Pinterest Q3 2026 Earnings Call Transcript
Pinterest (NYSE:PINS) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.
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Access the full call at https://events.q4inc.com/attendee/714420261
Summary
Pinterest Inc. reported its 13th consecutive quarter of record user growth, but Q3 revenue fell below expectations due to international regulatory changes and restructuring impacts.
Despite revenue challenges, adjusted EBITDA met expectations, highlighting the company’s focus on building a diversified revenue base.
The company is focusing on enhancing its AI-driven visual search and shopping experience, with 80 billion monthly searches, predominantly visual and commercial.
Pinterest Assistant, an AI-powered tool, is now available in the U.S., with 80% of its searches being commercial, indicating strong monetization potential.
Q4 revenue is projected to grow between 8%-12% year-over-year, with ongoing international headwinds, but strong UCAN region performance is expected to continue.
Full Transcript
Bill Ready (Chief Executive Officer)
Continuing to improve our performance ads platform and strengthening our go-to-market motion, including new leadership across the organization. Now let me turn to the quarter. In Q3 we delivered our 13th straight quarter of record users and our 12th straight quarter of double digit user growth on revenue. We flagged two headwinds coming into the quarter affecting our international business, regulatory changes to the de minimis exemption in Europe affecting cross border sellers and the restructuring of our international go-to-market organization.
The regulatory impact was greater than we anticipated as it is inherently hard to forecast when changes take effect during the quarter. The pullback from cross border sellers accounted for approximately three points of the sequential change in our global revenue growth rate from Q2 to Q3. The impact of our international go-to-market restructuring played out about as we expected and was a smaller contributor. Overall Q3 revenue came in below our range.
We are not happy with that result and we have clear plans in place to accelerate our revenue diversification efforts. Despite these headwinds, we delivered adjusted EBITDA within the range we expected. This quarter reinforces the importance of the work already underway to build a broader, more durable revenue base. The reinvigoration of our UCAN business provides a clear proof point for the approach we are taking. Last year, changes in the regulatory environment in the United States affected large retailers and cross border sales into the U.S. Despite those headwinds, continued improvements to our performance ads platform and go-to-market execution helped us drive a reacceleration in UCAN revenue growth. Year to date, UCAN revenue has grown at a mid-teens rate, a clear acceleration from 2023.
We are now applying that same playbook internationally and we are beginning to see early signs that these changes are taking hold internationally. That gives us confidence that the actions we are taking are right for the long term health of the business. As we said at the beginning of the year, progress would not always be linear and we might face some short term headwinds as we make changes that are right for the long term. Moving forward, our priorities remain clear. First, continue building a differentiated visual search discovery and shopping experience. Second, keep AI at the core of everything we do. Third, accelerate monetization through improved go-to-market and measurement. With that context, I’ll start with engagement, which underscores the distinct role Pinterest plays for users. Pinterest has become a destination for search, particularly visual search. Users conduct more than 80 billion searches on Pinterest each month.
The vast majority are visual and more than half are commercial. This is a different kind of search experience from traditional text based search. People come to Pinterest with a point of view, but often without the exact words brand or product in mind. At the core of this search experience is our approach to agentic discovery. We use AI to proactively bring users relevant ideas, products and next steps based on their taste and intent. For many people, shopping is not a task to be automated.
It is a joyful activity and a pastime. Our AI assisted experiences are designed to enhance a journey the user wants to engage in rather than take that journey away from them. We use AI trained on our unique data to understand people’s preferences and anticipate what might inspire them next. But taste is personal and the ultimate choice belongs to the individual. We believe the best AI experiences will expand human choice, not replace it. This is why Pinterest is built for all the wonderful parts of shopping that people do not want to give up in the same way that people don’t seek to automate away their entertainment.
Approximately 70% of search journeys on Pinterest begin with a proactive recommendation made by our AI enabled systems before a user types a word. From there, users explore possibilities, compare options visually and turn inspiration into action. That experience continues to drive user momentum. Global MAUs grew 10% in Q3. It is resonating particularly well with Gen Z, our fastest growing cohort. Gen Z now represents 57% of our users and is our most engaged cohort across monthly retention, saves and sessions.
They also come with intent. Two thirds of Gen Z users say they come to Pinterest to shop. That intent carries through to monetization as ARPU for Gen Z users is comparable to Millennials in UCAN, which bodes well for ARPU growth as Gen Z begins to enter their peak spending years. What makes our engagement particularly valuable is the intent behind it. As users search, save and build boards, they reveal evolving tastes and interests that help us anticipate what they want next. This creates a valuable feedback loop. The more people engage, the more relevant and personalized their search experience becomes, giving them more reasons to return. These distinctive signals built over years create an increasingly differentiated experience for users and a powerful commercial opportunity for advertisers.
Pinterest Intelligence is the foundation that connects our proprietary first-party signals, visual understanding and purpose built AI models. With it we can deliver more personalized discovery for users and better performance for advertisers. We pair our proprietary data with compact fit for purpose models and open-weight models post-trained in our own environment. As I said last quarter, open-weight models can outperform comparably sized closed third party models for our use cases because we can post-train them on Pinterest unique data.
