Canada, we recorded revenue of $745 million, reflecting an 11% increase, primarily fueled by retail and financial services. Europe’s revenue stood at $191 million, a 34% increase reported and a 29% increase in constant currency, driven by retail performance. Our Rest of World revenue was $63 million, marking a 65% increase reported and a 72% increase in constant currency. Ad impressions grew 55% this quarter, highlighting the synergy between total impressions, both paid and organic, and ad load on our platform. This quarter represents the 12th consecutive quarter of growth in ad impressions, largely attributable to both increased total impressions and ad load. However, ad pricing declined by 25% year-over-year, mainly due to the shift towards ad impressions in previously unmonetized or undermonetized international markets, which have lower pricing compared to our mature markets. On the cost side, our revenue for Q2 was $197 million, reflecting a 10% year-over-year rise and a 2% increase from Q1, primarily due to heightened infrastructure spending related to user and engagement growth. Our non-GAAP operating expenses totaled $555 million, rising 14% due to increased investments in sales, marketing, R&D, and support teams across AI and product initiatives. Thanks to our revenue outperformance and strict cost management, we achieved an adjusted EBITDA of $251 million for the quarter, resulting in an adjusted EBITDA margin of 25%, an increase of about 310 basis points from last year, which exceeded our expectations. We also reported free cash flow of $197 million and ended the quarter with $2.7 billion in cash, cash equivalents, and marketable securities. In Q2, we allocated $106 million for net share settlements and $53 million for share repurchases to mitigate dilution, resulting in a 1% decline in the year-over-year fully diluted share count compared to Q2 2024, which is better than our target of a 2% to 3% average annual decline. Looking ahead, we expect third quarter revenue to fall between $1.033 billion and $1.053 billion, indicating a year-over-year growth of 15% to 17%. We anticipate foreign exchange to contribute approximately one point of benefit based on current rates. In terms of the P&L, we predict third quarter adjusted EBITDA will be between $282 million and $302 million, with year-over-year leverage on non-GAAP cost of revenue expected to be about half of what we delivered in Q2 2025. Our primary investment area for non-GAAP operating expenses in Q3 will be expanding headcount within R&D to support our AI and other product initiatives, along with our global enterprise sales team. We foresee adjusted EBITDA margin expansion during the second half of 2025, albeit at a lower level than the first half, as we continue to invest in revenue-generating initiatives. In conclusion, I'm proud of our team's performance this quarter as we adhere to our strategic plans, delivering value for both users and advertisers while maintaining strong revenue growth. Now I'll turn it over to Bill for some final thoughts.

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

First question is from Ron Josey with Citigroup.

Bill, I wanted to ask a little bit more on just overall usage trends with Gen Z being 50% of users today. I would love to hear just how usage overall intent has changed just given the changing demographic. I know we talked about newer verticals last quarter, and you mentioned that today. And then maybe bigger picture, and this gets into the Gen Z comment. Just given changing search habits, we're hearing more and more users are starting their search directly on Pinterest. And so just wanted to hear more about the opportunity here as Pinterest gets more direct traffic and particularly younger direct traffic.

Thanks, Ron. Yes, as you noted, user growth overall has been a real bright spot for us. And we're growing across all geographies and generations that we track. And we're increasingly relevant with the next generation, particularly with Gen Z now accounting for over 50% of our MAUs, followed by millennials who are our second fastest. To your point on Gen Z coming to Pinterest to search, Adobe put out a study recently, which found that Gen Z used Pinterest as a search destination. They found that 39% of study participants have used Pinterest as a search engine, and that was 47% for Gen Z. And so over 70 from those users say the top reason they use Pinterest as a search engine is because it's visually appealing. So what we've done around visual search using curation paired with AI to make really, really relevant recommendations where users say Pinterest just gets me. It's helping them in entirely new forms of search that are both a mix of discovery based on deep knowledge of their taste, but then their ability to really easily refine that taste in a purely visual manner. While we see that resonating the most with Gen Z, that is working across our platform globally, across demographics, and across generations. And so that's part of why you see our growth both in UCAN, in Europe and in Rest of World, strong growth numbers across all of those because that is working globally, but that AI paired with our unique curation signal on the platform is leading users to say, well, Pinterest just gets me. And we think we've got a lot more that we can do there as we continue to nestle deeper into AI. And as we are increasingly a destination with 100% of our users being logged in, and 85% coming to our mobile app directly. So we're a destination for these things. Users are seeking us out, and we think there's a lot of continued opportunity to build upon that.

