10-Q 1 pins-20220331.htm 10-Q pins-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________
FORM 10-Q
_________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from                     to                     
Commission file number 001-38872
pins-20220331_g1.jpg
Pinterest, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware26-3607129
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
 Identification No.)
505 Brannan Street
San Francisco, California
94107
(Address of Principal Executive Offices, including zip code)(Zip Code)
(415762-7100
Registrant’s Telephone Number, Including Area Code
_______________________
Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
Trading Symbol
Name of each exchange on which registered
Class A Common Stock, $0.00001 par value PINS New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes    No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    No 
As of April 22, 2022, there were 574,700,162 shares of the Registrant’s Class A common stock, $.00001 par value per share, outstanding, and 88,784,787 shares of the Registrant’s Class B common stock outstanding.




PINTEREST, INC.
TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.

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NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risk and uncertainties. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and are often characterized by the use of words such as “believes,” “estimates,” “expects,” “projects,” “may,” “intends,” “plans,” “targets,” “forecasts” or “anticipates,” or by discussions of strategy, plans or intentions. Such forward-looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from historical results or any future results, performance or achievements expressed, suggested or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, statements about:
the impact of the COVID-19 pandemic, including its impact on global and regional economies and economic activity;
general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth;
the effect of general economic and political conditions, including Russia's recent invasion of Ukraine;
our financial performance, including revenue, cost and expenses and cash flows;
our ability to attract, retain and recover Pinners and maintain and grow their level of engagement;
our ability to provide content that is useful and relevant to Pinners’ personal taste and interests;
our ability to develop successful new products or improve existing ones;
our ability to maintain and enhance our brand and reputation;
potential harm caused by compromises in security, including our cybersecurity protections and resources and costs required to prevent, detect and remediate potential security breaches;
potential harm caused by changes in online application stores or internet search engines’ methodologies, particularly search engine optimization methodologies and policies;
discontinuation, disruptions or outages in third-party single sign-on access;
our ability to compete effectively in our industry;
our ability to scale our business, including our monetization efforts;
our ability to attract and retain advertisers and scale our revenue model;
our ability to attract and retain creators that create relevant and engaging content;
our ability to develop effective products and tools for advertisers, including measurement tools;
our ability to expand and monetize our platform internationally;
our ability to effectively manage the growth of our business;
our ability to successfully manage our new flexible work model with a more distributed workforce;
our lack of operating history and ability to sustain profitability;
decisions that reduce short-term revenue or profitability or do not produce the long-term benefits we expect;
fluctuations in our operating results;
our ability to raise additional capital on favorable terms or at all;
our ability to realize anticipated benefits from mergers and acquisitions, joint ventures, strategic partnerships and other investments;
our ability to protect our intellectual property;
our ability to receive, process, store, use and share data, and compliance with laws and regulations related to data privacy and content;
current or potential litigation and regulatory actions involving us;
our ability to comply with modified or new laws and regulations applying to our business, and potential harm to our business as a result of those laws and regulations;
3


real or perceived inaccuracies in metrics related to our business;
disruption of, degradation in or interference with our use of Amazon Web Services and our infrastructure; and
our ability to attract and retain personnel.
These statements are based on our historical performance and on our current plans, estimates and projections in light of information currently available to us, and therefore you should not place undue reliance on them. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Forward-looking statements made in this Quarterly Report on Form 10-Q speak only as of the date on which such statements are made, and we undertake no obligation to update them in light of new information or future events, except as required by law.
You should carefully consider the above factors, as well as the factors discussed elsewhere in this Quarterly Report on Form 10-Q. The factors identified above should not be construed as an exhaustive list of factors that could affect our future results and should be read in conjunction with the other cautionary statements that are included in this Quarterly Report. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. If any of these trends, risks or uncertainties actually occurs or continues, our business, revenue and financial results could be harmed, the trading price of our Class A common stock could decline and you could lose all or part of your investment.
Unless expressly indicated or the context requires otherwise, the terms "Pinterest," "company," "we," "us," and "our" in this document refer to Pinterest, Inc., a Delaware corporation, and, where appropriate, its wholly owned subsidiaries. The term "Pinterest" may also refer to our products, regardless of the manner in which they are accessed. For references to accessing Pinterest on the "web" or via a "website," such terms refer to accessing Pinterest on personal computers. For references to accessing Pinterest on "mobile," such term refers to accessing Pinterest via a mobile application or via a mobile-optimized version of our website such as m.pinterest.com, whether on a mobile phone or tablet.
Summary of Risk Factors
The following summarizes the principal factors that make an investment in our company speculative or risky, all of which are more fully described in the Risk Factors section below. This summary should be read in conjunction with the Risk Factors section and should not be relied upon as an exhaustive summary of the material risks facing our business. The following factors could result in harm to our business, reputation, revenue, financial results, and prospects, among other impacts:
Business Strategy and Growth. Our strategic decisions and efforts to expand the business, including:
our ability to scale our business for future growth, as we are in the early stages of our monetization efforts;
our ability to attract, grow, retain, recover and engage our user base;
providing content that is useful and relevant to Pinners’ personal taste and interests;
decisions consistent with our mission and values that may reduce our short- or medium-term operating results;
removing objectionable content or blocking objectionable practices by advertisers or third parties;
our ability to compete effectively for users or advertisers and to develop effective products and tools for advertisers;
our ability to attract and retain creators to create engaging content;
our further expansion and monetization of our platform internationally;
effective management of our business growth; and
our acquisition of other businesses.
Operation of Our Business. The manner in which we operate our business, including:
the disruption and harm from the COVID-19 pandemic outbreak, as well as potential challenges of post-pandemic recovery;
4


our dependence on and ability to maintain and enhance a strong brand and reputation;
actual or perceived compromises in our security;
our dependence on advertising for substantially all of our revenue;
the development of tools to accurately measure the effectiveness of advertisements on our platform and thereby attract and maintain advertisers;
the inherent challenges of measurements related to Pinner metrics and other estimates;
our ability to maintain and scale our technology infrastructure, including the speed and availability of our service; and
the attraction, retention, and loss of our key personnel and other highly qualified personnel.
Third-Party Reliance. Our use and dependence on third-party businesses and products, or the impacts of third-party business and products, including:
our dependence on online application stores and internet search engines, including their methodologies, policies, and results, to direct traffic and refer new Pinners to our service;
users’ ability to authenticate with our service through third-party login providers;
our dependence on Amazon Web Services for the vast majority of our compute, storage, data transfer, and other services;
effectively operating with mobile operating systems, web browsers, networks, regulations, and standards, which we do not control, and changes in our products or to those mobile operating systems, web browsers, networks, regulations or standards; and
our reliance on software, technologies, and related services from other parties; and
technologies that can block the display of our ads.
Legal and Regulatory Matters. The legal and regulatory frameworks, actions, and requirements to which our business, products, services, and operations are subject, including:
any liability as a result of content or information that is published or made available on our service;
government action to restrict access to our service or certain of our products in their countries;
the data, including personal information, we receive, process, store, use, and share, which subjects us to complex and evolving governmental regulation and other legal obligations related to data privacy, data protection and other matters;
our involvement in any legal disputes or other disputes that are expensive to support and may be resolved adversely;
an ability to protect our intellectual property and our use of “open source” software; and
the interpretation and application of U.S. tax legislation or other changes in U.S. or non-U.S. taxation of our operations.
Financial Statements and Performance. The preparation of our financial statements and our financial and operating performance, including:
our limited operating history and previously incurred operating losses, anticipated increases to operating costs, and expenses and our ability to obtain or maintain profitability;
fluctuations in our operating results from quarter to quarter;
our ability to obtain additional financing, if needed and any default on our credit obligations;
5


greater than anticipated tax liabilities;
limitations in our ability to use or benefit from our net operating loss carryforwards and certain other tax attributes; and
the requirements of being a public company.
Our Common Stock. The rights, restrictions, and structure of, and actions that we may take that impact our common stock, including:
the dual class structure of our common stock;
trading price volatility of our Class A common stock;
future offerings of debt or equity securities by us or existing stockholders that could adversely impact the market price of our Class A common stock;
additional stock issuances, including in connection with settlement of equity awards, and any resulting dilution;
provisions under Delaware law and our governing documents that could make a merger, tender offer, or proxy contest difficult;
our certificate of incorporation’s designation of a state or federal court located within Delaware as the exclusive forum for substantially all disputes between us and our stockholders; and
our intention not to pay dividends for the foreseeable future.
General. The risks common to our industry and public companies generally, including:
our development of or investment in successful new products or improvements to existing one;
adverse global economic and financial conditions; and
changes in accounting principles generally accepted in the United States.
6


