WEBVTT - Pinterest CEO Bill Ready Talks 2nd Quarter Earnings

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Pinterest is ending the week on a high note, the

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<v Speaker 2>company's second quarter revenue topping guidance, easing investor concerns about

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<v Speaker 2>an advertising slowdown. Pinterest also saying that it's AI investments

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<v Speaker 2>are beginning to pay off. The CEO of the company,

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<v Speaker 2>Bill Ready, saying, our ability to leverage AI to personalize

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<v Speaker 2>our users experience is a key differentiator. It also makes

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<v Speaker 2>us a highly valuable partner to advertisers. He joins US

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<v Speaker 2>now along with Bloomberg Technologies. Caroline Hyde, Bill, thanks for

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<v Speaker 2>coming on the program. Really appreciate it. I'm fascinated by

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<v Speaker 2>really the sell through revenue that you can get, not

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<v Speaker 2>as much the advertising, but because of the way I

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<v Speaker 2>use the Internet, because of the way I want to

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<v Speaker 2>use Pinterest. I search for things that I want or need,

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<v Speaker 2>and I want to just click through and buy them.

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<v Speaker 2>How much are you to making that, you know, a

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<v Speaker 2>very profitable reality.

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<v Speaker 3>Yeah, I mean we've had a huge transformation in our

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<v Speaker 3>business over the last three years where we've really made

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<v Speaker 3>Pinterest a shopping destination for our users. And exactly to

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<v Speaker 3>your question, you know, Pinterest historically was great for window shopping,

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<v Speaker 3>but you really couldn't click or take action. Over the

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<v Speaker 3>last three years, we've really opened up those stores, so

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<v Speaker 3>it's not just window shopping. Now you can easily click

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<v Speaker 3>and purchase with some really seamless examples. You can link

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<v Speaker 3>your Amazon account, you can have a one click buying

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<v Speaker 3>experience right inside of our app. And there's a lot

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<v Speaker 3>that we're doing to really drive clicks and conversions and

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<v Speaker 3>sales for our advertisers. But for our users, it's just

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<v Speaker 3>really great shopping and seamless buying right on our platform.

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<v Speaker 1>And let's just talk about the resilience of those consumers,

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<v Speaker 1>the buying and indeed the advertisers bill because it's not

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<v Speaker 1>exactly a feeling of economic nirvana out there right now,

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<v Speaker 1>but still you're managing to give us a forecast unlike

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<v Speaker 1>rivals in the social media space. What gives you that clarity,

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<v Speaker 1>what gives you that resilience in the business.

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<v Speaker 3>Well, you know, back to what we've done for our

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<v Speaker 3>users in turning interest into a shopping destination pinteresses where

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<v Speaker 3>gen Z goes to shop. Gen Z is now our

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<v Speaker 3>largest fastest growing demographic, over forty percent of our users,

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<v Speaker 3>and you know they're coming here to shop. We're giving

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<v Speaker 3>them a great shopping destination. But you know that has

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<v Speaker 3>allowed us to deliver great performance for our advertisers. We've

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<v Speaker 3>delivered a performance advertising platform where advertisers can get clicks

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<v Speaker 3>and conversions and great performance. We're giving them AI enabled tools,

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<v Speaker 3>so it's easier than ever for them to go create

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<v Speaker 3>campaigns on Pinterest and see really great returns on that.

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<v Speaker 3>So that's the other side of the businesses that we've

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<v Speaker 3>made Pinterest a shopping destination. Eighty five percent of our

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<v Speaker 3>users come to us directly, and then we connect them

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<v Speaker 3>with advertisers and make it really easy for advertisers to

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<v Speaker 3>connect with those users in this moment where they're in

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<v Speaker 3>market looking for something to buy but haven't decided what

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<v Speaker 3>to buy. That's a great moment for those two to meet,

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<v Speaker 3>and we see that continue to accelerate. We're all time

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<v Speaker 3>highs on users and all time highs on depth of

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<v Speaker 3>engagement per user, really driven by AI and the personalization there,

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<v Speaker 3>and then how we're connecting shoppers and sellers.