Next question is from the line of Eric Sheridan with Goldman Sachs.

Bill, there's been a lot of volatility year-to-date in the broader macro environment. How would you characterize the current demand state for digital ads broadly? And how are you thinking about the potential for volatility in either direction or nuance around budgets as we progress deeper into the year?

Thanks, Eric. Broadly speaking, I'd say, you look at our over-delivery on revenue in Q2, we saw a bit more constructive environment than what we had expected and many others expected at the time of our last call. But I'll turn it over to Julia to give some more insights and thoughts as to how we're seeing that going forward.

Yes. Thanks, Eric. So I guess for Q2, we saw areas that have been strong for several quarters now for us, such as retail and financial services, continue to be sources of strength. And as Bill alluded to in his prepared remarks, we're also seeing continued gains through our investments in AI, which are driving user and engagement growth as well as compounding benefits from improvements to our ad tech stack as evidenced by outbound click growth and efficiency improvements for advertisers. So while the tariff impact was certainly smaller than we anticipated in Q2, we did still see some impact affecting our UCAN region. For example, Asia-based e-commerce retailers pulled back spend in the U.S. tied to the change in the de minimis exemption. But partially offsetting this headwind, we also continue to see really exciting ongoing geographic diversification from some of these and other retailers to our European and Rest of World regions. So outside of UCAN and in our international markets, we saw a nice acceleration in Q2 both on a reported and constant currency basis in Europe and Rest of World. Europe, this was really driven by strength in retail as we continue to expand our lower funnel and shopping playbooks to those markets. While in our Rest of World region, we saw strength coming from our own first-party sales force plus contributions from resellers as they continue to ramp, which is consistent with our kind of multi-pronged strategy to accelerate monetization in this region. So overall, a very strong Q2, and we see that continuing into Q3. You asked a little bit about sort of ad environment again, I'd say, as we talk to advertisers about Q3, we do hear that some of that tariff-related and broader market uncertainty has continued into how they're thinking about spend for Q3, though this varies by advertiser and again, it's definitely a relatively more constructive environment than feared. So we're trying to provide an outlook for Q3 that is responsive to that overall environment and we'll have to see how the broader market backdrop plays out. Stepping back, though, we're guiding to a revenue range that is similar to the 17% growth we just delivered in Q2. So we think the consistency of our revenue growth year-to-date really highlights the resilience of our business and more importantly, the durability of our many revenue growth drivers as we're continuing to execute on our strategy.

Next question is from the line of Doug Anmuth with JPMorgan.

Bill, I wanted to ask about Performance+ adoption. You rolled out ROAS bidding in GA in March and then also gave advertisers the ability to bring in audience data in 2Q. Can you just talk about how those initiatives are trending so far? And then what else may be in the pipeline for Performance+?