LIMITATIONS OF KEY METRICS AND OTHER DATA
The numbers for our key metrics, which include our monthly active users (MAUs) and average revenue per user (ARPU), are calculated using internal company data based on the activity of user accounts. We define a monthly active user as an authenticated Pinterest user who visits our website, opens our mobile application or interacts with Pinterest through one of our browser or site extensions, such as the Save button, at least once during the 30-day period ending on the date of measurement. Unless otherwise indicated, we present MAUs based on the number of MAUs measured on the last day of the current period. We measure monetization of our platform through our average revenue per user metric. We define ARPU as our total revenue in a given geography during a period divided by the average of the number of MAUs in that geography during the period. We calculate average MAUs based on the average of the number of MAUs measured on the last day of the current period and the last day prior to the beginning of the current period. We calculate ARPU by geography based on our estimate of the geography in which revenue-generating activities occur. We use these metrics to assess the growth and health of the overall business and believe that MAUs and ARPU best reflect our ability to attract, retain, engage and monetize our users, and thereby drive revenue. While these numbers are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring usage of our products across large online and mobile populations around the world. In addition, we are continually seeking to improve our estimates of our user base, and such estimates may change due to improvements or changes in technology or our methodology.

7

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PINTEREST, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)


March 31,December 31,
20222021
ASSETS
Current assets:
Cash and cash equivalents $1,683,792 $1,419,630 
Marketable securities 994,346 1,060,488 
Accounts receivable, net of allowances of $8,366 and $8,282 as of March 31, 2022 and December 31, 2021, respectively
473,031 653,355 
Prepaid expenses and other current assets 56,183 48,090 
Total current assets 3,207,352 3,181,563 
Property and equipment, net 54,714 53,401 
Operating lease right-of-use assets222,751 227,912 
Goodwill and intangible assets, net60,084 61,115 
Other assets13,289 13,247 
Total assets $3,558,190 $3,537,238 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $12,546 $17,675 
Accrued expenses and other current liabilities 213,019 242,131 
Total current liabilities 225,565 259,806 
Operating lease liabilities202,569 209,181 
Other liabilities30,396 29,508 
Total liabilities 458,530 498,495 
Commitments and contingencies
Stockholders’ equity:
Class A common stock, $0.00001 par value, 6,666,667 shares authorized, 573,585 and 568,228 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively; Class B common stock, $0.00001 par value, 1,333,333 shares authorized, 88,669 and 88,644 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively
7 7 
Additional paid-in capital 5,133,804 5,059,528 
Accumulated other comprehensive loss (10,259)(2,181)
Accumulated deficit (2,023,892)(2,018,611)
Total stockholders’ equity 3,099,660 3,038,743 
Total liabilities and stockholders’ equity $3,558,190 $3,537,238 



The accompanying notes are an integral part of these condensed consolidated financial statements.

8


PINTEREST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended March 31,
20222021
Revenue$574,885 $485,230 
Costs and expenses:
Cost of revenue146,070 133,470 
Research and development195,548 171,728 
Sales and marketing173,953 130,322 
General and administrative62,979 72,618 
Total costs and expenses578,550 508,138 
Loss from operations(3,665)(22,908)
Interest income1,088 1,492 
Interest expense and other income (expense), net(1,576)(1,563)
Loss before provision for (benefit from) income taxes(4,153)(22,979)
Provision for (benefit from) income taxes1,128 (1,305)
Net loss$(5,281)$(21,674)
Net loss per share, basic and diluted
$(0.01)$(0.03)
Weighted-average shares used in computing net loss per share, basic and diluted
656,899 628,593 








The accompanying notes are an integral part of these condensed consolidated financial statements.

9


PINTEREST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)


Three Months Ended March 31,
20222021
Net loss$(5,281)$(21,674)
Other comprehensive loss, net of taxes:
Change in unrealized gain (loss) on available-for-sale marketable securities (7,844)(987)
Change in foreign currency translation adjustment (234)(180)
Comprehensive loss $(13,359)$(22,841)








The accompanying notes are an integral part of these condensed consolidated financial statements.

10


Pinterest, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands)
(Unaudited)


Three Months Ended March 31, 2022
 
Class A and Class B Common Stock
Additional
Paid-In Capital
Accumulated Other Comprehensive LossAccumulated DeficitStockholders’ Equity
SharesAmount
Balance as of December 31, 2021656,872 $7 $5,059,528 $(2,181)$(2,018,611)$3,038,743 
Release of restricted stock units
4,706 — — — — — 
Issuance of common stock for cash upon exercise of stock options, net
369 — 1,036 — — 1,036 
Issuance of restricted stock awards
307 — — — — — 
Share-based compensation— — 73,240 — — 73,240 
Other comprehensive loss— — — (8,078)— (8,078)
Net loss — — — — (5,281)(5,281)
Balance as of March 31, 2022662,254 $7 $5,133,804 $(10,259)$(2,023,892)$3,099,660 

Three Months Ended March 31, 2021
Class A and Class B Common StockAdditional
Paid-In Capital
Accumulated Other Comprehensive Income (Loss)Accumulated DeficitStockholders’ Equity
SharesAmount
Balance as of December 31, 2020626,372 $6 $4,574,934 $2,480 $(2,335,049)$2,242,371 
Release of restricted stock units
5,710 — — — — — 
Issuance of common stock for cash upon exercise of stock options, net
2,997 — 9,344 — — 9,344 
Issuance of common stock related to charitable contributions
250 — 20,490 — — 20,490 
Share-based compensation— — 79,459 — — 79,459 
Other comprehensive loss— — — (1,167)— (1,167)
Net loss— — — — (21,674)(21,674)
Balance as of March 31, 2021635,329 $6 $4,684,227 $1,313 $(2,356,723)$2,328,823 








The accompanying notes are an integral part of these condensed consolidated financial statements.

11


PINTEREST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)



Three Months Ended March 31,
20222021
Operating activities
Net loss$(5,281)$(21,674)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 7,220 6,783 
Share-based compensation 73,240 79,459 
Non-cash charitable contributions 20,490 
Other 2,978 2,029 
Changes in assets and liabilities:
Accounts receivable 180,203 176,564 
Prepaid expenses and other assets (8,285)(91)
Operating lease right-of-use assets12,394 10,288 
Accounts payable (4,638)(717)
Accrued expenses and other liabilities (31,620)8,298 
Operating lease liabilities(12,822)(10,850)
Net cash provided by operating activities 213,389 270,579 
Investing activities
Purchases of property and equipment and intangible assets(6,902)(1,251)
Purchases of marketable securities (155,181)(263,170)
Sales of marketable securities 4,168 79,831 
Maturities of marketable securities 207,319 149,532 
Net cash provided by (used in) investing activities 49,404 (35,058)
Financing activities
Proceeds from exercise of stock options, net
1,036 9,344 
Net cash provided by financing activities 1,036 9,344 
Effect of exchange rate changes on cash, cash equivalents and restricted cash333 (355)
Net increase in cash, cash equivalents and restricted cash264,162 244,510 
Cash, cash equivalents and restricted cash, beginning of period1,427,064 678,911 
Cash, cash equivalents and restricted cash, end of period$1,691,226 $923,421 
Supplemental cash flow information
Accrued property and equipment$3,462 $125 
Operating lease right-of-use assets obtained in exchange for operating lease liabilities$7,085 $630 

Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets
Cash and cash equivalents$1,683,792 $913,740 
Restricted cash included in prepaid expenses and other current assets1,137 571 
Restricted cash included in other assets6,297 9,110 
Total cash, cash equivalents and restricted cash$1,691,226 $923,421 








The accompanying notes are an integral part of these condensed consolidated financial statements.

