Pinterest (PINS.US) Q3 Earnings Call: Growth Engine Remains Intact, International Business Expected to Reaccelerate in the Future

Pinterest (PINS.US) Q3 Earnings Call: Growth Engine Remains Intact, International Business Expected to Reaccelerate in the Future Image-based social and shopping platform Pinterest (PINS.US) released its Q3 2026 earnings report on Thursday, October 29, local time. Although global monthly active users (MAU) hit a record high of 661 million and net sales achieved double-digit growth, the company's quarterly revenue and adjusted profit both fell short of Wall Street expectations, and its revenue guidance for the holiday shopping season (Q4) was entirely below analyst expectations, disappointing investors. The earnings report shows that Pinterest's Q3 revenue was US$1.174 billion, up 12% year-over-year (up 12% on both a reported and constant-currency basis), below the analyst average estimate of US$1.21 billion; adjusted earnings per share (Non-GAAP EPS) was US$0.46, missing the market expectation of US$0.49; adjusted EBITDA was US$339 million (28.9% margin), also slightly below the expected US$348 million. The two sets of profitability metrics diverged markedly: under US Generally Accepted Accounting Principles (GAAP), the company's quarterly net income was only US$22 million, down 77% sharply from US$92 million in the prior-year period, with diluted earnings per share of US$0.04 (US$0.13 in the prior-year period); while non-GAAP net income was US$270 million, up 3% year-over-year. The main reason for the divergence was rising costsQ3 total costs and expenses rose from US$991 million in the prior-year period to US$1.14 billion, growing faster than revenue, causing operating income to fall from US$59 million to US$30 million and the operating margin to narrow from 5.6% to 2.6%. On the cash flow front, operating cash flow was US$316 million, down 2% year-over-year; free cash flow was US$300 million, down 6% year-over-year, with a free cash flow margin of 25.6%. In Q3, Pinterest's global monthly active users grew 10% year-over-year to 661 million, a record high. Among them, users in the US and Canada grew 4% to 107 million; European users grew 7% to 161 million; users in the rest of the world grew 13% to 394 million. But user growth did not revenue in sync: revenue in the US and Canada market grew 14% to US$894 million, a solid performance; revenue in the rest of the world surged 24% to US$87 million; while in the European market, despite user growth, revenue was only flat year-over-year (US$193 million). Global average revenue per user (ARPU) performance diverged: ARPU in the US and Canada grew 10% to US$8.38, the rest of the world grew 9%, while European ARPU fell 7% to US$1.21, dragging global ARPU to only a slight 1% increase to US$1.80, further widening the regional monetization gap. A noteworthy new adverse factor is the change in the European regulatory environment. According to CEO Bill Ready, Q3 revenue was negatively impacted by new European rules affecting cross-border sellers. Effective July 1, 2026, the EU eliminated the long-standing duty exemption for low-value goods shipped from overseas into the EU: low-value parcels now incur a temporary flat duty of 3 per item; and starting November 1, parcels from non-EU online stores and direct-to-consumer mail will also face an additional handling fee imposed by the European Commission. This policy change directly hit a large number of cross-border direct-mail sellers that rely on the Pinterest platform to reach European consumers, in turn dragging down the platform's advertising monetization in the European market. What truly triggered the stock plunge was the Q4 guidance. Pinterest expects Q4 revenue of US$1.425 billion to US$1.475 billion (midpoint US$1.45 billion), implying year-over-year growth of 8% to 12%, but the entire range is below the analyst expectation of US$1.52 billioneven the upper end of the guidance only matches the 12% growth in Q3; adjusted EBITDA guidance is US$538 million to US$588 million, also below the market expectation of US$605 million. The company said the revenue guidance already incorporates a modest foreign exchange headwind. Pinterest executives stressed on the call that Pinterest's users and shopping intent remain strong, and that although near-term growth is being dragged down by European regulation and the restructuring of the international sales organization, the company is opening up new monetization space through AI, performance advertising, international commercialization, and programmatic advertising. The executives noted that after the EU policy change, cross-border sellers sharply cut advertising spending. But cross-border sellers will not exit permanently; instead, they will adapt to the new regulatory environment through means such as local warehousing, but this process takes time. Therefore, the company explicitly stated that cross-border advertising spending is not expected to recover during this year's holiday shopping season, but by the first half of 2027, the situation may gradually improve. Pinterest's commercialization path over the past three years has been: user shopping behavior performance