Thanks, Doug. We're really pleased with what we're seeing on the rollout of Performance+. We've seen notable early adoption from mid-market advertisers. Since the end of last year, the percentage of lower funnel revenue flowing through Pinterest Performance+ campaigns has more than doubled. And so we've consistently talked about how we see that as a multi-quarter, multiyear cycle. But we feel really good about the adoption and the performance there, and we're continuing to bring best offerings for bidding, targeting, budgeting and creative to advertisers. As you noted, we launched ROAS bidding in Q1, and in Q2 we launched the P+ creative previews and campaign customer groups. Our goal of Performance+ was to expand our reach beyond the largest retailers, and we're seeing to do exactly that, that Performance+ gives advertisers their preferred level of control, and it's also getting us more into that mid-market, more into some of that $1 billion to $30 billion segment. And even as we go a little bit further in the small business, we're seeing some early signs there because Pinterest Performance+ is making it much easier for advertisers to come on the platform. I spoke before about how it's cutting campaign creation time in half, and they're seeing a lower cost per action. So we continue to see all those things playing out nicely. Again, driving what we think will be a multi-quarter, multiyear adoption cycle, and not just the existing features, but as we continue to round out the feature set.

Next question is from the line of Justin Patterson with KeyCorp.

Great. Bill, there's been a lot of talk about just how agentic AI is changing the search funnel. I'd love to hear you expand on just some of the investments you're making to really succeed in this new era? And how long you think it will be before you see some benefits there?

Yes. Thanks, Justin. First, I'd say that as we've entered sort of this Cambrian moment of a lot of new AI-driven experiences and people thinking about searching in new ways, Pinterest is an AI winner in that. Through that moment, Pinterest is more popular than ever as we're driving record highs in users, winning with the next generation, deepening engagement per user, and at the core of that is that we've really made AI essential to everything that we're doing. While we don't talk about it this way, Pinterest has effectively become an AI-enabled shopping assistant. And we don't talk about it that way because it's not how our users think of it. But when users say things like Pinterest just gets me, it's because they can open the app and the app is going to make recommendations to them proactively on things that they're really interested in, that align with their taste and stylistic preferences, the way that a really great personal shopping assistant would. We think there's a lot more to go on that, and then we think we have something really unique around our curation signal that doesn't just let us understand the taste for that user individually. When they curate and associate products, it gives us a completely unique signal for us to show the next user that may start with just a small signal of even just one product that we can then recommend what else might go with that. And not just the obvious things like, you bought your first ever bag of dog food, and so here's the dog collar. Those are pretty obvious. But things that will suggest, well, if you're into this kind of beauty product, you might be into these kinds of yoga apparel and those kinds of things and really unique associations that are going to resonate with that user. And to your question on agentic, I think this notion of an agent just going and buying all the things for you without you doing anything, I think that's going to be a very, very long cycle for that to play out, both in terms of how the users think about it and where the users are going to be ready to just let something go run off and do everything for them, save for maybe some very utilitarian journeys. If we look at what's happening on our platform already, we can take the user much further down that shopping journey, assisting them, as I mentioned, with the relevancy of our recommendations that's effectively taking the user much further down the shopping journey without them having to do the work. So we see really great early signs of that. We think there’s a lot more that we're going to be able to do there that we will focus on in a very user-centric way that meets the user where they are. But with AI and LOMs and agentic capabilities deeply embedded in the way that we're doing that. As we're going through this Cambrian moment, Pinterest is more popular than ever. And it's because we've made Pinterest into an AI winner and really made the core competency both based on what we're able to do through our engineering, but importantly, the unique curation signal that we have on our platform.

Next question is from the line of Mark Shmulik with Societe Generale Group.

Julia, we've seen strong acceleration in the international business the last few quarters. Can you perhaps help us dimensionalize kind of what's driving that strength between just overall stronger market dynamics? And what Pinterest is doing to perhaps close the monetization gap there? And then, Bill, just a follow-up on the search question from earlier. I appreciate the color on the traction with visual search. I think the last data point we have on search query volume was from the Analyst Day, but is that reasonable to assume that search volume is kind of growing alongside this changing user mix with more Gen Z users?