12


PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.Description of Business and Summary of Significant Accounting Policies
Description of Business
Pinterest was incorporated in Delaware in 2008 and is headquartered in San Francisco, California. Pinterest is a visual discovery engine that people around the globe use to find the inspiration to create a life they love. We generate revenue by delivering ads on our website and mobile application.
Basis of Presentation and Consolidation
We prepared the accompanying condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). The condensed consolidated financial statements include the accounts of Pinterest, Inc. and its wholly owned subsidiaries. We have eliminated all intercompany balances and transactions.
The condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited financial statements as of that date. We have condensed or omitted certain information and notes normally included in complete financial statements prepared in accordance with GAAP. As such, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 31, 2021, which are included in our Annual Report on Form 10-K.
In our opinion, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the results for the interim periods presented, but they are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2022.
Reclassifications
We have reclassified certain amounts in prior periods to conform with current presentation.
Use of Estimates
Preparing our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect amounts reported in the condensed consolidated financial statements and accompanying notes. We base these estimates and judgments on historical experience and various other assumptions that we consider reasonable. GAAP requires us to make estimates and assumptions in several areas, including the fair values of financial instruments, assets acquired and liabilities assumed through business combinations, share-based awards, and contingencies as well as the collectability of our accounts receivable, the useful lives of our intangible assets and property and equipment, the incremental borrowing rate we use to determine our operating lease liabilities, and revenue recognition, among others. Actual results could differ materially from these estimates and judgments.
Significant Accounting Policies
There have been no material changes to our significant accounting policies from our Annual Report on Form 10-K for the year ended December 31, 2021.





13



PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. Fair Value of Financial Instruments
The fair values of the financial instruments we measure at fair value on a recurring basis are as follows (in thousands):
March 31, 2022
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds $1,022,691 $ $ $1,022,691 
Commercial paper  140,301  140,301 
U.S. treasury securities 11,999   11,999 
Marketable securities:
Corporate bonds  416,340  416,340 
Commercial paper  224,046  224,046 
U.S. treasury securities 209,669   209,669 
Certificates of deposit  83,530  83,530 
Municipal securities 31,852  31,852 
Non-U.S. government and supranational bonds 27,909  27,909 
U.S. agency bonds 1,000  1,000 
Prepaid expenses and other current assets:
Certificates of deposit  1,137  1,137 
Other assets:
Certificates of deposit $ $6,297 $ $6,297 
December 31, 2021
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds $711,188 $ $ $711,188 
Commercial paper 114,976  114,976 
Corporate bonds 4,310  4,310 
Marketable securities:
Corporate bonds  449,417  449,417 
Commercial paper 247,560  247,560 
U.S. treasury securities189,010   189,010 
Certificates of deposit 82,486  82,486 
Municipal securities 49,331  49,331 
Non-U.S. government and supranational bonds 41,684  41,684 
U.S. agency bonds 1,000  1,000 
Prepaid expenses and other current assets:
Certificates of deposit  1,137  1,137 
Other assets:
Certificates of deposit $ $6,297 $ $6,297 
We classify our marketable securities within Level 1 or Level 2 because we determine their fair values using quoted market prices or alternative pricing sources and models utilizing market observable inputs.
Gross unrealized gains and losses on our marketable securities were immaterial in the aggregate as of March 31, 2022 and December 31, 2021. We evaluated all available evidence and did not recognize any allowance for credit losses for our marketable securities as of March 31, 2022 and December 31, 2021.
14


PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The fair value of our marketable securities by contractual maturity is as follows (in thousands):
March 31, 2022
Due in one year or less $711,071 
Due after one to five years 283,275 
Total $994,346 
Net realized gains and losses from sales of available-for-sale securities were not material for any period presented.
3. Commitments and Contingencies
Purchase Commitments
In April 2021, we entered into a new private pricing addendum with Amazon Web Services (“AWS”), which governs our use of cloud computing infrastructure provided by AWS. Under the new pricing addendum, we are required to purchase at least $3,250.0 million of cloud services from AWS through April 2029. If we fail to do so, we are required to pay the difference between the amount we spend and the required commitment amount. As of March 31, 2022, our remaining contractual commitment is $2,819.2 million. We expect to meet our remaining commitment.
Legal Matters
We are involved in various lawsuits, claims and proceedings that arise in the ordinary course of business, including those described below. While the results of legal matters are inherently uncertain, we do not believe there is a reasonable possibility that the ultimate resolution of these matters, either individually or in aggregate, will have a material adverse effect on our business, financial position, results of operations or cash flows.
In November and December 2020, certain of our executives and members of our board of directors were named as defendants in shareholder derivative lawsuits filed in the U.S. District Court for the Northern District of California. Pinterest was also named as a nominal defendant. The lawsuits purport to assert claims for breach of fiduciary duty in connection with allegations of gender and racial discrimination at Pinterest. In addition, the lawsuits purport to assert claims for waste, abuse of control, aiding and abetting breaches of fiduciary duties, unjust enrichment, and violations of Section 14(a) of the Exchange Act. The complaints seek declaratory and injunctive relief, corporate governance changes, monetary damages, interest, disgorgement, and fees and costs. On April 22, 2021, the defendants moved to dismiss this complaint. On July 14, 2021, another shareholder derivative complaint with similar allegations was filed in the same court and was subsequently related to the earlier action. The cases were referred to a magistrate judge for mediation, and the proceedings were stayed during the pendency of that mediation. On November 24, 2021, the parties entered into a stipulation of settlement and plaintiffs filed a motion for preliminary settlement approval. Preliminary approval was granted February 16, 2022, and a final approval hearing for the settlement is scheduled for May 26, 2022. We continue to evaluate these claims but do not believe this litigation will have a material impact on our financial position or results of operations.
In March 2021, certain of our executives and members of our board of directors were named as defendants in a shareholder derivative lawsuit filed in the Delaware Chancery Court. Pinterest was also named as a nominal defendant. The complaint alleges that executives and members of the board breached their fiduciary duties to the company in connection with allegations of gender and racial discrimination at Pinterest. On May 10, 2021, the court stayed this lawsuit in light of the related pending case in the Northern District of California. The complaint seeks damages, litigation costs, and interest. We continue to evaluate these claims but do not believe this litigation will have a material impact on our financial position or results of operations.
4. Share-Based Compensation
Equity Incentive Plan
In June 2009, our board of directors adopted and approved our 2009 Stock Plan (the "2009 Plan"), which provides for the issuance of stock options, Restricted Stock Awards ("RSAs") and Restricted Stock Units ("RSUs") to qualified employees, directors and consultants. Stock options granted under our 2009 Plan have a maximum life of 10 years and an exercise price not less than 100% of the fair market value of our common stock on the date of grant. RSUs
15


PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
granted under our 2009 Plan have a maximum life of seven years. No shares of our common stock were reserved for future issuance under our 2009 Plan as of March 31, 2022.
Our 2019 Plan became effective upon closing of our initial public offering and succeeds our 2009 Plan. Our 2019 Omnibus Incentive Plan (the "2019 Plan") provides for the issuance of stock options, RSAs, RSUs and other equity- or cash-based awards to qualified employees, directors and consultants. Stock options granted under our 2019 Plan have a maximum life of 10 years and an exercise price not less than 100% of the fair market value of our common stock on the date of grant. 160,872,457 shares of our Class A common stock were reserved for future issuance under our 2019 Plan as of March 31, 2022.
The number of shares of our Class A common stock available for issuance under the 2019 Plan will be increased by the number of shares of our Class B common stock subject to awards outstanding under our 2009 Plan that would, but for the terms of the 2019 Plan, have returned to the share reserves of the 2009 Plan pursuant to the terms of such awards, including as the result of forfeiture, repurchase, expiration or retention by us in order to satisfy an award’s exercise price or tax withholding obligations. In addition, the number of shares of our Class A common stock reserved for issuance under our 2019 Plan will automatically increase on the first day of each fiscal year through and including January 1, 2029, in an amount equal to 5% of the total number of shares of our Class A common stock and our Class B common stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by our board of directors.
Stock Option Activity
Stock option activity during the three months ended March 31, 2022, was as follows (in thousands, except per share amounts):
Stock Options Outstanding
SharesWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Term
Aggregate Intrinsic
Value (1)
(in years)
Outstanding as of December 31, 202116,141$3.19 1.9$535,118 
Exercised (369)2.81 
Outstanding as of March 31, 202215,772$3.20 1.7$337,583 
Exercisable as of March 31, 202215,278$2.59 1.5$336,466 
(1)We calculate intrinsic value based on the difference between the exercise price of in-the-money-stock options and the fair value of our common stock as of the respective balance sheet date.
The total grant-date fair value of stock options vested during the three months ended March 31, 2022 and 2021, was $0.8 million and $0.8 million, respectively. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2022 and 2021, was $9.5 million and $225.2 million, respectively.