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<v Speaker 1>So is that keeping the likes of Timu and Sin

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<v Speaker 1>who a lot of those gen zs are going to

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<v Speaker 1>buy on your platform? Is that sticking around because many

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<v Speaker 1>had worried because of the towers, because of the difficulty

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<v Speaker 1>accessing the US and consumer in terms of a price point,

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<v Speaker 1>what we'd see retrenchment in terms of ads from those companies.

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<v Speaker 3>Yeah, Well, we're a global platform, you know, or over

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<v Speaker 3>you know, five hundred and seventy million users. Eighty percent

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<v Speaker 3>of those are outside the US, and so we noted

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<v Speaker 3>as others that for Asian cross border sellers, you know,

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<v Speaker 3>that has slowed down coming into the US, as others

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<v Speaker 3>have noted as well. But we're seeing those sellers sell

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<v Speaker 3>more globally and we're helping them to connect to other

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<v Speaker 3>markets around the world. Here in the US. Consumers are resilient.

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<v Speaker 3>You know, there's lots of public spending information that says

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<v Speaker 3>that consumers are still shopping. We went through a major

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<v Speaker 3>supply chain disruption just a few years ago during the pandemic,

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<v Speaker 3>and you know, we all saw, you know, things are

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<v Speaker 3>out of stock and consumers found other ways to buy,

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<v Speaker 3>other things to buy, and we see that happening on

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<v Speaker 3>our platform. That while you have things like budget conscious searches,

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<v Speaker 3>like you know, budget friendly recipes or you know budget

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<v Speaker 3>you know party decorations, budget party favors, and those kinds

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<v Speaker 3>of things up to two hundred percent plus here on here.

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<v Speaker 3>People find substitute products, they find other ways to go

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<v Speaker 3>sort of bring delight into their life, and we're a

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<v Speaker 3>great place to help them do that in a great

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<v Speaker 3>place for advertisers to see these shifting consumer trends.

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<v Speaker 2>So I'm fascinated. Did you say eighty percent of your

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<v Speaker 2>users are outside of the US or the US approximately years?

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<v Speaker 3>Okay, so approximate a percent users outside US?

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<v Speaker 2>What's the mix of sales? So for US consumers, you know,

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<v Speaker 2>I'm looking at stuff all the time that's arrow leathers

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<v Speaker 2>in Scotland or the real McCoy's in Tokyo. So all

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<v Speaker 2>of the products that I'm looking for, for the most part,

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<v Speaker 2>except for Westco Boots in California, are coming from overseas.

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<v Speaker 2>What's the mix right now for US shoppers through Pinterest

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<v Speaker 2>on overseas products versus made in the US say stuff?

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<v Speaker 3>Well, I would say we'd track the market generally on

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<v Speaker 3>on that. But the opportunity for us with eighty percent

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<v Speaker 3>of the users be outside the US is that you know,

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<v Speaker 3>we have eighty percent of our users outside the US,

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<v Speaker 3>but rough only twenty percent of our revenue outside the US.

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<v Speaker 3>So the shopping playbook that we've created over the last

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<v Speaker 3>few years, that's really working in North America for US.

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<v Speaker 3>We're now exporting that to other markets and we're seeing

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<v Speaker 3>that shopping playbook really take hold in other markets as well.

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<v Speaker 3>So that's a big part of our forward looking opportunity.

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<v Speaker 3>And here in the US we continue to grow rapidly

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<v Speaker 3>as well, particularly you know on our depth of engagement,

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<v Speaker 3>really making Pinterest a shopping destination. And again, consumers are resilient.

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<v Speaker 3>You know, if some things aren't available to them, they're

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<v Speaker 3>going to be creative and find other ways to buy.

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<v Speaker 3>And you know, even if their pocket gets pinched. You know,

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<v Speaker 3>we are a place for intentional purpose purchases, not just

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<v Speaker 3>impulse purchases. So you know, we see highly considered purchases

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<v Speaker 3>on our platform. Our users are planful and so if

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<v Speaker 3>they go through a moment where they need to be

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<v Speaker 3>a little bit more thoughtful about what they buy, are

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<v Speaker 3>a little bit more creative about where to get it,

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<v Speaker 3>that's exactly what people do on our platform, and we

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<v Speaker 3>think that'll be a great moment for us to shine.

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<v Speaker 1>You talk about that depth of engagement and in many

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<v Speaker 1>ways that's driven by the AI investment you've made and

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<v Speaker 1>the fact that you're personalizing it. You call it a differentiator.

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<v Speaker 1>How is it differentiating you when we see meta also

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<v Speaker 1>plowing a lot of money into AI and offering that

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<v Speaker 1>to advertisers too, what's the secret source that you've had.

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<v Speaker 3>So for us? You know, the really uniquely on our

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<v Speaker 3>platform is that Pinterest is the only place in the

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<v Speaker 3>Western world where users not only shop, but they also curate.

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<v Speaker 3>So you know, you know, there's plenty of other places

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<v Speaker 3>through third party cookies and things like that that could

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<v Speaker 3>say they know everything you've bought and everything in your closet,

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<v Speaker 3>but they have no idea how you style that into

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<v Speaker 3>an outfit. They don't know your taste. On Pinterest, hundreds

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<v Speaker 3>millions of people every day are styling their outfits, deciding,

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<v Speaker 3>you know, what handbag to go with, what pair of

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<v Speaker 3>shoes with what dress, And so we learn people's taste.

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<v Speaker 3>I talked about on our call. Our taste graph has

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<v Speaker 3>grown by over seventy five percent over the last two years,

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<v Speaker 3>and that really unique signal lets us train AI to

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<v Speaker 3>be really really personal is the way that manifests for

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<v Speaker 3>our users. If you go ask a gens the user

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<v Speaker 3>why they go to Pinterest. What they'll say is Pinterest

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<v Speaker 3>just gets me. Well, that is the use of AI

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<v Speaker 3>trained on that really unique signal where we understand not

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<v Speaker 3>only their style and taste, but when somebody else bought

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<v Speaker 3>that same handbag, how did they put an outfit together

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<v Speaker 3>around that. That is really really great personalization, that's really

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<v Speaker 3>helpful to our user and again totally unique in that

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<v Speaker 3>signal that we have that we're able to do differentiated

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<v Speaker 3>things with AI because of that unique signal of the

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<v Speaker 3>from the curation that users do on our platform.

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<v Speaker 2>I'm wondering about partnerships. You mentioned recipes earlier, and that's

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<v Speaker 2>probably the main thing that I do on a daily

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<v Speaker 2>basis with Pinterest. I save recipes that I like there

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<v Speaker 2>and then I go to Pinterest when I'm ready to

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<v Speaker 2>cook them. Can you partner up with, for example, on Instacart,

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<v Speaker 2>to use your AI find all the ingredients I need

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<v Speaker 2>and then say, like, you know, click this button to

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<v Speaker 2>order all the stuff you need for this recipe.

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<v Speaker 3>You know, what we're seeing is that our visual search

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<v Speaker 3>technology is working across many many categories. Shopping has been

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<v Speaker 3>a first area of focus for us, but there are

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<v Speaker 3>many adjacent categories that works for and the way we

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<v Speaker 3>think about that is partnering closely with great retailers, great

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<v Speaker 3>brands to connect them directly to a customer. So I

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<v Speaker 3>think those opportunities continue to abound. And you know, in

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<v Speaker 3>terms of that visual search capability, one of the things

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<v Speaker 3>that we talked about on our call yesterday is we

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<v Speaker 3>just launched a new multimodal AI model for visual search

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<v Speaker 3>that outperforms off the shelf models by over thirty percent.

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<v Speaker 3>So just to make it really tangible how much better

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<v Speaker 3>those recommendations are because of that unique signal. Outperforming the

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<v Speaker 3>you know, the best off the shelf models by over

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<v Speaker 3>thirty percent gets to really just how unique our capabilities

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<v Speaker 3>are there. And that makes us a great partner for

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<v Speaker 3>many And you've seen us partner with Amazon, You've seen

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<v Speaker 3>us partner you know, with large retailers, and we're now

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<v Speaker 3>expanding that to more and more other great partners, and

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<v Speaker 3>so there are many more forward opportunities for us on that.

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<v Speaker 2>All right, Bill, thanks so much for joining us on

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<v Speaker 2>what must be a very busy day for you. Bill

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<v Speaker 2>ready there the CEO having Pinterest