We are also achieving a cost per transaction at less than 8% of comparable closed proprietary models. Importantly, we are scaling these AI capabilities efficiently and applying them to highly monetizable use cases such as Pinterest Assistant. Pinterest Assistant is now in general availability in the U.S. and we are encouraged by the early signals. While more than half of all searches on Pinterest are commercial, approximately 80% of searches using Pinterest Assistant are commercial in nature.
Within the Assistant, we are building more agentic experiences designed to assist users in their discovery journey rather than automating them out of it, including Ask Mode, which is beginning to scale in the U.S. We are also deepening capabilities across our core use cases with products such as Beauty Guides and Restyle. Restyle, which launched in beta in Q3, helps users reimagine a room from a photo by adding a new piece, replacing an existing one or exploring a different look.
It combines Pinterest Intelligence’s understanding of style with shoppable products from our catalog, helping users see how an idea could work in their own space. Much of the Restyle experience is currently powered by Pinterest Canvas, our proprietary AI image generation model. The same intelligence that improves the user experience is also helping drive compounding gains for advertisers. We continue to improve how we retrieve and rank ads using stronger relevant signals and predicted purchase intent. We are also increasing the pace of these enhancements so gains reach advertisers sooner. Visual Search Ads is a new lower funnel format currently in beta, which helps performance advertisers reach users in some of Pinterest’s highest intent moments, search results and Pin close-ups.
The format is designed to drive measurable outbound action, giving advertisers a new way to turn visual discovery into conversion. Advertisers can use their existing catalogs in keyword targeting, making adoption straightforward. We are extending the same focus on performance to app promotion, our new objective for app installs, now in beta with qualified advertisers globally. Pinterest has not historically been a meaningful participant in mobile app advertising and this opens an important new budget pool.
Alongside these launches, we are making Pinterest easier for advertisers to use, optimize and scale. We have consistently said that Pinterest Performance Plus, our AI-powered campaign solution, would be a multi-year product and adoption cycle. Advertisers can now add keywords and interests that matter most to them and track results for each with priority products. They can also emphasize the product groups they value most. The result is automation with greater control and transparency.
Larger advertisers have asked for both and they are driving continued Pinterest Performance Plus adoption. We are also advancing our measurement and bidding capabilities to help advertisers see the full value Pinterest drives. In Q3, more of our most sophisticated advertisers directly integrated their in-house measurement systems with our AI bidding tools. These integrations allow us to optimize toward the outcomes each advertiser values most. For example, in early testing with a leading e-commerce platform, that advertiser saw 77% higher new customer return on ad spend reflected in their proprietary measurement.
Source of truth. We are pairing these platform improvements with a more disciplined go-to-market motion focused on selling performance advertising. Stepping back, we are only about three years into our performance advertising journey which started in UCAN. We built our lower funnel playbook around shopping in a deliberate order, starting with making Pinterest a place where users shop and take action. We then built a performance ads platform so advertisers could tap into that intent and aligned our sales and go-to-market teams behind it. We are now running the same playbook internationally. On go-to-market, we are building across three areas: people, organizational structure and operational rigor.
Starting with people, we have leveled up our sales leadership to align with our shift toward performance selling, which takes different skills than selling upper funnel brand ads. In our international regions, we started this process more recently and more changes were required across multiple markets. Overall, while the toughest parts of our personnel changes are behind us, many of our new leaders are still ramping up. Second, organizational structure.
We are refining account coverage around our largest opportunities and bringing our technical and sales teams closer together. That gives advertisers more consistent access to the performance measurement and product expertise they need to scale with Pinterest. Third, operational rigor. We are creating clear seller accountability through more consistent training, incentives and sales motions. In UCAN, this has helped us package key commercial moments more effectively and connect Pinterest product performance more directly to advertiser outcomes.
Internationally, we are bringing the same discipline to each market. These actions are designed to improve client coverage, seller productivity and our ability to convert strong advertiser performance into more durable revenue growth. Ultimately, the goal is a more resilient revenue base that reflects both the strength of our users and engagement and the performance we deliver for advertisers. In summary, I am confident in this work because our foundation is strong, our users are growing and engaged, our platform is delivering performance for advertisers and we are strengthening the go-to-market engineering. The work we are doing now positions Pinterest to reaccelerate growth over time and return to the mid- to high-teens revenue growth we have delivered historically.
Before I walk through our results and outlook, I’d like to turn it over to James to share a few words about why he joined Pinterest.
James (Chief Financial Officer)
Thank you, Bill. I’m delighted to have joined Pinterest on Monday, and since it’s only been a few days, I’ll keep my remarks brief for this call. I came to Pinterest because I have huge admiration for what Bill and the team have built, but primarily because of the enormous upside opportunity still ahead of us. I first discovered Pinterest in 2014 and have used it for house moves and remodels, planning my dream Jeep Wrangler build, and just last weekend I had some fun searching for outfit ideas for my first day as Pinterest CFO.