Great. Thanks, Mark. I'll take your first one on international. So we still think that international is a huge opportunity for us in the medium to long term. In Q2, as you noted, we're pleased with the acceleration we're seeing in our international regions. We're starting to see that over the last couple of quarters. We are beginning to narrow the gap between UCAN and international ARPU. There's obviously a lot more room to go to further narrow that gap over a multiyear period. But we think the early proof points in Europe with retail in particular demonstrate that the success we've seen with lower funnel and performance ad budgets in UCAN can translate well to large markets abroad with the right focus and execution. As a reminder, the monetization and go-to-market approach do vary country by country internationally. So in Western Europe, it's primarily our first-party sales team, whereas when you get to longer tail international markets, which tend to be in the Rest of World region, it's really a mix of our first-party sales force, reseller partners, which we've been continuing to ramp and then third-party ad demand through our Google partnership as well. So these markets are overall sort of lower TAM and have ad impressions with lower eCPM in general. So you're starting to see that affect our overall pricing trends. However, they're really clearly net revenue accretive. And you can see that in the accelerating growth rates really for the past several quarters, in particular, this quarter. It represents a large opportunity for us going forward as we start to break into and grow more meaningful share in these markets.

Yes. And on your second part of your question, Mark, around visual search and search volume. A couple of things that we've commented on. First, as you look at us hitting record levels of users, we continue to see the general trend of DP engagement per user. And as I've commented on past calls, it continues to be the case that at the core of that DP engagement per user is actionability, which is intent-driven experiences. A general way to think about it, that we've talked about before is that our platform in terms of user interaction is approximately 1/3 home feed and then 2/3 search-related. That 2/3 search-related is sort of a more purely visual form of search. Even the home feed, increasingly we see as a continuation of search journey. The entire platform has become a new way that people think about searching in a way where it is more proactive, it is more contiguous across sessions, it is more personalized, it is more visual. Again, that deep engagement per user and the residence with Gen Z, it really is at the core of that, helping them go satisfy intent, which is effectively a search type experience, but delivering that for them in an entirely new way. We continue to feel really great about the progress, and again, expect there's a lot more we can do.

Next question is from the line of Ross Sandler with Barclays.

Great. Julia, could you talk about your investment priorities for the second half of this year, the pace of margin improvement is still up, but it's coming down a bit, as you noted. So how should we think about that? And then, Bill, could you just elaborate a little bit on this new Instacart partnership? It sounds like you're integrating some of their shopping data to make CPG ads more targeted on Pinterest. Can you just kind of double click into that? And was there an off Pinterest component involved as well?

Great. So Ross, thank you for the question. I'll take the first one on margins. I would say in Q2, we had exceptionally strong revenue performance, so the flow-through of that led to outsized adjusted EBITDA margin expansion. For the second half, we talked about in the prepared remarks that we're expecting adjusted EBITDA margin expansion again, but just at a lower level than the elevated expansion in the first half. But maybe just to give a little bit more color on sort of the areas that we're investing in and how we're seeing that play out. So where you're starting to see the pacing of investments showing up in our expense line. Our planned investments in R&D are targeted at high-value areas that enhance our products, both for users and advertisers. As we look back over the last 18 months, it's just incredibly clear that we've seen really nice near-term returns from where we focus these investments, particularly within AI to improve relevance and personalization like Bill was talking about a little earlier, leveraging our unique first-party signal and technology through LLM, to strengthen our search recommendation algorithms and creating new visual experiences like visual search through our proprietary multimodal model. We've also seen early revenue momentum in Europe and Rest of World. Also in kind of these emerging verticals like financial services that we've continued to call out for the last few quarters here and across the lower funnel. As a result, we want to invest in our sales capacity to further lean into that growth that we're starting to see and the larger opportunity that we have ahead of us there. To that end, after a period of more aggressive margin expansion in 2024, since the start of this year, we've added new sales leaders who are continuing to elevate their teams and add new talent, particularly in our UCAN and Europe enterprise sales teams, alongside this also investing in the growth of our sales enablement and support teams, bringing in more technical sales talent to support our increased focus on lower funnel and performance-based campaigns. So tying that all together, as a result, we still expect margin expansion in full year 2025, though at a more modest level than the outsized amount we delivered in 2024. This is all consistent with our prior margin outlook commentary provided on previous earnings calls as well.