16


PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Restricted Stock Unit and Restricted Stock Award Activity
RSU and RSA activity during the three months ended March 31, 2022, was as follows (in thousands, except per share amounts):
Restricted Stock Units and Restricted Stock Awards Outstanding
SharesWeighted Average Grant Date Fair Value
Outstanding as of December 31, 202136,258$30.84 
Granted 2,14632.97 
Released(4,800)26.21 
Forfeited(3,225)28.89 
Outstanding as of March 31, 202230,379$31.92 
Share-Based Compensation
Share-based compensation expense during the three months ended March 31, 2022 and 2021, was as follows (in thousands):
Three Months Ended March 31,
20222021
Cost of revenue $1,194 $1,312 
Research and development52,890 56,475 
Sales and marketing11,769 11,891 
General and administrative 7,387 9,781 
Total share-based compensation $73,240 $79,459 
As of March 31, 2022, we had $755.5 million of unrecognized share-based compensation expense, which we expect to recognize over a weighted-average period of 2.6 years.
5. Net Loss Per Share
We present net loss per share using the two-class method required for multiple classes of common stock. Holders of our Class A and Class B common stock have identical rights except with respect to voting, conversion and transfer rights and therefore share equally in our net income or losses.
We calculate basic net loss per share by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share gives effect to all potential shares of common stock, including stock options, RSAs and RSUs to the extent these are dilutive.
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PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We calculated basic and diluted net loss per share as follows (in thousands, except per share amounts):
Three Months Ended March 31,
20222021
Class AClass BClass AClass B
Numerator:
Net loss$(4,568)$(713)$(18,432)$(3,242)
Denominator:
Weighted-average shares used in computing net loss per share, basic and diluted568,238 88,661 534,554 94,039 
Net loss per share, basic and diluted$(0.01)$(0.01)$(0.03)$(0.03)
Basic net loss per share is the same as diluted net loss per share because we reported net losses for all periods presented. We excluded the following weighted-average potential shares of common stock from our calculation of diluted net loss per share because these would be anti-dilutive (in thousands):
Three Months Ended March 31,
20222021
Outstanding stock options15,929 22,136 
Unvested restricted stock units and restricted stock awards34,693 52,156 
Total50,622 74,292 
6. Income Taxes
We determine our income tax provision for interim periods using an estimate of our annual effective tax rate adjusted for discrete items occurring during the periods presented. The primary difference between our effective tax rate and the federal statutory rate is the full valuation allowance we have established on our federal, state and foreign net operating losses and credits. Income taxes are not material for the three months ended March 31, 2022 and 2021.
We are subject to taxation in the U.S. and various other state and foreign jurisdictions. As we have net operating loss carryforwards for U.S. federal and state jurisdictions, the statute of limitations is open for all tax years. For material foreign jurisdictions, the tax years open to examination include the years 2017 and forward. We are currently under examination of our U.S. consolidated federal income tax return by the Internal Revenue Service for 2018 and 2019. We believe that we have adequately reserved for any adjustments to the provision for income taxes or other tax items that may ultimately result from these examinations.
7. Geographical Information
Revenue disaggregated by geography based on our customers’ billing addresses is as follows (in thousands):
Three Months Ended March 31,
20222021
U.S. and Canada(1)
$462,073 $405,075 
Europe(2)(3)
88,897 68,215 
Rest of World(2)
23,915 11,940 
Total revenue $574,885 $485,230 
(1)United States revenue was $440.9 million and $388.2 million for the three months ended March 31, 2022 and 2021, respectively.
(2)No individual country other than the United States exceeded 10% of our total revenue for any period presented.
(3)Europe includes Russia and Turkey.
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PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Property and equipment, net and operating lease right-of-use assets by geography is as follows (in thousands):
March 31,December 31,
20222021
United States $236,975 $247,975 
International(1)
40,490 33,338 
Total property and equipment, net and operating lease right-of-use assets$277,465 $281,313 
(1)No individual country other than the United States exceeded 10% of our total property and equipment, net and operating lease right-of-use assets for any period presented.
8. Subsequent Events
On April 13, 2022, we granted 24,701,239 RSUs and RSAs with an aggregate grant-date fair value of $566.9 million, which we expect to recognize as share-based compensation expense over a weighted-average period of 3.8 years.
19



ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions, including risks and uncertainty regarding the duration and scope of the impact of the COVID-19 pandemic. Our actual results could differ materially from these forward-looking statements as a result of many factors, including those discussed in “Risk Factors” and “Note About Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q.
Overview of First Quarter Results
Our key financial and operating results as of and for the three months ended March 31, 2022 are as follows:
Revenue was $574.9 million, an increase of 18% compared to the three months ended March 31, 2021.
Monthly active users ("MAUs") were 433 million, a decrease of 9% compared to March 31, 2021.
Share-based compensation expense was $73.2 million, a decrease of $6.2 million compared to the three months ended March 31, 2021.
Total costs and expenses were $578.6 million.
Loss from operations was $3.7 million.
Net loss was $5.3 million.
Adjusted EBITDA was $76.8 million.
Cash, cash equivalents and marketable securities were $2,678.1 million.
Headcount was 3,430.
Beginning in the first quarter of 2022, we are updating the presentation of our key metrics by presenting U.S. and Canada, Europe and Rest of World separately. We believe our revised presentation will provide additional details on the relative maturity of these regions we previously included within International. Specifically, we want to provide additional disclosure on Europe given the relative maturity of the region. As a result, we are also presenting Canada with the U.S. given the relative maturity of our business in Canada and the similarity of the U.S. and Canada advertising markets. For comparability, we are providing revenue, MAUs and ARPU data from the first quarter of 2020 to the fourth quarter of 2021 on the same basis.
Update on the COVID-19 Pandemic
The COVID-19 pandemic initially positively impacted Pinner engagement and user growth globally as people spent more time at home and sought online inspiration for some of our core use cases. Starting in mid-March 2021, the easing of the restrictions related to the COVID-19 pandemic began to slow our global MAU growth and lowered Pinner engagement as compared to 2020 as Pinners began spending less time at home. This behavior reversed some of the MAU gains we saw during 2020, and, as a result, we saw a decline in global MAUs throughout 2021 which continued in the first quarter of 2022.
We are unable to predict the extent and duration of the impact of the COVID-19 pandemic on advertiser demand, user growth, Pinner engagement, and our business, operatios and financial results. See "Risk Factors" and "Note About Forward-Looking Statements” for additional details.