I’m looking forward to getting to know the analyst and investor community and working with Bill, the board, and the whole team to realize Pinterest’s full potential as a world leader. Visual search, shopping, and advertising platform. Pinterest is a place where a growing number of users from around the world come looking for inspiration and a safe space online to discover the ideas, products, and adventures that bring them joy offline at a moment when a growing number of people are actively trying to limit their use of social media.
And as the father of two daughters, I believe Pinterest’s focus on positivity and inspiration is especially timely and important, as well as a significant business opportunity. The AI-powered innovations the team continues to develop are helping more and more brands to reach those high-intent customers at exactly the right moment with relevant, useful, actionable ads that are complementary to users’ Pinterest experience, and in success will create an accelerating growth flywheel of higher advertiser value, deeper user engagement, and increasing value for shareholders.
I’m looking forward to the journey and to our discussions on future earnings calls. Thank you, and I’ll pass it back to you, Bill.
Bill Ready (Chief Executive Officer)
Thank you, James. Now I’ll discuss our third quarter 2026 financial results and provide an update on our fourth quarter 2026 outlook. All financial metrics except for revenue will be discussed in non-GAAP terms unless otherwise specified, and all comparisons will be discussed on a year-over-year basis unless otherwise noted. We ended the quarter with 661 million global monthly active users, or MAUs, growing 10% and reaching another record high. We continue to demonstrate user growth across all of our geographic regions. In Q3, our US and Canada region had 107 million MAUs, growing 4%. Our Europe region had 161 million MAUs, growing 7%, and in the rest of world markets we had 394 million MAUs, growing 13%.
Shifting to revenue, in Q3 our global revenue was $1.174 billion, up 12% on a reported and on a constant currency basis. We saw strength from our consideration objective, particularly our performance-driven CPC advertisers, and to a lesser extent our awareness objective across verticals. We continue to see strength in retail as well as smaller but faster growing emerging verticals on our platform, including financial services, health, and travel.
Turning to our geographical breakouts for Q3, revenue in the US and Canada was $894 million, growing 14%. Growth came from retail, financial services, and health. In Europe, revenue was $193 million, roughly flat on a reported basis or up 1% on a constant currency basis. The pullback from cross-border sellers represented roughly an 11-point drag on Europe’s year-over-year growth. Revenue from rest of world was $87 million, growing 24% on a reported basis or 21% on a constant currency basis.
I want to be clear about the primary drivers of the six-point sequential deceleration in global revenue growth from 18% in Q2 to 12% in Q3. Approximately three points reflected the pullback from cross-border sellers in response to the EU regulatory change on the de minimis exemption. Approximately two points reflected the timing of Prime Day and World Cup–related spend that we called out last quarter. The remaining point reflected foreign exchange, which added 1 point to Q2 growth and was neutral in Q3.
In Q3, overall ad impressions grew 17%. Ad pricing in Q3 declined 4% as ad impressions growth outpaced revenue growth. Moving to expenses, in Q3 cost of revenue was $250 million, up 21% year over year and up 2% versus Q2, driven by increased infrastructure spend related to our user and engagement growth and investments in GPU capacity as well as the impact of TV Scientific. Our non-GAAP operating expense was $591 million, up 9%. The increase was primarily driven by sales and marketing, reflecting higher marketing expense and sales headcount, as well as R&D to support our AI and product initiatives.
We ended Q3 with 5,192 employees, down slightly year over year in Q3, including employees who joined Pinterest through the TV Scientific acquisition. Excluding that acquisition, headcount was down 4% year over year in Q3. We will continue to invest in specialized talent where we see a clear and compelling ROI, but an ongoing focus for us is finding the right mix of talent, infrastructure, and AI-enabled productivity tooling to produce durable growth and expand margins over time.
In Q3 we delivered $339 million in adjusted EBITDA with an adjusted EBITDA margin of 29%, down 30 basis points versus Q3 last year. We also delivered Q3 free cash flow of $300 million. On a trailing 12-month basis, we’ve generated nearly $1.26 billion of free cash flow, representing 90% free cash flow conversion. We ended the quarter with cash, cash equivalents, and marketable securities of $1.5 billion. Now I’ll discuss our guidance. For the fourth quarter, we expect Q4 revenue to be in the range of $1.425 billion to $1.475 billion, representing 8% to 12% year-over-year growth. Based on current spot rates, we expect foreign exchange to be a modest headwind in Q4. Our outlook assumes that the puts and takes that impacted our Q3 revenue growth will continue in Q4. First, we expect to see continued strong revenue growth in UCAN, our largest region.
However, we expect the pullback from cross-border sellers to continue to weigh on international revenue growth. We are beginning to see early signs that our international go-to-market changes are taking hold, but their associated revenue benefits will take time to build and are not expected to fully offset this pressure in Q4. To be prudent, we have widened our Q4 revenue guidance range to reflect the broader range of potential outcomes we see for the quarter.