And on the second part of your question, Ross, around the Instacart partnership, we're quite excited about that. As I've consistently talked about, actionability and bringing actionability into the platform has been really core to the revitalization of Pinterest over the last three years. We started with core retail and shopping categories. But food and beverage has been one of those categories that is endemic to our platform, but where actionability was still relatively low. The partnership with Instacart will allow us to do things like as people are looking at, say, a recipe on the platform, immediately go order the ingredients for that recipe to have it delivered to their door. The way that will work is consistent with what we've done in retail: seamless hand-offs to the place that you're buying. You've seen us with mobile deep linking and those kinds of approaches make it so that as you find the product that you want, we create a really seamless handoff to the place to go buy it. We're taking that over to the place for you to go buy those things. We’ll continue to bring actionability into food and beverage, which is a large endemic category for us.

Next question is from the line of Brian Nowak with Morgan Stanley.

I wanted to ask about the future growth of advertising. You've made significant improvements to the platform, and you've discussed the compounding gains over the past nine months using GPN machine learning. When other platforms have made similar advancements, we often see considerable growth and acceleration. Is it incorrect to apply that same expectation to Pinterest? As you evaluate the ad revenue you're generating, are there any limitations on how much the business can accelerate that we might not fully understand? I'm trying to consider the trajectory of revenue growth in the second half of the year and into next year.

Yes. Thanks for the question, Brian. I think I've been very, very consistent on this, is saying that think of these things as long-term compounding initiatives and I don't know how many more ways I can say no hockey stick, no step function because these things, as we're building the performance ad platform, these all have compounding benefit. We're pretty consistently delivering above the rate of the market growth overall. And we feel really good about that. We've really turned the platform into a performance advertising platform over the last few years and have increasingly broken into those always-on performance budgets, really taking share, growing above the rate of the market overall. We have continued to consistently deliver on that very much in line with the expectations we said at our Investor Day, delivering above the high end of our guidance range. So we feel really good about the way that we're delivering there. We don't see any structural limitation to that. We're a small player in the market, but we're growing faster than the market and increasingly relevant in more use cases with more advertisers as we work our way from the largest advertisers down to sort of the mid-market on down. There's a lot of room for growth ahead, and those are all the levers of growth that we laid out at our Investor Day, and we're executing on those and delivering in the ranges that we've talked about consistently on how we would do that.

Next question is from the line of Anthony Post with Bank of America.

Great. There are a couple of points to mention. The functionality of the site is definitely improving. Are you noticing an increase in the number of men using the site? Do you think there are opportunities to further grow the audience in that demographic over time? Also, while some other sites experienced significant acceleration during the quarter, you talked about less variability but more durability for your auctions. Can you explain what makes your auctions stand out from other sites and why they may be more sustainable over time?

Thanks, Justin. To your point on broadening use cases, that is absolutely what we see happening on the platform. We've talked about winning the next generation with Gen Z, and that's going very, very well. I commented in my prepared remarks about broadening relevance across all generations that we track. We're growing across all generations and also gender lines with more and more men coming to the platform. The reason we see that our relevancy is increasing across all the geographies that we track, across the generations that we track, and across gender lines is that what we're doing around our AI-powered recommendations and visual search—so much of what people are looking for is visually driven and that's true for women, men, Gen Z, millennials, Gen X, and boomers. We're really pleased with how we see the relevancy of the platform improving across demographics.

Yes. And then I think to get at your second question, Justin, obviously, we don’t comment on sort of monthly trends. But what you're seeing from us in Q2 and what I would expect in Q3 as well, is that we're a really vital partner for many of our advertisers, particularly as we break into their more performance-oriented budgets. You're seeing that they continue to really value the full funnel, very unique full funnel offering that we have and the sort of leaned in high commercial intent users that we have who are actively participating in our site. I think we're a great partner to those advertisers in retail during these moments and we're seeing really nice penetration gains as well in some of these emerging verticals that we've talked about here for the last quarters. We're seeing some nice tailwind also in the mid-market segment due to earlier adoption in Performance+, although still multiyear cycle ahead of us. So that's a little bit more color on that, but I think that's all we're going to comment on there.