20


Trends in User Metrics
Monthly Active Users. We define a monthly active user as an authenticated Pinterest user who visits our website, opens our mobile application or interacts with Pinterest through one of our browser or site extensions, such as the Save button, at least once during the 30-day period ending on the date of measurement. We present MAUs based on the number of MAUs measured on the last day of the current period. We calculate average MAUs based on the average of the number of MAUs measured on the last day of the current period and the last day prior to the beginning of the current period. MAUs are the primary metric by which we measure the scale of our active user base.
Quarterly Monthly Active Users
(in millions)
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Note: U.S. and Canada, Europe and Rest of World may not sum to Global due to rounding. Europe includes Russia and Turkey for our reporting of Revenue, MAUs and ARPU by geographic region.
As of March 31, 2022, we have experienced a decline in our global MAUs as compared to March 31, 2021 due to the COVID-19 pandemic unwind and lower search traffic driven by changes in search engine algorithms.
Trends in Monetization Metrics
Revenue. We calculate revenue by user geography based on our estimate of the geographic location of our users when they perform a revenue-generating activity. The geography of our users affects our revenue and financial results because we currently only monetize certain countries and currencies and because we monetize different geographies at different average rates. Our revenue in U.S. and Canada and, to a lesser extent, Europe is higher primarily due to the relative size and maturity of the digital advertising markets in these geographies.
Quarterly Revenue
(in millions)
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Note: Revenue by geography in the charts above is geographically apportioned based on our estimate of the users geographic location when they perform a revenue-generating activity. This allocation differs from our disclosure of revenue disaggregated by geography in the notes to our condensed consolidated financial statements where revenue is geographically apportioned based on our customers’ billing addresses. U.S. and Canada, Europe and Rest of World may not sum to Global and quarterly amounts may not sum to annual due to rounding.
Average Revenue per User (“ARPU”). We measure monetization of our platform through our average revenue per user metric. We define ARPU as our total revenue in a given geography during a period divided by average MAUs in that geography during the period. We calculate ARPU by geography based on our estimate of the geography in which revenue-generating activities occur. We present ARPU on a U.S. and Canada, Europe and Rest of World basis because we currently monetize users in different geographies at different average rates. U.S. and Canada ARPU is higher primarily due to the relative size and maturity of the digital advertising markets in these geographies.



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Quarterly Average Revenue per User
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For the three months ended March 31, 2022, global ARPU was $1.33, which represents an increase of 28% compared to the three months ended March 31, 2021. For the three months ended March 31, 2022, U.S. and Canada ARPU was $4.98, an increase of 31%, Europe ARPU was $0.72, an increase of 40% and Rest of World ARPU was $0.08, an increase of 164% compared to the three months ended March 31, 2021.
We use MAUs and ARPU to assess the growth and health of the overall business and believe that these metrics best reflect our ability to attract, retain, engage and monetize our users, and thereby drive revenue.
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Non-GAAP Financial Measure
To supplement our condensed consolidated financial statements presented in accordance with GAAP, we consider Adjusted EBITDA, a financial measure which is not based on any standardized methodology prescribed by GAAP.
We define Adjusted EBITDA as net loss adjusted to exclude depreciation and amortization expense, share-based compensation expense, interest income, interest expense and other income (expense), net, provision for (benefit from) income taxes and non-cash charitable contributions.
We use Adjusted EBITDA to evaluate our operating results and for financial and operational decision-making purposes. We believe Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the income and expenses that it excludes. We also believe Adjusted EBITDA provides useful information about our operating results, enhances the overall understanding of our past performance and future prospects, and allows for greater transparency with respect to key metrics we use for financial and operational decision-making. We are presenting Adjusted EBITDA to assist investors in seeing our operating results through the eyes of management and because we believe that this measure provides an additional tool for investors to use in comparing our core business operating results over multiple periods with other companies in our industry. However, our definition of Adjusted EBITDA may not be the same as similarly titled measures used by other companies.
Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net loss, the nearest GAAP equivalent. For example, Adjusted EBITDA excludes:
certain recurring, non-cash charges such as depreciation of fixed assets and amortization of acquired intangible assets, although these assets may have to be replaced in the future; and
share-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense and an important part of our compensation strategy.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net loss and our other financial results presented in accordance with GAAP. The following table presents a reconciliation of net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA (in thousands):
Three Months Ended March 31,
20222021
Net loss$(5,281)$(21,674)
Depreciation and amortization7,220 6,783 
Share-based compensation73,240 79,459 
Interest income(1,088)(1,492)
Interest expense and other (income) expense, net1,576 1,563 
Provision for (benefit from) income taxes1,128 (1,305)
Non-cash charitable contributions— 20,490 
Adjusted EBITDA$76,795 $83,824 

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Components of Results of Operations
Revenue. We generate revenue by delivering ads on our website and mobile application. Advertisers purchase ads directly with us or through their relationships with advertising agencies. We recognize revenue only after transferring control of promised goods or services to customers, which occurs when a user clicks on an ad contracted on a cost per click ("CPC") basis, views an ad contracted on a cost per thousand impressions ("CPM") basis or views a video ad contracted on a cost per view ("CPV") basis.
Cost of Revenue. Cost of revenue consists primarily of expenses associated with the delivery of our service, including the cost of hosting our website and mobile application. Cost of revenue also includes personnel-related expense, including salaries, benefits and share-based compensation for employees on our operations teams, payments associated with partner arrangements, credit card and other transaction processing fees, and allocated facilities and other supporting overhead costs.
Research and Development. Research and development consists primarily of personnel-related expense, including salaries, benefits and share-based compensation for our engineers and other employees engaged in the research and development of our products, and allocated facilities and other supporting overhead costs.
Sales and Marketing. Sales and marketing consists primarily of personnel-related expense, including salaries, commissions, benefits and share-based compensation for our employees engaged in sales, sales support, marketing and customer service functions, advertising and promotional expenditures, professional services and allocated facilities and other supporting overhead costs. Our marketing efforts also include user- and advertiser-focused marketing expenditures.
General and Administrative. General and administrative consists primarily of personnel-related expense, including salaries, benefits and share-based compensation for our employees engaged in finance, legal, human resources and other administrative functions, professional services, including outside legal and accounting services, charitable contributions and allocated facilities and other supporting overhead costs.
Other Income (Expense), Net. Other income (expense), net consists primarily of interest earned on our cash equivalents and marketable securities and foreign currency exchange gains and losses.
Provision for (Benefit From) Income Taxes. Provision for (benefit from) income taxes consists primarily of income taxes in foreign jurisdictions and U.S. federal and state income taxes adjusted for discrete items.
Adjusted EBITDA. We define Adjusted EBITDA as net loss adjusted to exclude depreciation and amortization expense, share-based compensation expense, interest income, interest expense and other income (expense), net, provision for (benefit from) income taxes and non-cash charitable contributions. See “Non-GAAP Financial Measure” for more information and for a reconciliation of net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA.

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Results of Operations
The following tables set forth our condensed consolidated statements of operations data (in thousands):
Three Months Ended March 31,
20222021
Revenue$574,885 $485,230 
Costs and expenses (1):
Cost of revenue146,070 133,470 
Research and development195,548 171,728 
Sales and marketing173,953 130,322 
General and administrative62,979 72,618 
Total costs and expenses578,550 508,138 
Loss from operations(3,665)(22,908)
Interest income1,088 1,492 
Interest expense and other income (expense), net(1,576)(1,563)
Loss before provision for (benefit from) income taxes(4,153)(22,979)
Provision for (benefit from) income taxes1,128 (1,305)
Net loss$(5,281)$(21,674)
Adjusted EBITDA (2)
$76,795 $83,824 
(1)Includes share-based compensation expense as follows (in thousands):
Three Months Ended March 31,
20222021
Cost of revenue $1,194 $1,312 
Research and development 52,890 56,475 
Sales and marketing11,769 11,891 
General and administrative 7,387 9,781 
Total share-based compensation$73,240 $79,459 
(2)See “Non-GAAP Financial Measure” for more information and for a reconciliation of net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA.