advertising products sales organization restructuring advertisers increasing investment ARPU improvement. This model was first successfully validated in the US and Canada (UCAN), and the company is now replicating the same playbook in international markets. Management believes that the US market similarly experienced regulatory and cross-border trade shocks last year, but Pinterest ultimately succeeded in reaccelerating, so although the situation Europe is currently experiencing will last several quarters, it does not mean the business model has failed. This is also management's most important source of confidence in the future reacceleration of the international business. In addition, AI was the most frequently mentioned long-term growth theme throughout the call. Management emphasized that Pinterest's advantages lie in: AI + Pinterest's unique first-party data + visual understanding + user shopping intent. The company uses its own data to train and post-train models, and extensively adopts lightweight models and open-weight models tailored to specific tasks. Management even pointed out that for Pinterest's specific application scenarios, open-source models post-trained on the company's data can outperform closed-source third-party models of similar scale, while the cost per transaction is less than 8% of comparable closed-source models. This means the company believes its AI strategy focus is not simply scaling up model size, but using unique data to achieve higher AI cost-effectiveness and directly serve commercialization. If the entire call were compressed into one sentence, management is actually conveying to the market: Pinterest's current problem is not "whether users are coming," but "how to turn the existing user shopping intent into revenue faster and more effectively." Therefore, the company is currently doing three things simultaneously: first, safeguarding user growth. Second, turning AI into a commercialization tool. Third, replicating the commercialization model already validated in the US to international markets. The following is the specific content of Pinterest's Q3 earnings call. I. Executive Remarks 1. William ReadyChief Executive Officer and Director Good afternoon, and thank you for joining our Q3 2026 earnings call. Before we begin, I want to formally welcome James Dibbo. He joined Pinterest earlier this week as our Chief Financial Officer. James comes to us from Amazon.com, Inc., where he most recently served as CFO of its Advertising and Media business. Prior to that, he served as CFO of Amazon.com, Inc.'s Worldwide Consumer business. James has deep experience across one of the largest and fastest-growing advertising platforms in the industry, as well as one of the world's best shopping experiences. Both are highly relevant to the business we are building, and we are very excited to have him join Pinterest. Later in the call, James will share some thoughts and introduce himself. Welcome, James. Before discussing the specifics of the quarter, I want to step back and frame the stage Pinterest is currently in. Pinterest is a platform where users find and search for the things they love. We have increasingly become an important destination for visual search and shopping, powered by differentiated AI capabilities and built around commercial intent. Unlike platforms built on passive content consumption, Pinterest helps people discover what they like and take action. At a time when search and consumer expectations are changing rapidly, we continue to capture record consumer shopping demand on the platform, a trend that spans regions and generations, and is especially pronounced among Gen Z users. In our core UCAN market, engagement is deepening, as search volume, boards created, and outbound clicks all grew faster than user growth in Q3. User and engagement are the clearest indicators of platform strength, and they give us confidence in the long-term opportunity. Over the past year, our focus has been on translating strong user engagement into more durable monetization capability. We are doing this primarily in two ways: continuing to improve our performance advertising platform, and strengthening our go-to-market system, including bringing in new leadership across the organization. Now to the quarter's performance. In Q3, we delivered a record high in users for the 13th consecutive quarter and double-digit user growth for the 12th consecutive quarter. On revenue, we had previously noted that we entered the quarter with two headwinds facing our international business: the regulatory adjustment to Europe's de minimis policy applicable to cross-border sellers, and the restructuring of our international go-to-market organization. The impact of the regulatory change was greater than we expected, because when a policy change takes effect mid-quarter, it is inherently difficult to forecast. The contraction in cross-border seller business accounted for about 3 percentage points of the sequential change in global revenue growth from Q2 to Q3. The impact of the international go-to-market organization restructuring was broadly in line with our expectations and contributed a smaller impact. Overall, Q3 revenue came in below our guidance range. We are not satisfied with this result, and we have already laid out a clear plan to accelerate our revenue diversification efforts. Despite these headwinds, our adjusted EBITDA remained within the expected range. This quarter further highlights the importance of the work underway, namely building a broader and more durable revenue base. The reacceleration of the UCAN business provides a clear validation case for our approach. Last year, changes in the US regulatory environment affected large retailers as well as businesses selling cross-border into the US market. Despite these headwinds, our continued improvements to the performance advertising platform and go-to-market execution helped reaccelerate UCAN revenue growth. Year to date, UCAN revenue growth has been in the mid-teens, a clear acceleration compared with 2025. We are now applying the same approach in international markets, and we are already seeing early signs that these changes are gradually taking effect in international markets. This gives us confidence that the actions we are taking are conducive to the long-term health of the business. As we said at the start of the year, progress is not always linear, and we may face some near-term headwinds as we make changes that benefit the long term. Looking ahead, 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 commercialization by improving go-to-market and measurement systems. Against this backdrop, let me start with engagement, because it highlights the unique role Pinterest plays for users. Pinterest has become a search destination, especially a visual search destination. Users conduct more than 80 billion searches on Pinterest each month. The vast majority are visual searches, and more than half have commercial intent. This is different from the traditional text-based search experience. People often come to Pinterest already with an idea, but often do not know the exact keyword, brand, or product name. At the core of this search experience is our approach to agentic discovery. We use AI to proactively surface relevant ideas, products, and next-step suggestions to users based on their tastes and intent. For many people, shopping is not a task to be automated, but a pleasurable activity and a pastime. Our AI-assisted experiences are designed to enhance the shopping journey users want to participate in, not to remove users from that journey. We use AI trained on Pinterest's unique data to understand people's preferences and predict what might spark their interest next. But taste is personal, and the final choice belongs to the individual. We believe the best AI experiences should expand human choice, not replace it. That is why Pinterest is committed to preserving all the good parts of the shopping process that people do not want to give up, just as people do not seek to fully automate their entertainment. About 70% of search journeys on Pinterest begin with proactive recommendations from our AI systems before the user types any text. From there, users explore possibilities, compare options visually, and turn inspiration into action. This experience continues to drive user growth momentum. In Q3, global monthly active users (MAU) grew 10%. This trend is especially pronounced among Gen Z users, our fastest-growing user cohort. Gen Z now makes up 57% of our total users and is our most engaged cohort in terms of monthly retention, saves, and time spent. They also have clear purchase intent. Two-thirds of Gen Z users say they come to Pinterest to shop. This intent extends to monetization, as Gen Z ARPU (average revenue per user) is already comparable to that of Millennial users and users in the UCAN market. As Gen Z begins to enter their peak spending years, this bodes well for future ARPU growth. What makes our engagement particularly valuable is the intent behind it. As users search, save content, and create boards, they continuously reveal their evolving tastes and interests, information that helps us predict what they will want next. This creates a valuable feedback loop. The more engagement, the more relevant and personalized the search experience, giving users more reasons to return. These unique signals accumulated over years create an increasingly differentiated experience for users and a powerful commercial opportunity for advertisers. Pinterest Intelligence is the foundation connecting our proprietary first-party signals, visual understanding capabilities, and purpose-built AI models. With this capability, we can deliver more personalized discovery experiences for users while delivering better advertising results for advertisers. We combine proprietary data with compact, fit-for-purpose models, as well as open-weight models post-trained in our own environment. As I said last quarter, for our use cases, open-weight models can outperform closed-source third-party models of comparable scale, because we can post-train these models on Pinterest's unique data. At the same time, our cost per transaction is less than 8% of comparable closed-source proprietary models. More importantly, we are efficiently scaling these AI capabilities and applying them to highly monetizable surfaces such as Pinterest Assistant. Pinterest Assistant is now fully available in the US, and we are encouraged by early performance signals. Although more than half of searches on Pinterest have commercial intent, about 80% of searches conducted with Pinterest Assistant are commercial in nature. Within Assistant, we are building more agentic experiences designed to help users complete their discovery journey rather than remove them from the process, including Ask mode, which is beginning to scale in the US. We are also further enhancing core use cases through products such as Beauty Guides and Restyle. Restyle launched in beta in Q3 and helps users reimagine a room from a single photo, for example by adding a new piece of furniture, replacing existing items, or exploring different styles. It combines Pinterest Intelligence's understanding of style with purchasable products from our catalog to help users see how an idea might look in their own space. Today, most of the Restyle experience is powered by Pinterest Canvas, our in-house AI image generation model. The same intelligence that improves the user experience is also helping advertisers achieve compounding performance gains. We continue to improve how ads are retrieved and ranked, using stronger relevance signals and predicted purchase intent. We are also accelerating the rollout of these improvements so they reach advertisers faster. Visual Search Ads is a new lower-funnel ad format currently in testing that helps performance advertisers reach some of the highest-intent moments on Pinterest, including search results pages and Pin close-up pages. This ad format is designed to drive measurable outbound actions, giving advertisers a new way to turn visual discovery into conversions. Advertisers can use their existing product catalogs in keyword targeting, making adoption of this format simpler. We are also extending the same performance orientation to app promotion. App Promotion is our new objective for app installs, now open for testing to eligible advertisers globally. Pinterest has not historically been a major player in mobile app advertising, and this opens up a significant new budget pool for us. Alongside these product launches, we are also making Pinterest easier for advertisers to use, optimize, and scale. We have been clear that Pinterest Performance+, our AI-powered ad delivery solution, will be a multi-year product and adoption cycle. Today, advertisers can add the keywords and interests that matter most to them and track results for each separately. With the priority product feature, they can also highlight the product categories they care most about. The result is automation with greater control and transparency. Large advertisers have been asking for both, and they are driving continued adoption of Pinterest Performance+. We are also advancing measurement and bidding capabilities to help advertisers see the full value Pinterest creates. In Q3, more of our mature advertisers directly integrated their internal measurement systems with our AI bidding tools. These integrations allow us to optimize for the outcomes each advertiser values most. For example, in an early test with a leading e-commerce platform, the advertiser saw a 77% increase in new-customer return on ad spend (ROAS) through its internal measurement system. We are combining these platform improvements with a more disciplined go-to-market approach focused on performance advertising sales. Stepping back, our performance advertising business is really only about three years into its development, having started in the UCAN market. We built a lower-funnel business model around shopping and took a deliberate sequence: first, make Pinterest a place where users shop and take action. Then, we built the performance advertising platform so advertisers could tap into that intent, and aligned our sales and go-to-market teams around it. Now, we are applying the same approach in international markets. On the go-to-market front, we are advancing across three areas: people, organizational structure, and operating discipline. First, people. We have upgraded our sales leadership team to align with our shift toward performance-based selling, because this selling approach requires different skills than selling upper-funnel brand advertising. In international markets, we only recently began this process, so more adjustments are needed across multiple markets. Overall, the hardest part of the people changes is behind us, but many of our new leaders are still in their ramp-up phase. Second, organizational structure. We are optimizing account coverage around our biggest opportunities and bringing technical teams closer to sales teams. This gives advertisers more consistent access to the performance, measurement, and product expertise they need to grow their Pinterest business. Third, operating discipline. We are building clear seller accountability through more consistent training, incentives, and sales processes. In the UCAN market, this helped us more effectively package key commercial moments and connect Pinterest's product performance more directly to advertiser results. In international markets, we are applying the same discipline in each market. These actions are designed to improve account coverage, seller productivity, and our ability to translate strong advertiser performance into more durable revenue growth. Ultimately, our goal is to build a more resilient revenue base that reflects both the strength of our users and engagement and the results we deliver for advertisers. In summary, I am confident in this work because our foundation is very strong. Our users are growing and highly engaged. Our platform is delivering results for advertisers, and we are strengthening our go-to-market engine. The work we are doing now will enable Pinterest to reaccelerate growth over time and return to the mid-to-high-teens revenue growth we have achieved historically. Before I walk through results and outlook, I want to ask James to share why he joined Pinterest. 2. James DibboChief Financial Officer Thank you, Bill. I am excited to have joined Pinterest on Monday. Since I have only been with the company a few days, my remarks today will be brief. I joined Pinterest because I greatly admire what Bill and the team have built, but most importantly because we still have enormous upside ahead. I first encountered Pinterest in 2014, and I have been using Pinterest ever since, including for moving and renovating, and for planning my dream Jeep Wrangler build. Just this past weekend, I happily searched for outfit ideas to prepare for my first day as Pinterest's CFO. I look forward to getting to know the analyst and investor community further and to working with Bill, the board, and the entire team to realize Pinterest's full potential as the world's leading visual search, shopping, and advertising platform. Pinterest is a place where a growing number of users from around the world find inspiration and discover ideas, products, and experiences in a safe online space that bring joy to their offline lives. At a time when more and more people are actively trying to reduce their social media use, as a father of two daughters, I believe Pinterest's focus on positive and inspiring content is especially timely and important, and also a huge commercial opportunity. The AI-driven innovations the team continues to develop are helping more and more brands reach highly purchase-intent consumers at the right time with relevant, useful, and actionable ads. These ads complement the user's Pinterest experience and, if successful, will form an accelerating growth flywheel: greater advertiser value, deeper user engagement, and increased shareholder value. I look forward to the journey ahead and to speaking with everyone on future earnings calls. Thank you all, and I will now hand the call back to Bill. 3. William Ready Thank you, James. I will now discuss our Q3 2026 financial results and update our outlook for Q4 2026. All financial metrics other than revenue will be discussed on a non-GAAP basis unless otherwise noted; all comparisons are year-over-year unless otherwise noted. At the end of the quarter, we had 661 million global monthly active users, or MAU, up 10% year-over-year, again a record high. We continued to grow users across all regions. In Q3, the US and Canada had 107 million MAU, up 4% year-over-year. Europe had 161 million MAU, up 7% year-over-year. In the rest of the world, we had 394 million MAU, up 13% year-over-year. Turning to revenue. In Q3, our global revenue was US$1.174 billion, up 12% on both a reported and constant-currency basis. Our consideration-targeted advertising business performed strongly, especially performance-oriented CPC advertisers; meanwhile, brand awareness-targeted advertising also contributed. By industry, retail continued to perform strongly, while some smaller but faster-growing emerging industries on the platform also performed well, including financial services, healthcare, and travel. Now let's look at regional performance in Q3. US and Canada revenue was US$894 million, up 14% year-over-year. Growth was primarily driven by retail, financial services, and healthcare. Europe revenue was US$193 million, roughly flat on a reported basis and up 1% on a constant-currency basis. The contraction in cross-border seller business dragged on Europe's year-over-year growth by about 11 percentage points. Rest of world revenue was US$87 million, up 24% on a reported basis and up 21% on a constant-currency basis. I want to clearly explain the main reasons for the sequential slowdown in global revenue growth from 18% in Q2 to 12% in Q3. About 3 percentage points came from the contraction in cross-border seller business in response to the EU de minimis policy regulatory change. About 2 percentage points came from the timing of Prime Day and World Cup-related spending, which we mentioned last quarter. The remaining 1 percentage point came from foreign exchange, which contributed 1 percentage point to growth in Q2 and was neutral in Q3. In Q3, overall ad impressions grew 17%. Because ad impressions grew faster than revenue, ad pricing declined 4% in Q3. Now to expenses. Q3 cost of revenue was US$250 million, up 21% year-over-year and up 2% sequentially, primarily driven by increased infrastructure spending related to user and