Next question is from the line of Colin Sebastian with Baird.

Bill, the new visual search tool works really well from what we can tell. And I guess I'd be curious how you envision that functionality ultimately contributing to broader user engagement and monetization, how this helps position you against some of the other visual surfaces that we see cropping up on other AI-oriented apps. And Julia, I guess, curious what you've seen in Q2 in terms of MAUs that reflects seasonality in North America and Europe and how that might track into Q3. Thank you.

Thanks, Colin. On the visual search part, I think the thing that I'd say there is the uniqueness of our platform and the curation signal that we have that lets us make proactive recommendations. So even before you go search, we're giving you recommendations for things that are highly likely to be interesting to you in a much more targeted way than what you would typically find on entertainment-based platforms and those kinds of things because there is intent expressed on our platform, and that allows us to make those proactive recommendations. I talked about on our new multimodal model for visual search that, that is outperforming off-the-shelf models by 34 percentage points on the relevancy of the recommendations to our users, and that is really getting at the uniqueness of that curation signal and the product associations on our platform that let us make those really, really great recommendations. Therefore, you're seeing our users vote directly by coming to us more and more with these very actionable journeys, driving clicks and conversions for advertisers, and this deep engagement with users on our platform is, as I mentioned in my prepared remarks, driving greater retention because we're pleased with the experience they're getting. That unique curation signal is integral to what makes our offering stand out.

And then, Colin, to your second question on MAUs and sort of seasonality. We don't guide to MAUs. But in Q2, you're seeing consistent growth and actually accelerating growth across many of the regions that we're reporting on an MAU basis. We do see seasonality sort of every year, particularly in Europe. Just as a reminder, MAUs are reported on a 30-day look back from the last day of the quarter. So you do tend to see summer vacations show up in Europe. But on a year-over-year basis, we accelerated user growth across all regions in Q2. I'm really happy with what we're seeing there, not just on the user growth side but also on sort of the various engagement metrics that we're tracking per user; it's really been a bright spot for us as we've been able to drive relevance and personalization through the use of more and more AI as we were talking about earlier on the call, but also better able to kind of re-engage marginally engaged users. We've been able to better retain users over time but also monetize those users.

The final question is from the line of John Blackledge with TD Securities.

Great. With AI driving so many parts of the business, I'm curious how PINS is competing for talent, particularly AI talent, given the increasingly competitive market for the AI talent?

Yes. Thanks for the question, John. What I would say is that there are multiple factors involved in how you compete with talent. Money and mission are two of those. Another major component is having a great sandbox for excellent engineers to experiment with. There's definitely competition for talent. The good news is that we're able to align what we're doing with AI to monetize use cases that generate returns for us. We're competing for talent in that regard, not at the most headline-grabbing numbers that you would see out there, but that's on the money side of it. The mission side is significant too; I think we really punch above our weight. We aim to create a more positive alternative to what’s happening in the rest of social media. A lot of individuals really want to build for that. There are two competing points of view around this: some folks who are willing to do things at all costs and others who care about ensuring that AI is used for good and responsibly. We're not the only ones building in that regard, but for us and others competing on this dimension, we see that mission making a big difference. Engineers are also drawn to a high-quality sandbox. With nearly 600 million monthly active users engaging in a unique visual experience, there are very few sandboxes that can facilitate that. While some platforms are larger, few reach above 0.5 billion users with such unique offerings. This makes for a good environment, and we find that helps us compete effectively.

Thank you for your question. I would now like to hand the call back over to Bill Ready, CEO, for closing remarks.

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

That concludes the conference call. Thank you for your participation. You may now disconnect your lines.