We are confident in the underlying drivers of the business and have made significant progress to simplify how we operate and invest intentionally in the areas that matter most that give us the flexibility to navigate a range of scenarios. For Q4, we expect adjusted EBITDA to be in the range of $538 million to $588 million. We anticipate Q4 2026 non-GAAP cost of revenue to grow sequentially from Q3 2026 at a low-teens rate, partially driven by our investment in GPU capacity. As a reminder, Q3 2026 non-GAAP cost of revenue benefited from the accelerated recognition of certain contractual benefits associated with our recently executed multi-year infrastructure agreement. Within Q4 non-GAAP operating expense, the primary areas of year-over-year investment will be sales and marketing and R&D to support our AI and product initiatives.
We continue to expect full-year 2026 adjusted EBITDA margins of approximately 30%. While our near-term revenue growth is not where we want it to be, I’m proud of the experience we continue to deliver for users. I have full confidence in our team, strategy, and the actions we are taking to durably re-accelerate growth over time. With that, Andrew and I will now move to Q&A.
OPERATOR
Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Please limit yourself to one question. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Your first question comes from the line of Jason Helfstein with Oppenheimer.
Jason, your line is open. Please go ahead.
Jason Helfstein (Analyst at Oppenheimer)
Thanks for taking the question. Hey everybody. So Bill, I think you were pretty clear about the headwinds with 3Q. I’m intrigued by your comment about seeing signs of internal signs that international can accelerate. Obviously, you know we’ve got the fourth quarter guide, but I guess help us maybe like when do you think that the initiatives could start to turn international revenues as we’re kind of thinking out? And I guess if there’s any other color you want to give us on kind of how to kind of process what we saw in third pre Q and how that follows through the model of the fourth quarter or next year.
Thank you.
Bill Ready (Chief Executive Officer)
Thanks for the question. Yeah, so I’ll give a little bit more color on Q3 and then give you some more color on our Q4 outlook as well. So in Q3 the sources of puts and takes in the business were consistent with what we described on our last earnings call, namely strong UCAN growth continuing and two headwinds impacting international, the one being regulatory changes in Europe and the other being our own go-to-market restructuring. However, the magnitude of the European regulatory change was greater than we forecast and contributed three points of deceleration in the quarter.
Let me give you a little more color on all those puts and takes. We continue to drive strong user engagement growth globally, and global users grew 10% to 661 million, and engagement in UCAN is deepening, with searches, boards created, and outbound clicks all growing faster than users. UCAN revenue is up 15% year to date, a meaningful acceleration from 2025. And globally, revenue growth decelerated sequentially from 18% in Q2 to 12% in Q3. Three points of that came from factors we mentioned on our last earnings call, those being the World Cup, timing of Prime Day shifting from Q3 into Q2, and a point from foreign exchange.
The other three points were due to the removal of the European de minimis exemption, which resulted in cross-border sellers pulling back more than we anticipated. Regulatory changes like those are inherently hard to forecast, particularly as they took effect during the quarter. We also saw some near-term disruption from the transition of our international go-to-market organization, although that impact played out largely as we expected. And I’d add to that that in recent months we’ve made a number of leadership changes as we transition toward a more performance-oriented selling model.
We’re actually quite encouraged by the talent we’ve added and we’re largely through the most difficult parts of that transition. And we’re starting to see early signs of those changes taking hold. For example, the growth rate in our core European enterprise business, which excludes cross-border sellers — that growth rate halved in Q3 relative to Q2, but quarter to date in Q4, we have since re-accelerated that growth rate above its Q2 level. So while we and our advertisers were dealing with major regulatory changes and the implementation of those played out through the quarter, leading to a miss in our revenue guidance — and we saw the deviation from the forecast was greater in the later weeks of the quarter — that’s now stabilized in Q4. And again, we’re seeing good green shoots with our international sales restructuring.
For Q4, based on our quarter-to-date results, Q4 is tracking broadly in line with the growth that we saw in Q3. We continue to see strong global engagement along with continued strong revenue growth in UCAN, offset by pressure on international growth from cross-border sellers, although that pressure has stabilized. That said, as mentioned earlier, we have provided a wider revenue guidance range to reflect a broader range of potential outcomes, as well as a desire to provide a prudent baseline that we feel highly confident we can meet or exceed.
OPERATOR
Your next question comes from the line of John Blackledge with TD Cowen. John, your line is open. Please go ahead.
John Blackledge (Analyst at TD Cowen)
Great, thanks.
James (Chief Financial Officer)
Thanks for the question. So as I mentioned, regulatory changes like these can be inherently difficult to forecast in the short term as advertisers, you know, adapt to a new reality. You know, I mentioned that there was a three-point sequential change in our overall revenue growth at the global level and we do anticipate that will still weigh on international growth. In Q4, though, it stabilized. But I’d say it’s also important to recall what happened with these advertisers. Last year when tariffs went into effect in the U.S., many rerouted their spend into Europe and Latin America. Now there are barriers in both U.S. and Europe and there are fewer large markets to reroute to. So, you know, in the short term, you know, we’re seeing these advertisers pull back globally to protect margins, but we do expect these sellers to adapt over time. For example, some of those retailers have talked about their plans to leverage local warehouses to navigate those new regulations, but those shifts take some time.