engagement growth, GPU capacity investments, and the impact of tvScientific. Our non-GAAP operating expenses were US$591 million, up 9% year-over-year. Growth was primarily driven by sales and marketing expenses, including higher marketing spend and increased sales headcount, as well as R&D spending supporting AI and product initiatives. At the end of Q3, we had 5,192 employees, down slightly year-over-year, including employees who joined Pinterest through the tvScientific acquisition. Excluding that acquisition, headcount was down 4% year-over-year in Q3. We will continue to invest in specialized talent in areas where we see clear and attractive returns. But at the same time, one focus we continue to maintain is finding the optimal combination of talent, infrastructure, and AI-enabled productivity tools to drive durable growth and expand margins over time. In Q3, we delivered adjusted EBITDA of US$339 million, with an adjusted EBITDA margin of 29%, down 30 basis points from Q3 last year. We also delivered free cash flow of US$300 million in Q3. Over the past 12 months, we generated nearly US$1.26 billion in free cash flow, with a free cash flow conversion rate of 90%. At the end of the quarter, we had US$1.5 billion in cash, cash equivalents, and marketable securities. Now to Q4 guidance. We expect Q4 revenue to be between US$1.425 billion and US$1.475 billion, up 8% to 12% year-over-year. At current spot rates, we expect foreign exchange to be a modest headwind in Q4. Our outlook assumes that the various factors affecting Q3 revenue growth will persist in Q4. First, we expect UCAN, our largest market, to continue to deliver strong revenue growth. However, we expect the contraction in cross-border seller business to continue to weigh on international revenue growth. We are beginning to see early signs that changes in our international go-to-market are taking effect, but the related 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 outcomes we believe are possible this quarter. We are confident in the underlying drivers of the business and have made significant progress in making operations simpler and focusing investments in the areas that matter most, giving us flexibility to navigate a range of scenarios. For Q4, we expect adjusted EBITDA to be between US$538 million and US$588 million. We expect Q4 2026 non-GAAP cost of revenue to grow up low-teens percent sequentially from Q3 2026, partly due to our GPU capacity investments. As a reminder, Q3 2026 non-GAAP cost of revenue benefited from accelerated recognition of certain contractual benefits under a multi-year infrastructure agreement we recently signed. In Q4 non-GAAP operating expenses, the primary areas of year-over-year investment growth will be sales and marketing, as well as R&D supporting AI and product initiatives. We continue to expect a full-year 2026 adjusted EBITDA margin of approximately 30%. While near-term revenue growth has not met our targets, I am proud of the experience we continue to deliver to users. I am confident in our team, our strategy, and the actions we are taking, which I believe will drive a durable reacceleration of growth over time. II. Q&A Session 1. Oppenheimer Analyst Jason Helfstein Bill, I think you explained the Q3 headwinds very clearly. I am interested in your comment that you are "seeing signs internally that international business may accelerate." Obviously, we already have Q4 guidance. But I would like to understand further when you think these initiatives will begin to turn around the international revenue trajectory. Also, if there is other information that can help us understand the Q3 situation and how it will carry into Q4 and next year, please share. William Ready Thank you for your question. I will provide more color on Q3 and then discuss some details of our Q4 outlook. In Q3, the various favorable and unfavorable factors in the business were consistent with what we described on our last earnings call, namely that UCAN continued to deliver strong growth while the international business was affected by two headwinds. One was the European regulatory policy change, and the other was our own go-to-market organization restructuring. However, the impact of the European regulatory policy change exceeded our forecast, causing a 3-percentage-point slowdown in the quarter. Let me provide more color on these factors. We continued to deliver strong engagement growth globally and in the UCAN market. Users grew 10% to 661 million. Engagement in UCAN is deepening, with search volume, boards created, and outbound clicks all growing faster than users. UCAN revenue has grown 15% year to date, a clear acceleration compared with 2025. Globally, revenue growth slowed sequentially from 18% in Q2 to 12% in Q3. About 3 percentage points came from factors we mentioned on the last earnings call, including the World Cup, the timing shift of Prime Day from Q3 to Q2, and the 1 percentage point contribution from foreign exchange. Another 3 percentage points came from the elimination of the European de minimis policy, which caused cross-border seller business to contract more than we expected. Such regulatory changes are inherently difficult to predict, especially when the policy takes effect mid-quarter. We also experienced some short-term disruption from the international go-to-market organization changes, though this impact was broadly in line with our expectations. I should also add that in recent months, we have made several leadership changes as part of the transition to a more performance-oriented sales model. In fact, we are very encouraged by the new talent joining the company, the hardest phase of the transition is largely behind us, and we are beginning to see early signs that these changes are taking effect. For example, the growth rate of our core European enterprise business, excluding cross-border seller business, halved in Q3 compared with Q2. But since entering Q4, we have seen this growth rate reaccelerate and exceed the Q2 level quarter to date. So, as we and advertisers dealt with a major regulatory change, with policy implementation spanning the entire quarter and ultimately causing revenue to miss guidance, we saw the deviation from our forecast become more pronounced later in the quarter. But since entering Q4, the situation has stabilized. Again, we are seeing positive early signs from the international sales organization restructuring. For Q4, based on performance to date, Q4 overall is broadly consistent with Q3 growth. We continue to see strong global engagement and continued strong UCAN revenue growth; at the same time, cross-border seller business continues to pressure international growth, though that pressure has stabilized. As mentioned earlier, we widened our revenue guidance range to reflect a broader range of potential outcomes, while also aiming to provide a prudent baseline that we have high confidence we can meet or exceed. 2. TD Cowen Analyst John Blackledge Great. I think you have answered part of this, but I wonder if you could discuss further the impact of the regulatory change, the de minimis policy change, on cross-border sellers. Also, following up on Jason's question, as we head into next year, how do you see Europe returning to growth? Any information would be very helpful. William Ready Thank you for your question. As I mentioned, such regulatory changes are inherently difficult to predict in the short term because advertisers need to adapt to the new reality. I mentioned that this factor changed the sequential change in overall global revenue growth by 3 percentage points. We expect this factor to continue to weigh on international growth in Q4, though the impact has now stabilized. But I think it is also important to look back at what happened with these advertisers last year. When US tariffs took effect, many advertisers shifted spending to Europe and Latin America. Today, trade barriers have emerged in both the US and Europe, leaving fewer major markets to shift to. So in the short term, we see these advertisers cutting spending globally to protect margins. But we expect these sellers will eventually adapt. For example, some retailers have talked about plans to use local warehouses to comply with the new regulations. But these adjustments take time, so it is difficult for us to predict. At the same time, our new sales leadership team is ramping up. They are helping us bring in more advertisers across more categories, diversifying revenue over time. So while this cannot fully offset the headwinds we face, we remain quite encouraged. While we are not providing guidance for next year at this time and do not believe cross-border advertising spending will recover during the holiday period, looking to the first half of next year, we believe more time will allow these advertisers to complete similar adjustments, while we continue to advance revenue diversification. 3. Baird Analyst Colin Sebastian I would also like to welcome James. Bill, thank you for discussing the agentic initiatives. How do you view the relationship between Pinterest Assistant and the app's core discovery features? I would also like to better understand your current thinking on the role of agents or assistants in helping users move from inspiration to purchase. William Ready Thank you for your question. First, I would say that as we deliver a record high in users for the 13th consecutive quarter, despite the emergence of multiple AI-driven and agentic experiences in the market, we continue to deliver strong user and engagement growth. At the core is that we offer an AI-driven shopping experience that we believe truly meets the way users want to engage. I touched on some of this in my prepared remarks. From the very beginning, we have focused on the parts of the shopping process that users genuinely want to participate in. You have often heard me say that the first 25 years of e-commerce somewhat solved the "buying" problem while in some ways killing "shopping." The difference is that "shopping" is a journey users want to participate in, including the joy of discovery, figuring out what style they want, and continually refining their taste. So we designed Pinterest Assistant first and foremost to be integrated into the overall experience. It plays a co-pilot role, helping users move from inspiration to comparison and research, while always keeping users in control. Pinterest Assistant is our AI conversational layer, and we have not treated it as a standalone experience. It is integrated into the overall user experience, and every Pin on Pinterest is already powered by AI. But it does bring large language model capabilities into our visual, personalized experience, enabling users to research, compare, and decide without leaving Pinterest. This experience is now fully available in the US, and we are very encouraged by how users are engaging with it. One of the most encouraging signals we see is that about 80% of Assistant searches are commercial in nature, compared with about half of other searches on Pinterest. This shows we are matching AI with highly monetizable use cases. We are very pleased with this match between AI application and monetization, and with our ability to monetize it. We conduct more than 80 billion searches per month. And on the agentic point, about 70% of searches on Pinterest today begin with proactive recommendations. This gives you a sense of how much we have already embedded proactive recommendations into the core experience, proactively surfacing recommendations to users before they type or ask for anything. This in some ways reflects the promise of agents, but it is also implemented in a way suitable for mass adoption, allowing ordinary users to engage with these experiences according to their own habits. So Assistant makes recommendations easier to understand and helps where the user is. Looking ahead, we do see opportunities to further expand more agentic experiences, such as Ask mode, which I mentioned earlier. It is now available to millions of users in the US and can help users complete multi-step journeys, such as planning a trip. For example, when planning a trip, you can ask how to plan a trip, and the system will recommend places to stay, activities to consider, restaurants to visit, and outfits to prepare based on your style and taste. These features are helping us go further into agentic experiences. But again, we still keep users in control: they can get great recommendations, but the final decision remains with the user. We are just getting started here. We will continue to focus on expanding actionability and monetization, continuously testing, innovating, and adding assistive features. But again, we are very pleased with how we are combining these AI-driven capabilities with good commercial experiences, which will benefit future monetization. We are also very pleased with how these experiences are designed for mass adoption, helping where the user is and helping them complete the decisions they want to make, while still letting users ultimately decide for themselves. We think this is very important. People do not want to lose control of decisions. They may want help with decisions, but they do not want to lose decision-making authority. So we believe this is core to driving strong user and engagement growth. 4. KeyBanc Analyst Justin Patterson I would like you to discuss further the decision to expand programmatic partnerships. How do you view the impact of this move on advertiser reach and bid density? Also, since you have done some similar partnerships in the past, could you discuss what you learned initially and how it is going so far? William Ready Thank you for your question. Yes, we are expanding our programmatic partner range, which is one of several ways we are broadening Pinterest's demand sources and helping us reach advertisers where they are. To date, our goal has been to supplement our first-party business with more demand sources, fill gaps in our ad auction, and leverage the commercial intent we see on the platform. However, we also see a very meaningful opportunity to make it easier for customers to buy ads in the way they want. As we see more advertisers buying ads programmatically, we want to be closer to them. As we announced this week, our partners now cover about two-thirds of the DSP market, including Google DV360, Amazon DVA+, and Yahoo! DSP, with Magnite as our supply-side partner. Looking ahead, we believe more similar opportunities will emerge. As we have shared over the past several quarters, we also see a significant opportunity to leverage our audience beyond the Pinterest platform. Our acquisition of tvScientific earlier this year began in that direction, extending our audience reach to connected TV (CTV). As these platforms continue to evolve, we can work with these DSPs to leverage our unique audience data in more privacy-protective ways. This opens up an opportunity to bring in more demand programmatically while continuing to highlight the value of our unique signals and Pinterest's highly distinctive, strongly commercial audience. Finally, I want to remind everyone that, as I have shared when discussing these partnerships, this type of demand takes time to tune and ramp, as has been the case with past programmatic partnerships. So we see this as an important step to make it easier for more partners to bring more demand to the platform. But again, expect these businesses to take time to ramp. 5. Mizuho Analyst Lloyd Walmsley I want to ask about your recently announced new visual