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The following table sets forth our condensed consolidated statements of operations data (as a percentage of revenue):
Three Months Ended March 31,
20222021
Revenue100 %100 %
Costs and expenses:
Cost of revenue25 28 
Research and development34 35 
Sales and marketing30 27 
General and administrative11 15 
Total costs and expenses101 105 
Loss from operations(1)(5)
Interest income— — 
Interest expense and other income (expense), net— — 
Loss before provision for (benefit from) income taxes(1)(5)
Provision for (benefit from) income taxes— — 
Net loss(1)%(4)%
Three Months Ended March 31, 2022 and 2021
Revenue
Three Months Ended March 31,
20222021% change
(in thousands)
Revenue$574,885 $485,230 18 %
Revenue for the three months ended March 31, 2022 increased by $89.7 million compared to the three months ended March 31, 2021. Revenue growth was driven by a 28% increase in ARPU offset by a 9% decrease in MAUs. This resulted in a 2% increase in the price of advertisements served and a 16% increase in the number of advertisements served for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.
Revenue based on our estimate of the geographic location of our users increased by 15% in U.S. and Canada to $470.0 million, Europe revenue increased by 27% to $87.4 million and Rest of World revenue increased by 152% to $17.5 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.
Cost of Revenue
Three Months Ended March 31,
20222021% change
(in thousands)
Cost of revenue$146,070 $133,470 %
Percentage of revenue25 %28 %
Cost of revenue for the three months ended March 31, 2022 increased by $12.6 million compared to the three months ended March 31, 2021. The increase was primarily due to higher absolute hosting costs due to revenue growth.
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Research and Development
Three Months Ended March 31,
20222021% change
(in thousands)
Research and development$195,548 $171,728 14 %
Percentage of revenue34 %35 %
Research and development for the three months ended March 31, 2022 increased by $23.8 million compared to the three months ended March 31, 2021. The increase was primarily due to a 16% increase in average headcount, which drove higher personnel expenses, as well as higher consulting expenses.
Sales and Marketing
Three Months Ended March 31,
20222021% change
(in thousands)
Sales and marketing$173,953 $130,322 33 %
Percentage of revenue30 %27 %
Sales and marketing for the three months ended March 31, 2022 increased by $43.6 million compared to the three months ended March 31, 2021. The increase was primarily due to a 32% increase in average headcount, which drove higher personnel expenses, a $12.0 million increase in marketing expenses, as well as higher consulting expenses.
General and Administrative
Three Months Ended March 31,
20222021% change
(in thousands)
General and administrative$62,979 $72,618 (13)%
Percentage of revenue11 %15 %
General and administrative for the three months ended March 31, 2022 decreased by $9.6 million compared to the three months ended March 31, 2021. The decrease was primarily due to $20.5 million in non-cash charitable contributions made in 2021.
Other Income (Expense), Net
Three Months Ended March 31,
20222021% change
(in thousands)
Interest income$1,088 $1,492 (27)%
Interest expense and other income (expense)(1,576)(1,563)%
Other income (expense), net$(488)$(71)587 %
Other income (expense), net for the three months ended March 31, 2022 decreased by $0.4 million compared to the three months ended March 31, 2021.
Provision for (Benefit from) Income Taxes
Three Months Ended March 31,
20222021% change
(in thousands)
Provision for (benefit from) income taxes$1,128 $(1,305)(186)%
Provision for (benefit from) income taxes was primarily due to income (losses) generated in U.S. federal, state and certain foreign jurisdictions for each of the periods presented.
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Net Loss and Adjusted EBITDA
Three Months Ended March 31,
20222021% change
(in thousands)
Net loss$(5,281)$(21,674)76 %
Adjusted EBITDA$76,795 $83,824 (8)%
Net loss for the three months ended March 31, 2022 was $5.3 million, as compared to $21.7 million for the three months ended March 31, 2021, respectively. Adjusted EBITDA was $76.8 million for the three months ended March 31, 2022, as compared to $83.8 million for the three months ended March 31, 2021, respectively, due to the factors described above. See “Non-GAAP Financial Measure” for more information and for a reconciliation of net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA.
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Liquidity and Capital Resources
We finance our operations primarily through payments received from our customers. Our primary uses of cash are personnel-related costs and the cost of hosting our website and mobile application. As of March 31, 2022, we had $2,678.1 million in cash, cash equivalents and marketable securities. Our cash equivalents and marketable securities are primarily invested in short-duration fixed income securities, including government and investment-grade corporate debt securities and money market funds. As of March 31, 2022, $125.5 million of our cash and cash equivalents was held by our foreign subsidiaries.
In November 2018, we entered into a five-year $500.0 million revolving credit facility with an accordion option which, if exercised, would allow us to increase the aggregate commitments by the greater of $100.0 million and 10% of our consolidated total assets, provided we are able to secure additional lender commitments and satisfy certain other conditions. Interest on any borrowings under the revolving credit facility accrues at either LIBOR plus 1.50% or at an alternative base rate plus 0.50%, at our election, and we are required to pay an annual commitment fee that accrues at 0.15% per annum on the unused portion of the aggregate commitments under the revolving credit facility.
The revolving credit facility also allows us to issue letters of credit, which reduce the amount we can borrow. We are required to pay a fee that accrues at 1.50% per annum on the average aggregate daily maximum amount available to be drawn under any outstanding letters of credit.
The revolving credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict our ability to incur indebtedness, grant liens, make distributions to holders of our stock or the stock of our subsidiaries, make investments or engage in transactions with our affiliates. The revolving credit facility also contains two financial maintenance covenants: a consolidated total assets covenant and a minimum liquidity balance of $350.0 million, which includes any available borrowing capacity. The obligations under the revolving credit facility are secured by liens on substantially all of our domestic assets, including certain domestic intellectual property assets. We are in compliance with all covenants, and there were no amounts outstanding under this facility as of March 31, 2022.
We believe our existing cash, cash equivalents and marketable securities and amounts available under our revolving credit facility will be sufficient to meet our working capital and capital expenditure needs over at least the next 12 months, though we may require additional capital resources in the future. We may elect to raise additional capital through the sale of additional equity to fund our future needs beyond the next 12 months.
There have been no material changes to our non-cancelable contractual commitments since December 31, 2021.
For the three months ended March 31, 2022 and 2021, our net cash flows were as follows (in thousands):
Three Months Ended March 31,
20222021
Net cash provided by (used in):
Operating activities$213,389 $270,579 
Investing activities$49,404 $(35,058)
Financing activities$1,036 $9,344 
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Operating Activities
Cash flows from operating activities consist of our net loss adjusted for certain non-cash reconciling items, such as share-based compensation expense, depreciation and amortization, non-cash charitable contributions and changes in our operating assets and liabilities. Net cash provided by operating activities decreased by $57.2 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily due to timing of payments to vendors.
Investing Activities
Cash flows from investing activities consist of capital expenditures for improvements to new and existing office spaces. We also actively manage our operating cash and cash equivalent balances and invest excess cash in short-duration marketable securities, the sales and maturities of which we use to fund our ongoing working capital requirements. Net cash provided by (used in) investing activities increased by $84.5 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily due to decreased purchases and increased maturities offset by decreased sales of marketable securities.
Financing Activities
Cash flows from financing activities consist of proceeds from the exercise of stock options. Net cash provided by financing activities decreased by $8.3 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.
Critical Accounting Policies and Estimates
We prepare our condensed consolidated financial statements in accordance with GAAP. Preparing our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses as well as related disclosures. Because these estimates and judgments may change from period to period, actual results could differ materially, which may negatively affect our financial condition or results of operations. We base our estimates and judgments on historical experience and various other assumptions that we consider reasonable, and we evaluate these estimates and judgments on an ongoing basis. We refer to such estimates and judgments, discussed further below, as critical accounting policies and estimates.
Refer to Note 1 to our condensed consolidated financial statements for further information on our other significant accounting policies.
Revenue Recognition
We generate revenue by delivering ads on our website and mobile application. We recognize revenue only after transferring control of promised goods or services to customers, which occurs when a user clicks on an ad contracted on a CPC basis, views an ad contracted on a CPM basis or views a video ad contracted on a CPV basis. We typically bill customers on a CPC, CPM or CPV basis, and our payment terms vary by customer type and location. The term between billing and payment due dates is not significant.
We recognize revenue only after satisfying our contractual performance obligations. We occasionally offer customers free ad inventory. When contracts with our customers contain multiple performance obligations, we allocate the overall transaction price, which is the amount of consideration to which we expect to be entitled in exchange for promised goods or services, to each of the distinct performance obligations based on their relative standalone selling prices. We generally determine standalone selling prices based on the effective price charged per contracted click, impression or view, and we do not disclose the value of unsatisfied performance obligations because the original expected duration of our contracts is generally less than one year.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks, including changes in foreign currency exchange and interest rates, in the ordinary course of our business.
Foreign Currency Exchange Risk