So hard for us to predict that. But in the meantime, our new sales leaders are ramping. They’re helping to bring in more advertisers across more categories and that’ll diversify our revenue over time. And so, you know, while that doesn’t fully offset the headwinds that we see, we are quite encouraged by that. And while we’re not guiding next year and we don’t expect cross-border spend to come back for the holiday, as we look into H1 of next year, we think that allows more time for those advertisers to make those kinds of shifts while we also continue to build out our revenue diversification as we look into H1.
OPERATOR
Your next question comes from the line of Colin Sebastian with Baird. Colin, your line is open. Please go ahead.
Colin Sebastian (Analyst at Baird)
Great. Thanks for the questions, and I’ll add my welcome to James. Bill, thanks for the comments on the agentic initiatives. How are you thinking about the role of Pinterest Assistant alongside core discovery within the app? And I’d be curious to understand a little bit better what you’re learning about the role of agents or assistants in helping users move from inspiration towards a purchase. Thank you.
Bill Ready (Chief Executive Officer)
Yeah, thanks for the question. Well, first thing I’d say, having just put up our 13th straight quarter of record-high users, as there have been multiple waves of AI-driven experiences and agentic experiences, we have continued to show strong user and engagement growth. And at the core of that is that we are delivering an AI-powered shopping experience that we think really meets our users’ needs in the ways that they want to see it. And I mentioned a little bit in my prepared remarks, from the very beginning we’ve been focused on the aspects of shopping that the user wants to engage in.
As you all have heard me say many times before, the first 25 years of e-commerce sort of solved buying, but killed shopping in some ways. And the distinction being the shopping part being the journey that the user wants to engage in, the joy of the discovery, sort of figuring out what you want your look to be, refining your own taste. And so we’ve designed Pinterest Assistant, one, to be woven in throughout the experience. It acts as a copilot, taking users from inspiration to comparison and research while the user stays in control. So Pinterest Assistant, which is our AI conversational layer, we’re not approaching it as a separate experience. It’s woven throughout the user experience where every Pin is already served by AI. But it does bring large language model capabilities into our visual personalized experience so users can research, compare, and decide without leaving Pinterest.
That experience is now generally available in the U.S., and we’re really encouraged by what we’re seeing as users engage with it. One of the most encouraging signs that we see is that roughly 80% of Assistant searches are commercial. And that compares to half of searches across the rest of Pinterest. So that demonstrates how we are aligning AI to highly monetizable use cases. We feel really good about that alignment of our use of AI towards monetization and our ability to monetize that.
So, you know, we’re doing 80 billion plus monthly searches. And around this issue of agentic, 70% of the searches on Pinterest today start with a proactive recommendation. So that gives you a sense of how much we have woven this into the core experience of making proactive recommendations before the user had to type or ask anything. And that sort of gets to the promise of agentic, but in a way that is built for mass adoption in terms of how, you know, users, you know, everyday users think of engaging with these things in a way that meets them where they are.
So the Assistant makes recommendations easier to digest, meets users where they are. And as we look forward, we do see an opportunity to expand further into more agentic experiences, like our Ask mode that I mentioned that’s now available to millions of users in the U.S., and that helps with multi-step journeys such as planning a trip. And so for things like planning a trip, you can ask about planning a trip and it will come back with recommendations aligned with your style and taste around where to stay, what activities you might engage in, what restaurants you might dine at, what outfits you might plan for.
These are all things that are taking us deeper into that agentic experience. But again, keeping the user in control, where they’re getting great recommendations, but the user’s still deciding. So we’re just getting started around that. But we continue to focus on scaling, actionability, and monetization. And we continue to test and innovate, and we’re adding assistive capabilities. But again, we feel really good about how we’re aligning those AI-driven capabilities with good commercial experiences, which bodes well for monetization as we look forward.
And we feel really good about the way that we’re designing these for mass user adoption, meeting the users where they are, which is helping them with the decisions that they want to make, but still allowing the user to ultimately decide for themselves, which we think is really important, that people don’t want to lose control of decisions. They may want help with the decisions, but they don’t want to lose control of the decisions. So we think that’s really at the core of how we’re driving really great growth in users and engagement.
OPERATOR
Your next question comes from the line of Justin Patterson with KeyBank. Justin, your line is open. Please go ahead.
Justin Patterson (Analyst at KeyBank)
Great. Thank you very much, and good afternoon. I was hoping you’d talk a little bit more about the decision to expand programmatic partnerships. How do you see this influencing advertiser reach and auction density? And since you’ve done some of these before, could you talk about how your initial learnings were there and how that’s been playing out thus far? Thank you.
Bill Ready (Chief Executive Officer)
Yeah, thanks for the question. So, yes, we’re expanding the partners we work with programmatically, and it’s one of several ways we’ve been broadening demand on Pinterest, and it helps us reach advertisers where they are. So up to this point, our goal has been to complement our first-party business with more sources of demand to round out gaps in our auction, drawing on the commercial intent that we see on the platform. However, we also see a meaningful opportunity to make it easier for our customers to buy where they want.