Our reporting currency is the U.S. dollar, and the functional currency of our subsidiaries is either their local currency or the U.S. dollar, depending on the circumstances. While the majority of our revenue and operating expenses are denominated in U.S. dollars, we have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar. We have experienced and will continue to experience fluctuations in our net income (loss) as a result of transaction gains or losses related to revaluing certain asset and liability balances denominated in currencies other than the functional currency of the subsidiaries in which they are recorded. To date, these fluctuations have not been material. We have not engaged in hedging activities relating to our foreign currency exchange risk, although we may do so in the future. We do not believe a 10% increase or decrease in the relative value of the U.S. dollar would have materially affected our condensed consolidated financial statements as of and for the three months ended March 31, 2022.
Interest Rate Risk
As of March 31, 2022, we held cash, cash equivalents and marketable securities of $2,678.1 million. Our cash equivalents and marketable securities primarily consist of short-duration fixed income securities, including government and investment-grade corporate debt securities and money market funds, and our investment policy is meant to preserve capital and maintain liquidity. Changes in interest rates affect the interest income we earn on our cash, cash equivalents and marketable securities and the fair value of our cash equivalents and marketable securities. A hypothetical 100 basis point increase in interest rates would have decreased the market value of our cash equivalents and marketable securities by $6.5 million and $8.1 million as of March 31, 2022 and December 31, 2021, respectively.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer ("CEO") and chief financial officer ("CFO"), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our CEO and CFO have concluded that as of March 31, 2022, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission ("SEC"), and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are currently involved in, and may in the future be involved in, actual and threatened legal proceedings, claims, investigations and government inquiries arising in the ordinary course of our business, including legal proceedings, claims, investigations and government inquiries involving intellectual property, data privacy and data protection, privacy and other torts, illegal or objectionable content, consumer protection, securities, corporate governance, employment, workplace culture, contractual rights, civil rights infringement, false or misleading advertising, or other legal claims relating to content or information that is provided to us or published or made available on our service. This risk is enhanced in certain jurisdictions outside of the United States where our protection from liability for content published on our platform by third parties may be unclear and where we may be less protected under local laws than we are in the United States.
For information on certain litigation we are involved in, see "Legal Matters" in Note 3 of the accompanying notes to our condensed consolidated financial statements, which is incorporated herein by reference.
Although the results of the actual and threatened legal proceedings, claims, investigations and government inquiries in which we currently are involved cannot be predicted with certainty, we do not believe that there is a reasonable possibility that the final outcome of these matters will have a material adverse effect on our business or financial results. Regardless of the final outcome, however, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, harm to our reputation and brand, and other factors.
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Item 1A. Risk Factors
Investing in our Class A common stock involves a high degree of risk. In addition to the other information set forth in this Quarterly Report, you should carefully consider the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed consolidated financial statements and related notes, before deciding to invest in our Class A common stock. The occurrence of any of the following risks could harm our business, reputation, revenue, financial results and prospects. In addition, risks and uncertainties that are not presently known to us or that we currently believe are immaterial could also harm our business, revenue, financial results and prospects. If any of these risks occur, the value of our Class A common stock could decline and you may lose all or part of your investment.
Risks Related to our Business Strategy and Growth
We are in the early stages of our monetization efforts and there is no assurance we will be able to continue to scale our business for future growth.
We are in the early stages of our monetization efforts and are still growing and scaling our revenue model. Our growth strategy depends on, among other things, attracting more advertisers (including expanding our sales efforts to reach advertisers in additional international markets), scaling our business with existing advertisers and expanding our advertising product offerings. There is no assurance that this revenue model will continue to be successful or that we will generate increasing revenue. We do not know if we can sustain the historical growth rate of our revenue. To sustain or increase our revenue, we must obtain new advertisers, encourage existing advertisers to maintain or increase their advertising spend on our platform, expand the number of markets where we offer advertising and increase the breadth and functionality of our advertising offerings, including new advertising formats and measurement tools.
In order to obtain new advertisers and further our relationship with current advertisers, we must increase the size of our user base or the engagement of our users. There is no assurance that our user retention, growth or engagement strategy will be successful or that we will maintain or increase the number of users on our service. Further, if we are unable to scale or maintain our relationships with our large advertisers, our business, revenue and financial results could be harmed.
To continue to maintain and grow our advertiser base and our revenue, we depend on our ability to effectively serve enough advertisements that meet the objectives of our advertisers while maintaining a high quality user experience. If we are unable to do this on our platform due to factors such as a decline in user growth or user engagement, or changes in product features or user behavior where users engage increasingly with product features where we may not be able to display as many advertisements, our business, revenue and financial results could be harmed.
In addition, to scale the growth of our ad platform, we will have to successfully develop and target ad products based on Pinners’ personal taste and interests, which will require broad and diverse Pinner data. If we are unable to do this with the data, technology and resources available to us, we may need to consider alternatives, such as partnerships, to grow our business. If we choose not to pursue these partnerships, or if these partnerships are unsuccessful, our business may prove less scalable, and our business, revenue and financial results could be harmed.
Our ecosystem of Pinners and advertisers depends on our ability to attract, retain and engage our user base. If we fail to add new Pinners or retain or recover Pinners, or if Pinners engage less with us, our business, revenue and financial results could be harmed.
We must attract, grow, retain and engage our users on our platform, who we call Pinners. Our active Pinners may not grow, and may continue to decline.
If current and potential Pinners do not perceive their experience with our service to be useful, or the content that we serve to them to be relevant to their personal taste and interests, we may not be able to attract new Pinners, retain existing Pinners, recover past Pinners or maintain or increase the frequency and duration of Pinners' engagement. Pinner engagement has and may continue to fluctuate depending on factors beyond our control, such as changes to daily life as the COVID-19 pandemic continues to subside. Although we saw a higher number of Pinners and higher Pinner engagement during the peak of the COVID-19 pandemic in 2020, we have experienced and may continue to experience declines in the number of Pinners and lower levels of Pinner engagement since then.
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We anticipate that our active user growth rate will decline over time if the size of our active user base increases or we achieve higher market penetration rates. As a result, our financial performance will increasingly depend on our ability to increase Pinner engagement and our monetization efforts. We also may not be able to penetrate certain demographics in a meaningful manner to grow the number of Pinners. For example, in the United States, historically a substantial majority of our Pinners have been women of ages 18-64. We may not be able to further increase the number of Pinners in this demographic and may need to increase the number of Pinners in other demographics, such as men and international users, in order to grow our users.
Our ability to serve advertisements on our platform, and therefore the value proposition for our advertisers, depends on the size and engagement of our user base. Our growth efforts are not currently focused on increasing the number of daily active users, and we do not anticipate that most of our users will become daily active users. Therefore, even if we are able to increase demand for our advertising products, we may not be able to deliver those advertisements if we cannot also increase the size and engagement of our user base, which could harm our business, revenue and financial results.
There are many other factors that could negatively affect user growth, retention and engagement, including if:
our competitors mimic our products or product features or create more engaging platforms or products, causing Pinners to utilize their products instead of, or more frequently than, our products;
we do not provide a compelling Pinner experience because of the decisions we make regarding our products or the type and frequency of advertisements that we display;
our content is not relevant to Pinners’ personal taste and interests;
search queries by Pinners do not yield relevant results;
third parties do not permit or continue to permit their content to be displayed on our platform;
Pinners have difficulty or are blocked from installing, updating or otherwise accessing our service on mobile devices or web browsers;
there are changes in the amount of time Pinners spend across all applications and platforms, including ours;
Pinners use or spend more time on other platforms that they feel are more relevant or engaging;
we are unable to attract creators to create engaging and relevant content on our platform;
technical or other problems frustrate the Pinner experience, particularly if those problems prevent us from delivering our service in a fast and reliable manner;
users are located in countries with low smartphone penetration or with lack of cellular based data network since our products typically require high bandwidth data capabilities;
changes in regulations or our contractual arrangements that adversely impact our access to, and use of, zero-rating offers or other discounts or data usage for our service;