As we increasingly see advertisers buying programmatically, we want to meet them more where they are. So as we announced this week, we’re now working with DSPs that represent two-thirds of the DSP market, including Google DV360, Amazon DSP, and Yahoo DSP, with Magnite as our supply-side partner. And as we look forward, we think there’s more of those types of opportunities to come. As we’ve shared over the last few quarters, there’s also a meaningful opportunity to leverage our audience beyond our own platform. We started this with our acquisition of TV Scientific earlier this year, which extended our audience into connected TV.
Now, as these platforms advance, there are more privacy-safe ways to leverage our unique audience data in partnership with these DSPs. So that opens up the door to bring in more demand programmatically while still highlighting the value of our unique signal and the very unique, highly commercial audience that we have on Pinterest. And I’ll close with a reminder, as I’ve shared on these partnerships before, that this demand takes time to tune and ramp, as you’ve seen with prior programmatic partnerships. So we think this is an important step to make it easier for more partners to bring more demand onto the platform. But again, expect these things to take time to ramp.
OPERATOR
Your next question comes from the line of Lloyd Walmsley with Mizuho. Lloyd, your line is open. Please go ahead.
Lloyd Walmsley (Analyst at Mizuho)
Thanks for taking the question. Just wanted to ask about the new ad unit you guys announced in visual search in the last sort of month or so. You know, it looked like the release talked about some pretty bullish stats. I think it said the vast majority of searches are visual, more than half of them are commercial. But help us frame up how meaningful this could be, maybe equivalent to your other big surfaces, how incremental, you know, this potential ad unit could be.
Bill Ready (Chief Executive Officer)
Yeah, thanks for the question, Lloyd. So yes, visual search is a whole new way that people are searching online, and we’re the leader in visual search at those 80 billion plus monthly searches, the vast majority of them being visual. What we’re doing with visual search ads is giving advertisers a direct way to engage users in that experience for the first time. We think this is a big and meaningful opportunity. So those visual searches that are occurring on the platform, high commercial intent, more than half commercial, and now really opening up more of a way for the advertiser to engage at the top of those interactions.
We focused on building those experiences organically first and hadn’t really made ads featured in that visual search experience. Now we’re opening that up for advertisers to be much more prominent, much more top of placement. Visual search ads will appear at the top of those visual search results and on Pin close-ups where users are looking at what they want to buy. And so this unlocks that user interaction for advertisers, and they can now engage with users in a way that they can’t on other platforms, particularly given that we skew so significantly towards these visual interactions.
This is a major sort of user need that we are solving. That’s different than what they get from traditional search or from chatbots, where one of the biggest issues is that users so often don’t have the words to express what it is they’re looking for. They have this loosely formed idea. And so that’s why I mentioned earlier that 70% plus of our searches start with a proactive recommendation that we are making. So when you pair that proactive recommendation that we make without the user having to ask, which is sort of the promise of agentic experiences, sort of helping the user and acting on the user’s behalf, and then combine that with their ability to then go engage and refine visually and now get great product placements and great ad placements that are relevant to them right at the top of those results, we think this is a compelling experience for both users and advertisers.
It debuted at Pinterest Presents in September. It’s now in beta. And so we’re quite excited about it. We’re learning with advertisers and we’re excited to share more as it progresses.
OPERATOR
Your next question comes from the line of Rich Greenfield with LightShed Partners. Rich, your line is open. Please go ahead.
Rich Greenfield (Analyst at LightShed Partners)
Hi. Thanks for taking the questions. A couple. One, I just wanted to follow up on the DSP deals. Why now? I mean, obviously you could have done this last quarter, last year, Bill, like just what was the catalyst to put these into effect earlier this week? And then just, you know, I think last quarter there was a lot of excitement amongst investors that your revenue growth in the U.S., the key market, sort of had accelerated from lower teens up into the higher teens, and you sort of slowed back down towards that, you know, 14% this quarter. Were there any sort of unique items that sort of drove the acceleration, the slowdown, or just anything to think about of like, is there the ability to sort of sustain that higher level of growth you had last quarter as we think about the go forward?
Bill Ready (Chief Executive Officer)
Yeah, thanks, Rich. Appreciate the questions. So I’ll start with the first part and then give Andrew the second part. So, on the DSP deals, you know, you’ve heard us talk about for some time that we feel like there’s a lot of opportunity to monetize our audience, you know, in other contexts. And we started that with bringing, you know, third-party demand onto our platform and we extended that beyond our platform with the acquisition of TV Scientific. Part of what’s enabling us to do more is both our own learnings from how we did that—first with bringing demand onto our platform, the learnings we’ve had with how to monetize our audience on other new surfaces like connected TV.
And across the industry there’s been an advance of privacy-preserving technologies that is really helping us think about how we can work with others to meet advertisers where they are, help bring that really unique audience that we have and that great personalization that we’re able to do onto more surfaces or in partnership with others and their data. And part of that why now is like we’ve been testing and learning our way toward this, and the advance of privacy-preserving technology gives us the confidence that we can do these things in a way that helps deliver better experiences for users and advertisers, but also in a privacy-preserving way and in a way that makes sure that we capture the value from our audience as we engage in these partnerships. And I’ll give it to Andrew for the second part of your question.
Andrew
Yeah, thanks, Rich. So UCAN grew 14% in Q3, which represents strong reacceleration from where we ended 2025. As we noted on our last call, Q2 included a few unique one-time benefits including elevated spend from the World Cup as well as the shift of Prime Day into Q2. So in Q3 we did see some softness in food, beverage and alcohol which resulted in about a point of sequential pressure in UCAN. At the same time, as we’ve noted, we are successfully broadening our advertiser base across categories to help offset some of this pressure in food and beverage.
So in addition to retail, we’ve also seen health, inclusive of GLP-1 advertisers, growing nicely and this has helped to partially offset some of the pressure we see from food and beverage. So looking to Q4, we feel overall good about UCAN, but those are some of the things, some of the puts and takes I’d point to, Rich.
Bill Ready (Chief Executive Officer)
Yeah, and I just, you know, in closing on that, just say again, the reacceleration of UCAN along with our really strong user growth and engagement are real highlights in the business. You know, we navigated this sort of regulatory change in the U.S. last year. It’s analogous to what we’re now going through in Europe. But we’ve clearly reaccelerated that from last year. And it wasn’t just us. You’ve heard others sort of talk about World Cup and Prime Day and these things sort of shifting the shape of Q2 versus Q3.
That’s pretty consistent with what you’re seeing out there. But when you do the comparison to where UCAN was last year, it’s still a very clear reacceleration; we feel good about that. And as you heard in my comments on the guide, we see that strength in UCAN continuing into Q4.
OPERATOR
Your next question comes from the line of Eric Sheridan with Goldman Sachs. Eric, your line is open. Please go ahead.
Eric Sheridan (Analyst at Goldman Sachs)
Thanks so much for taking the question. Maybe two if I could quickly. On the back of the user growth you saw, and I just want to sort of pull on this thread we’ve been talking about on the call, how should investors think about the duration against the opportunity set to close an ARPU or monetization gap relative to the user growth you’ve closed, just so we understand how that might correlate with each other over the next 12 to 24 months? And then in the answer I think you gave earlier, you were talking primarily about the Pinterest assistant. I believe if we widen out the conversation to think about horizontal agents, how are you thinking about both the opportunity set that they present as well as some of the friction points that have to be solved for? Thanks so much.
Bill Ready (Chief Executive Officer)
All right, thanks for the question, Eric. So, you know, on the growth in ARPU, I think if you look at our U.S. business, our UCAN business, where we started our shopping journey first—and as a reminder, you know, we only launched our first product, our first ad product, designed this in clicks to advertise about three years ago. So we’re pretty early in that monetization journey, but we’ve had really great progress. And as we’ve rebuilt Pinterest into an AI-driven shopping platform that’s clearly bringing users here, you’ve seen ARPU improvement in UCAN.
As we look internationally, we’ve been making good progress there. But if you look at the ratio of, you know, ARPU in Europe or international relative to our U.S. business, there is a meaningful gap for us on that. The user behavior, the shopping user behavior we see, is a global phenomenon. So our user growth and engagement being driven by shopping behaviors is a global phenomenon for us. So in Europe and international, where, you know, we started in our largest home market with the ad opportunity, we’re now expanding into those markets.
And so while we’re earlier on, we’re running that playbook, we’re seeing it take hold. You know, we’ve had, you know, a bit of a speed bump with the European regulatory change, but that’s not impacting the user growth and engagement around shopping. And so ultimately, you know, if you have the user engagement on shopping, advertisers will meet that engagement. We’re making that more available to advertisers, both through our ad product and our go-to-market realignment.
I mentioned the early green shoots there. So we’re excited about that progress. But we’re also quite excited that there’s a lot of upside when you look at how, you know, how low the ARPU is sort of in ratio, the relative position of that ARPU or the ratio of that to the U.S., and what that ratio would be on other platforms. It says there’s a lot of upside in us addressing that ARPU internationally. And as we look into next year, you know, we see the go-to-market changes that we’re making internationally starting to take hold.
I shared some of those examples, and you know, what we saw in the U.S. was that these sort of tariff adjustments by advertisers can take a couple quarters. We can’t perfectly predict how this plays out with the European de minimis exemption change. But it’s probably a multi-quarter event, but also one that, just as we reaccelerate in the U.S., we think we accelerate in international. And the biggest thing that gives us confidence is that we see that core user shopping behavior.
So as we look into next year, you know, again we don’t guide beyond the quarter, but as we look into next year, we expect that we’ll manage to reaccelerate that just as we did in the U.S. On the second part of your question, you know, you mentioned horizontal agents. You know, I think it’s really interesting to note that if you look at how search has played out over the last 20-plus years, while there were a few winners on horizontal search, there were many winners on more verticalized search experiences. Think about how many product searches would start on an Amazon versus on a horizontal search platform. How many travel searches would start on a Booking or Expedia versus, you know, a horizontal search platform.
And as we look into the future world of agents, we think that there will be broad horizontal agents, but there will be opportunities for vertical-specific winners in those agents. And we’re very focused on making sure that we deliver a great shopping experience and one designed to help the user continue to drive those experiences. So we feel really good about that progress and we’ve been designing that in a way that meets the user where they are, driving mass adoption of that. We’re delivering agent experiences in a way that the user feels like is assisting them and helping them, but not taking the decision out of their hands.
I shared some of the stats around that, and I think that’s why, as we’ve been through multiple rounds of improvements in chatbots, now the launch of other horizontal agents, we have not seen any impact in our UCAN engagement since the launch of some of those popular consumer agent experiences, because those tend to be more horizontal and users are coming to us for a specific purpose around shopping and one where we’re able to really drive experiences that are deeply personalized to them and they feel like are letting them control those experiences.
So said simply, users, you know, they’re happy to automate away drudgery. They don’t want to automate away their joy; they don’t want to automate away their entertainment and their pastime. And so we’ve done some research on this. There’s some new research that was conducted by YouGov on behalf of Pinterest that more than 8 in 10 Americans say they’d miss something about shopping if AI did it for them—from discovering things that they weren’t looking for to figuring out what they like.
So this is why at Pinterest we’ve been building for all the wonderful parts of shopping that people don’t want to give up in the same way that people don’t seek to automate away their entertainment. And so that’s been at the very core of that deepening engagement I mentioned. In the U.S. we continue to see deepening engagement, especially with Gen Z, the most digitally native audience. We see deepening engagement even as these other tools are becoming available.
And a big part of that is that we’re in an expansionary moment for search. And I think we’re carving out a unique space for ourselves, particularly around shopping, in a way that is highly personalized and that’s striking the right balance between the user retaining their own agency and participating in those decisions versus just giving the decision up to others, which, you know, as I just mentioned in that research, users aren’t necessarily wanting to give up the decision.
They want help in making the decision, but they still want to be there for the decision. And so that’ll continue to play out. There’s more work to do, but we feel really good about the progress we’re making there.
OPERATOR
Your last question comes from the line of Shweta Kajuria with Wolfe Research. Shweta, your line is open. Please go ahead.
Shweta Kajuria (Analyst at Wolfe Research)
Hello? Can you hear me?
Andrew
We can hear you, Shweta.
Shweta Kajuria (Analyst at Wolfe Research)
Oh, sorry. Thanks, Andrew. I was on mute. Thanks for taking my question. I guess I have one on bidding optimization. So AI-driven bidding optimizations deployed that you deployed late in Q1 and then through Q2 were resonating really well with larger advertisers. Any more color you could provide in terms of how that has progressed through the quarter and how we should be thinking about the potential impact tailwinds, if there are any, between now and year end and then to the degree you can going forward beyond that.
Andrew
Thank you.
Bill Ready (Chief Executive Officer)
Yeah, thanks for the question, Shweta. So as you noted, we’re aligning our AI bidding systems to the advertisers’ measurement sources of truth. And as we then, you know, that allows us to deliver hyper-specific outcomes that they care about, and we’re seeing strong results from that. You know, we’ve clearly advanced significantly our ability to deliver great personalized recommendations to the user in terms of what they’re shopping for. But every advertiser values different events in different ways and has different outcomes that they want to see.
As those advertisers give us more specifics about how they value different events, whether it’s do they want to focus on a specific product sale, do they want to get a new customer versus deepen engagement with an existing customer, as they give us more information about what they desire. In the same way that our AI is able to be hyper-specific about the recommendations that we make to the consumer, we can now be hyper-specific about the outcomes that we drive for the advertiser.
So we feel really good about the progress that we’ve made there. Our focus to date has been on more sophisticated advertisers with proprietary measurement systems. And as we said earlier this year, we’ve seen those advertisers leaning in as a result of this. In Q3, as planned, we extended these integrations to a small number of additional sophisticated advertisers. For example, in early testing with a leading e-commerce platform, that advertiser saw 77% higher new customer ROAS reflected in their proprietary measurement source of truth.
So we feel good about that. We will continue to broaden that out, and it’s at an important moment in time because the industry is moving beyond last-click attribution, which is ultimately good for a platform like Pinterest. But different advertisers are moving at different speeds and we’re, you know, we’re continuing to learn from these direct integrations, extending that into partnerships with third-party measurement providers to reach the longer tail of advertisers.
So for the more sophisticated advertisers these are direct integration, or taking those learnings to work more with the third-party measurement providers that the longer tail of advertisers use. You know, those adoption curves, you know, naturally take time but we’re very encouraged about what we can do there. Again, we are much further along in the consumer and engagement side of this. But those same techniques about driving hyper-personalized results that we’re using for consumers are allowing us to match hyper-specific results for advertisers as they open up more of their specific attribution around different events. So again, these things take time to play out, but we feel really good about what that means for the long term of the business.
So with that, I want to thank everyone for joining our call today and for your questions. Before we conclude, I also want to thank Julia Donnelly for her contributions to Pinterest. Finally, 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. I hope you have a great rest of your day.
OPERATOR
This concludes today’s call. Thank you for attending. You may now disconnect.
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