we are unable to address Pinner and advertiser concerns regarding the content, privacy and security of our service;
we are unable to combat spam, harassment, cyberbullying, discriminatory, political or other hostile, inappropriate, misleading, abusive or offensive content or usage on our products or services;
Pinners adopt new technologies that block our products or services or where our products or services may be displaced in favor of other products or services, or may not be featured or otherwise available;
third-party initiatives that may enable greater use of our service, including low-cost or discounted data plans, are discontinued;
merchants on Pinterest do not provide Pinners with positive shopping experiences, for example, if products are not of the quality depicted on the platform or not readily available for purchase;
there are macro level conditions that are beyond our control, such as the COVID-19 pandemic and Russia’s recent invasion of Ukraine cause users to spend less time on our platform; or
the other risks and uncertainties described in this Quarterly Report on Form 10-Q.
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If our existing Pinners do not continue to utilize our service or our user base does not grow or we need to educate Pinners how to utilize new products and product features that we introduce, such as live stream content and video, we may be required to incur significantly higher marketing expenses than we currently anticipate.
Any decrease in user growth, retention or engagement could render our service less attractive to Pinners or advertisers, and could harm our business, revenue and financial results.
If we are not able to continue to provide content that is useful and relevant to Pinners’ personal taste and interests or fail to remove objectionable content or block objectionable practices by advertisers or third parties, user growth, retention or engagement could decline, which could result in the loss of advertisers and revenue.
Our success depends on our ability to provide Pinners with content, including advertisements, that is useful and relevant to their personal taste and interests, which in turn, depends on the content contributed by our users, creators and advertisers and the manner in which we present that content to Pinners. Pinners engage with content that is relevant to their country, language and gender preferences as well as their personal interests and intent. We may not correctly or timely identify and serve content that is useful and relevant to Pinners. In addition, new content and new or different forms of content we distribute may not have as much relevancy signal for optimal distribution of the pins as prior content and forms of content that have been saved repeatedly on our platform which may result in lower Pinner engagement with such content. For example, we are investing in publishing more native content and short form video content on our platform, including the distribution of Idea Pins. Pinner engagement has declined and may continue to decline as we learn to distribute this native and short form video content efficiently and as Pinners learn new ways to use and navigate our platform. As a result, we may not be able to provide adequate, useful or relevant content to our users. Content that is not visually pleasing, is not intuitive or easy to use or is not in the desired language may not be engaging for Pinners, especially in non-U.S. markets. If Pinners do not believe that we offer content that is useful and relevant to their personal taste and interests, user growth, retention or engagement may decline, which could result in the loss of advertisers and revenue.
Some of the actions that we may take to make our content more useful and relevant may reduce traffic that we drive from our platform to the websites of third parties, which may reduce their willingness to contribute or continue availability of their content on our service. We endeavor to keep divisive, disturbing or unsafe content off our service. We do this by deleting or hiding certain types of content, even if this content would be permitted on other platforms, which could result in a decrease in user growth, retention or engagement. We apply significant judgment in making these determinations and may be unsuccessful in our efforts to remove this content in a manner that is (or is perceived to be) consistently applied and on a timely basis or at all, which could also result in a decrease in user growth, retention or engagement. Further, if we fail to identify and keep off our service advertisers and merchants who offer poor quality goods or fail to deliver goods to their customers, we may lose Pinner confidence. In addition, controversies regarding content on other social media platforms, such as the boycott of Facebook and Twitter by some advertisers and the allegations of the impact of social media on the mental health of users, may impact user engagement and advertising spending on our platform, which could adversely affect our business and revenue. Any of these factors could result in decrease in user growth, retention or engagement.
We regularly monitor how our advertising affects Pinners’ experiences in our effort to avoid delivering too many advertisements or irrelevant advertisements to Pinners. Therefore, we may decide to change the number of advertisements or eliminate certain types of advertisements to maintain Pinners’ satisfaction in the service. We may make changes to our platform based on feedback provided by Pinners or advertisers. These decisions may not produce the short-term or long-term benefits that we expect, in which case user growth, retention and engagement, our relationships with advertisers, and our business, revenue and financial results could be harmed.
Current and future data privacy laws and regulations, including the General Data Protection Regulation (“GDPR”) and California Consumer Privacy Act of 2018 (the “CCPA”), the California Privacy Rights Act (the "CPRA"), or new interpretations of existing laws and regulations, may limit our ability to collect and use data, which may impact our ability to effectively deliver relevant content. These laws and regulations may also impact our ability to expand advertising on our platform, as they may impede our ability to deliver targeted advertising and accurately measure our ad performance. Additionally, even if not prohibited by data privacy laws and regulations, we may elect not to collect certain types of data if we believe doing so would be inconsistent with our Pinners’ expectations, if the source is unreliable or for any other reason. Similarly, the increase in media attention about online privacy and data protection may motivate Pinners to take certain actions to protect their privacy. Pinners may elect not to allow data sharing for a number of reasons, such as data privacy concerns. This could impact our ability to deliver relevant content aligned
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with Pinners’ personal taste and interests. Additionally, the impact of these developments may disproportionately affect our business in comparison to certain peers in the technology sector that, by virtue of the scope and breadth of their operations or user base, have greater access to user data.
Substantially all our revenue is generated from advertising, and a decline in user growth, retention or engagement as a result of our inability to provide relevant and useful content to Pinners, and therefore our inability to serve the volume of advertisements desired by our advertisers, may deter new advertisers from using our platform or cause current advertisers to reduce their spending with us or cease doing business with us altogether, which could harm our business, revenue and financial results.
If we are unable to compete effectively for users, our business, revenue and financial results could be harmed.
We face significant competition to attract, retain and engage users and for their time and attention. We compete with consumer internet companies that are either tools (search, e-commerce, creator tools) or media (newsfeeds, video, social networks).
We compete with large, established companies and companies that offer widely used products, such as Amazon, Meta (including Instagram), Google (including YouTube), Snap, TikTok and Twitter, which provide their users with a variety of online products, services, content (including video), creator incentives and offerings, and advertising offerings, including web search engines, social networks and other means of discovering, using or acquiring goods and services. Many of these competitors have longer operating histories, significantly greater financial, technical, research, marketing and other resources and larger user bases than we do. Many of these competitors also have access to larger volumes of data and platforms that are used on a more frequent basis than ours, which may enable them to better understand their user base and develop and deliver more relevant content.
Our competitors have previously and may continue to develop technology, products, services or interfaces that are similar to our existing and future products quickly and at scale, or that achieve greater market acceptance than our products, including by Pinners, advertisers, creators and other third parties. Some of our competitors also operate existing products that have significant market power in certain market sectors and could use that market power to advance their own products or services that compete with ours. For example, Amazon, Google, Snap, Facebook and Instagram have introduced shopping platforms, including similar offerings such as camera search functionality. In the area of live events, Amazon, Instagram, Facebook, YouTube, TikTok, and Snap are all expanding their video-based and live shopping experiences. In the area of content, TikTok has launched a series of features and integrations that add, for example, recipes to cooking videos or step-by-step instructions for DIY or How To videos. These competitors may engage in more extensive research and development efforts and undertake more extensive marketing campaigns, which may allow them to build larger, more engaged user bases than we have. Also, some of our existing or potential competitors operate products or services from which we currently derive substantial value, such as search engines and email, and those competitors could reduce or eliminate the value and information we receive.
We also face competition from smaller companies in one or more high-value verticals, including Allrecipes, Houzz and Tastemade, that offer users engaging content and commerce opportunities through similar technology, products, features or services to ours. In addition, emerging startups may be able to innovate and provide technology, products, services or features similar to ours or before us.
Our competitors may be able to respond more quickly than we can to new or emerging technologies and changes in user preferences. Barriers to entry in our industry are low, and our intellectual property rights may not be sufficient to prevent competitors from launching comparable products or services.
In emerging international markets, where mobile devices often lack large storage capabilities, we may also compete with other applications for the limited space available on a user’s mobile device.
We believe that our ability to compete for users depends upon many factors both within and beyond our control, including: