Categories Earnings Call Transcripts, Technology

Pinterest, Inc.  (NYSE: PINS) Q1 2020 Earnings Call Transcript

PINS Earnings Call - Final Transcript

Pinterest, Inc.  (PINS) Q1 2020 earnings call dated May 05, 2020

Corporate Participants:

Jane Penner — Head of Investor Relations

Ben Silbermann — Co-Founder and Chief Executive Officer

Todd Morgenfeld — Chief Financial Officer

Analysts:

Ross Sandler — Barclays — Analyst

Mark Mahaney — RBC Capital Markets — Analyst

Mark Shmulik — Bernstein — Analyst

Justin Post — Bank of America Merrill Lynch — Analyst

Lloyd Walmsley — Deutsche Bank — Analyst

Heath Terry — Goldman Sachs — Analyst

Stephen Ju — Credit Suisse — Analyst

Doug Anmuth — J.P. Morgan — Analyst

Michael Levine — Pivotal Research — Analyst

Presentation:

Operator

Good evening. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pinterest First Quarter Earnings Conference Call. [Operator Instructions] Thank you. Jane Penner, Head of Investor Relations for Pinterest, you may begin your conference.

Jane Penner — Head of Investor Relations

Thank you, Brent. Good afternoon and thank you for joining us. Welcome to Pinterest’s earnings conference call for the first quarter ended March 31, 2020. Joining me today on the call are Ben Silbermann, our President and CEO; and Todd Morgenfeld, our Chief Financial Officer.

Now, I’ll cover the Safe Harbor. Some of the statements that we make today regarding our business and financial performance and operations, including the impact of COVID-19 pandemic, may be considered forward-looking. And such statements involve a number of risks and uncertainties that could cause actual results to differ materially. Our results for Q2 2020 are preliminary and may not be an indication of future performance. We are making these forward-looking statements based on information available to us as of today, and we disclaim any duty to update them later, unless required by law. For more information, please refer to the risk factors discussed in our most recent Form 10-Q or 10-K filed with the SEC and available on the Investor Relations section of our website.

During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today’s earnings press release and letter to shareholders, which are distributed and available to the public through our Investor Relations website located at investor.pinterestinc.com.

And now, I’ll turn the call over to Ben.

Ben Silbermann — Co-Founder and Chief Executive Officer

Good afternoon and thanks for joining us today. Obviously, the world has changed a lot since we did our last call back in February. And on behalf of our entire company, I just want to thank all the heroes out there who are helping people through this tough time. Like every person and every business, we’re figuring out how to manage and work through the current health and economic crisis, and that starts with making sure our employees are safe and healthy. It also means ensuring that Pinterest is a valuable resource for people as they adjust to life in this new reality.

Over the last month and a half, we’ve learned that our mission of bringing everyone inspiration to their lives has never been more relevant than it is right now. Over the past weeks, we’ve seen record high engagement from existing users, resurrected users and new users. Prior to COVID-19, we saw gains driven by product investments that are detailed in this quarter’s and past shareholder letters. The stay-at-home orders that began in mid-March significantly accelerated this trend. When the COVID crisis began, we immediately prioritized the safety of our users by helping them find reliable health information during the pandemic. And as people saw practical solutions for challenges created by the crisis, they discovered new ways to use Pinterest and also deepened their existing uses of services. They search for things like recipes for freezer-friendly meals, getting ideas for home schooling, researching home gym equipment or figuring out how to do haircuts from home. We’re proud that Pinterest is helping people all over the world get through this difficult time.

We’re also working with advertisers as they adjust to this new economic climate. The quarter began with the continuation of the strength we’ve seen in Q4. But the pandemic began to impact our business during March. As offline stores closed around the world, many advertisers slowed or paused their advertising spending on Pinterest. For those advertisers that paused, we’re sharing our insights to help them plan and eventually reaccelerate and reactivate their spend. Pinterest is where consumers have always looked for ideas and plan their lives, and we’re offering CMOs valuable insights to help them decide how to spend their 2020 budgets. For those advertisers that continue to spend, we’ve seen a shift away from awareness campaigns and towards highly performing adds, an area we’ve invested heavily in over the past year. As a result, our conversion optimization ads and shopping ads are much bigger part of our product mix today than they were a year ago. These ads are delivering real value to marketers with ROI accountable objectives, particularly as Pinners’ engagement with shopping surfaces has increased significantly over the same period.

Finally, while we are working to help Pinners and advertisers through this current crisis, we remain firmly committed to our long-term strategies. We continue to invest in our vision to be the home of the Internet’s most inspiring content, to help users discover more ways to use Pinterest in their lives, to let Pinners easily purchase things they find on our surface, and to create value for a much more diverse base of advertisers. We have the benefit of having a balance sheet that allows us to continue to pursue these outcomes.

As you know, we withdrew annual guidance because we have limited visibility into future advertiser demand. That remains the case, but Todd and I will continue to provide as much transparency into our current business as possible as things evolve in the coming months.

With that, we’ll turn it over to Q&A. Brent, we’re ready for our first question.

Questions and Answers:

Operator

Your first question comes from the line of Ross Sandler with Barclays. Your line is now open.

Ross Sandler — Barclays — Analyst

Hey, guys. just a couple of questions. First is, can you tell us what you’re seeing thus far in 2Q? And if we look at your retail advertiser category, how much of the revenue is coming from digitally native e-commerce companies versus retailers that have a big offline stores presence? And could you talk about what you’re seeing, I guess, broadly across retail and CPG thus far in 2Q?

And then, the second question is, Ben, you mentioned in the letter that usage dipped a little bit in the early days of the quarantine, and you just mentioned that we’re now seeing like record engagement. So is — record means a lot of things, given that you guys are growing. I guess, the question is, are MAU growth rates accelerating in April, or since late March and into April as a result of COVID relative to the 6% US growth rate and 34% international growth rate in 1Q? Thanks a lot.

Ben Silbermann — Co-Founder and Chief Executive Officer

Sure. Ross, why don’t I start with your second question on engagement, and then Todd will talk about outlook in Q2 and sort of what we’re seeing in retail and CPG? So, as mentioned in the shareholder letter, when the pandemic first started, we saw an initial dip in engagement as people just got prepared. And then, we saw steadily rising engagement. We saw that across both brand-new users, so roughly 50% of engagement we saw were from people that were new to Pinterest. We also saw significant growth amongst existing users and resurrected users. So across all fronts, we saw really strong engagement. And we’ve talked in past calls about how we look at a basket of different metrics. Across all those metrics, we saw pretty significant increases. So for example, searches were up more than 60% year-over-year. New board creations, which to us indicate that people are using Pinterest for new use cases, were up 60% year-on-year. Pinner views on their own boards, that was also up 60%. And then, we continue to see strong growth in usage of video, which has been a longstanding trend.

As we look forward into April, there are probably two aspects. First, we would expect overall for there to be a slowing of that growth, just as people spend less time online. At the same time, the things that we typically look at, which are the indicators of sustained user engagement, things like people creating brand new boards, doing searches across multiple use cases, those early indicators look really strong. So we do expect to retain some of that engagement, but not at the same rate. It’s obviously an unprecedented situation. So we don’t know exactly how that will mete out. But we’ve been really excited about the growth that we’re seeing across the board, and we want to make sure that we continue to serve those Pinners going forward.

Todd, I can turn it over to you.

Todd Morgenfeld — Chief Financial Officer

Yeah, sure. So, Ross, I heard a couple of questions in there. One was an update on what we’re seeing into the early part of Q2 through April, and the second was a little bit more color on what we’re seeing in terms of vertical impact. And I’ll take those in turns.

So first, on the revenue side, through the course of April, we’re still obviously in the middle of a highly uncertain environment, driven by COVID-19. And so, what we wanted to do on this call was share what we know, what we’ve actually experienced rather than project things that we don’t yet know because of the amount of uncertainty in the markets. We had a very strong start to Q1. That persisted through January and February. But as we noted in the letter, we had a sharp deceleration in year-over-year growth trends that really started in earnest in mid-March. That sharp deceleration persisted through the latter half of March. And then, we began to see stabilization in our revenue — year-over-year revenue growth in early April. That stabilization persisted through the course of the month and into early May. To quantify that a bit further, our revenue for the month of April on a year-over-year basis declined 8%. And what I want to note here as a reminder, if you remember the call from a year ago, around Q2, we talked about Easter timing. And a year ago, in the month of April, Easter provided a little bit more than an extra week of benefit. So, on a normalized basis, we’re probably a point or two better than the 8% decline that we noted or experienced in the month of April. So that’s the April trends point.

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On the vertical piece, the impact has been uneven across the verticals where we’re in market. And that’s not — shouldn’t be too much of a surprise because the impact of the pandemic has been relatively uneven across verticals as well. Our major verticals, CPG and retail, I’ll pick those — I think you highlighted those as two that you wanted a bit more color on. In the CPG space, things like food and beverage, health and beauty had relatively better demand in the early part of this crisis because people were preparing to shelter in place in their homes. But even those advertisers began to experience supply chain difficulties that had various impacts on their appetite for spend.

In retail, the impact was a bit more pronounced. You might imagine that omni-channel retail stores — or omni-channel retailers that had stores that were closed had a significant pullback on spend, whereas direct-to-consumer brands grew relatively faster. In fact, our direct-to-consumer advertising cohort grew significantly faster than the rest of the business. But those advertisers, as we’ve noted historically, are not a huge part of our revenue mix. We’ve also noted historically that some of the most impacted verticals, areas like travel, automotive and restaurants were significantly impacted, but those constitute relatively smaller exposure for us. So hopefully, that gets to your two points on recent revenue trends and some of the color around our vertical exposure.

The only thing I would add there, just one extra point, and you didn’t ask, Ross, but it’s probably worth noting that we have these joint business partnerships that we sometimes sign with prospective advertisers. So these are not contracts to spend, but they’re indications of intent to spend. And we saw the number of those deals grow over the course of Q1 this year relative to last year, and the dollars covered by those agreements more than doubled year-over-year. So that was a good indication of intent to spend across our advertising base. And that trend has persisted even through April where we’ve continued to sign some of those deals. So I wouldn’t want to over-index on what that means because none of those deals are a contractual obligation. But we’re still very actively involved with major retailers and seeing good intent there.

Ross Sandler — Barclays — Analyst

Thanks a lot guys.

Operator

Your next question comes from Mark Mahaney with RBC. Your line is open.

Mark Mahaney — RBC Capital Markets — Analyst

Thanks. Let me try two questions. The new users that are coming on, is it too early to know what their experience is going to be like, their level of engagement is like versus prior cohorts? Secondly, I think you’ve been asked this in the past, but would you — how would you characterize your mix of awareness versus performance advertisers? And I’m sorry, a third quick question, when you talk about opex growth outlook in Q2 lower than — the growth lower than in Q1, do you mean that on a GAAP or a non-GAAP basis? Thank you very much.

Todd Morgenfeld — Chief Financial Officer

Great. So I don’t know, Ben, if you want to talk a little bit about the new users and engagement, and I can take the second two on brand and performance and expense guidance.

Ben Silbermann — Co-Founder and Chief Executive Officer

Sure. So, on new users, we continue to see really similar behavior across those new users. And so, a lot of the reasons they were coming to Pinterest were things that were directly related to COVID-19, so things like meal preparation, making your home more livable, interest in things like home and garden. And so, those topics look really similar. And as I mentioned earlier, the engagement trends from those folks looks promising, meaning that they’re taking all of the actions that in the past have helped us predict whether a user would be a long-term user. Now the situation is different. So we have to wait to see what that looks like.

The other thing that’s worth noting is that we continue to see strength from especially younger users. So we mentioned this in the last call, but we’re seeing really rapid growth in the population of users that are under 25, which we take as a positive sign because it’s an indication that we’re kind of expanding into a new demographic.

Todd, do you want to talk about the performance mix and opex?

Todd Morgenfeld — Chief Financial Officer

Yeah. So, Mark, the second couple pieces of your question here, on the format, what we’ve talked about in the past is that we are a majority performance business and a minority brand/awareness business, just in terms of revenue contribution. And I’ll go into a little bit more color there. But we’ve invested in a full funnel ads business. And the reason we’ve done that is because of the mindset that our users bring. When our users come to Pinterest, they come with commercial intent. They’re coming to plan something that they want to do in their real life, and they go all the way from discovering an idea or being inspired, ultimately in many cases, to buying something.

The second thing that’s worth noting is, advertisers tell us that their spend is ever more returns accountable. We know that advertising spend — the long-term trend in advertising is that it’s ever more ROI accountable. And so, it’s been very important for us, as we invest in our ads product, to build measurable value for conversion-oriented advertisers. We saw some trends around our conversion optimization and shopping products that grew much quicker than the rest of the business, reflecting the attributable conversion growth that we continue to see spike through the course of the quarter and into April. And we’ve been investing in that in three ways. Our tools and automation — we rolled out — I think we’ve added in the letter that we had automated bidding for our traffic objectives, which improved click delivery on the same budget, which was an important innovation and one that will extend to further products as the year unfolds. More work on creative and formats and against measurement where we’re showing more conversion activity against different attribution windows and better offline to online conversion matching. So that, coupled with all the tag integration work that we’ve been talking about for some time, is leading to a stronger performance business.

So, going back to your question, we continue to be performance heavy in terms of mix, or the majority of our business is performance versus brand/awareness. And we saw significant improvements in our conversion optimization and shopping product formats over the course of the quarter. The automated — the bidding automation improvements that we made had a big impact on our traffic business as well, but that was in flux over the course of the quarter. So, hopefully, that gets to your question on what we’re seeing in formats.

On the opex growth piece, I’ll answer two questions. One, you didn’t ask, but I think it will probably come up. On the gross margin piece, I just wanted to remind folks that our cost of revenue for the business really is more tied to the number of users, the depth of their engagement and usage, along with product complexity. So this isn’t — our cost of revenue doesn’t scale with revenue. It scales with the number of users and their engagement. So we wanted to call out just to make sure there was no daylight between the way we’re viewing our gross margin performance through the year in this odd market environment where engagement trends are spiking at exactly the moment when the demand picture is more mixed.

On the opex side, we continue to focus on and are excited about the long-term opportunity in front of us as a business. We believe in the potential of Pinterest. And as a result of that, we’re staying focused on the four big pillars of investment that we opened at the start of the year: investing in inspiring content, more use cases for our users, an improved shopping experience and diversifying our advertiser base. So we will continue to invest in those things. And the reason we’re investing in this environment is, one, we believe in the long-term potential of the business. We think that that remains unchanged. We have the balance sheet to do it with $1.7 billion in cash and a $500 million undrawn revolver. And we believe that in this market environment, retooling things like travel, event spending and marketing will allow us to dial back the growth of our investments prudently, while we still invest in the core strategic pillars that will drive long-term value. So I don’t know, Mark, that gets to your — oh, you also asked about non-GAAP versus GAAP. That was designed to be more of a non-GAAP comment.

Mark Mahaney — RBC Capital Markets — Analyst

Okay. Thank you very much.

Operator

Your next question comes from the line of Mark Shmulik with Bernstein. Your line is open.

Mark Shmulik — Bernstein — Analyst

Yes. Hi, thanks for taking my question. I think I’d like to ask a little bit more [Technical Issues] the performance, in particular, some of the bottom of the funnel initiatives that you’re working on. I know, recently, you’ve launched the stop, shop and search, shop from Pin. I’d love just to understand a little bit about what traction you’re seeing there, any response back from advertisers’ uptake, anything like that would be very helpful.

And then secondly, internally, if you think about your resources and resource allocation, we’ve heard from others about shifting around resources to where there’s demand today, which seems to kind of skew towards direct response performance. Anything you can share on that would be very helpful as well. Thank you.

Ben Silbermann — Co-Founder and Chief Executive Officer

Sure. I guess [Phonetic] to start it on the shopping, we’ve outlined in past calls that we kind of have a three-part shopping strategy. So, the first is that we want to continue to grow high-quality inventory, and we have two projects against that. Our catalog uploader — and we’ve been really excited. We’ve seen catalog uploads increase about 140% sequentially, and that’s buoyed by both the partner with shop — partnership with Shopify, which is now generally available in the US and Canada, as well as the Verified Merchant program. And we welcomed kind of both traditional omni-channel retailers, folks by Crate & Barrel, as well as lots of emerging brands, folks like [Indecipherable]. So that first part of the strategy is really about that.

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And you asked specifically, are we getting traction with users? And we really measure that by building these new shopping surfaces, some of the ones you mentioned, shop from boards, shop from search. And look, by the end of February, Pinners engaging with our shopping content had increased 44% and organic traffic to retailers has increased more than 2 times, about 2.3 times. And so, we’re really happy that Pinners are seeing more value and then advertisers and retailers are seeing that in the form of traffic.

And then, the last part of that story is really what ties together the first part of your question about shopping with some of your second part of your question around the more performance-based products. But we do see that shopping revenue is growing faster than the rest of the overall business mix. It’s almost doubled year-over-year, looking at Q1. And we’re building a lot of things to continue to support that more performance-oriented and conversion-oriented mentality. That includes investments in things like measurement. We continue to look at tag integrations. And tag integrations from third parties are up 2 times. That also means more automated products. And so, Todd mentioned that we provided tools and automatic bidding around traffic objectives. We’re really excited in the future to bring that to our conversion or oCPM objectives as well. So that’s how we’re really allocating resources. I wouldn’t say that’s a huge divergence from our strategy, which has been about enabling more conversion-like activity. But we’re doubling down there, especially in the current environment.

Operator

Your next question is from Justin Post with Bank of America. Your line is open.

Justin Post — Bank of America Merrill Lynch — Analyst

Great, thank you. Just two quick questions. How tied is the ad spend on Pinterest to events? Just wondering how you think about that. Obviously, you said it’s performance — higher percentage performance-based. But how does that correlate to events? And then, I remember last year, in 2Q, you had a nice acceleration around the IPO, which was in April, and also a very robust Easter. So wondering if that’s affecting your comps at all as you look at what you provided for April. Thank you.

Todd Morgenfeld — Chief Financial Officer

Yeah. So, I’m not — the first question around ad spend tied to events, what I would say that we’ve called out and continue to experience is something a little different perhaps than other platforms. But we — people plan well in advance of — you come with a planning mindset and commercial intent to Pinterest, often planning well in advance of an event or a seasonal moment. But I think your question is more about events that may be postponed in this environment than what we typically experience. And what I’m referring to specifically are things like seasonal moments that we called out of Q4, Halloween, Thanksgiving, end-of-year holidays. We had a lot of strength through Q1 around events like New Year’s Day, Valentine’s Day, the big game, etc. And so, while some of those seasonal moment can get delayed in this type of environment or the shape of spending may be altered, many of them are driven by the calendar. They’re moments that people plan for in their personal and family lives.

The second part of your question was around the Q2 dynamics that we called out last year. We really referenced two things that we thought led to some of the strength that we saw last year when we accelerated or reaccelerated our revenue growth to 62% on a year-over-year basis. The first of those was Easter timing. And I may get the dates wrong, but I think a couple of years ago, Easter was on the 1st of April. Last year, it was on 21st of April. And this year, it was on 12th. And so, as Easter moves around, back to the first part of my answer, Easter is a seasonal moment that many advertisers want to get in front of our users as they’re planning for that holiday event. And so, because that holiday moves around, it has a different impact year-to-year on Q1 and Q2 performance. And last year, it was much heavier in Q2 than it was this year, for example. We called out a moment ago, and I think that’s probably a point or two of a growth headwind that we’re experiencing right now. So while we’re down 8% in the month of April, there’s probably a point or two that’s related to Easter. There may be even more related to the IPO, but it was tougher to quantify that a year ago. And so, we didn’t want to do it here.

Justin Post — Bank of America Merrill Lynch — Analyst

Great. And maybe one follow-up. When I mean events, I mean personal events like wedding planning or get-togethers around Easter. Just wondering how that might be affecting [Technical Issues] activity.

Todd Morgenfeld — Chief Financial Officer

Well, I think the ad dollars follow people on their planning activities, and that’s why we’ve seen mixed amounts of spend, to the extent people are planning for how to home school their kids, how to exercise in their home, how to teach themselves how to cook. Those are new events that we’re seeing some spend deviate toward and away from things like wedding planning, travel events, etc. One of the things we’ve seen over the course of the last several weeks is, Ben referenced that engagement dipped a little bit as people were planning to shelter in place when all the news initially broke and then started to come back and we reached record levels because folks were trying to train themselves how to operate in this new environment. And so, for an advertiser like NordicTrack, that’s a great thing. People are trying to figure out how to exercise in their home and there’s a lot more spend opportunity for some brands like that relative to those that may be in the travel segment or around weddings and other events.

Justin Post — Bank of America Merrill Lynch — Analyst

Thank you, Todd.

Operator

Your next question comes from Lloyd Walmsley with Deutsche Bank. Your line is open.

Lloyd Walmsley — Deutsche Bank — Analyst

Thanks. Todd, kind of going back to the recent trends questions and the down 8% you called out, it involves a little bit of guesstimate on mix by month. But assuming March is bigger, it implies January and February grew about 44%. Does that number sound right? And then secondly, going back to the automatic bidding, as you rolled that out for conversion objectives, how meaningful could that be? And maybe what percent of the business today is targeting conversion optimization? And how do we think about that improved performance from automated bidding ultimately translating into higher spend and budgets? Anything you could share there would be helpful.

Todd Morgenfeld — Chief Financial Officer

Yeah. So, on the math you’re doing, there are a number of factors involved, and we saw the growth was in the kind of low-to-mid 40s, and it accelerated a little bit in February because we had an extra day in February. And then, we saw the impacts start to unfold early in March, but really take off in a material way mid-March. And so, I don’t think you’re too far off with your math and your assumptions.

With respect to the impact on — of auto bidding on our conversion optimization product, I’d say it’s too early to know. We’ve seen a positive impact on traffic objectives. We’ve seen a significant increase in budget utilization, a significant uptick in number of clicks per budget and even click-through rate. But it’s too early to tell because we haven’t yet rolled it out for conversion optimization. We are optimistic that it’s the right thing to do and will deliver value to our advertising partners and help us with budget utilization. But until it’s rolled out, we won’t know much to share.

Lloyd Walmsley — Deutsche Bank — Analyst

Okay, thank you.

Operator

Your next question comes from the line of Heath Terry with Goldman Sachs. Your line is open.

Heath Terry — Goldman Sachs — Analyst

Great, thanks. I was wondering if you could give us a sense and help us understand sort of the makeup of your performance advertisers a little bit better. Obviously, there is a broad spectrum of advertisers that are engaged in performance and a lot of grey area there. But if you could give us a sense of sort of what the spectrum looks like in terms of size, in terms of what you would consider to be performance advertisers that kind of fall in the premium, the ones that have access to Pinterest salespeople and third-party measurement versus some that might fall into kind of more the almost remnant category of performance advertisers, and particularly in this environment, sort of where you’re seeing maybe differentiation in the performance of those two categories, which — who is most active and where you’re seeing returns fluctuate there?

Ben Silbermann — Co-Founder and Chief Executive Officer

Heath, I can take a cut out [Phonetic] and Todd can chime in as well. Like the ask [Phonetic] was really about the composition of the performance advertisers and how we’re seeing them behave differently. So, as you know, we started off with a lot of large omni-channel retailers. So what I would say is that on average, those folks have been the first to pause spend when they closed stores. And then when they do reactivate, we’ve seen some folks reactivate, they tend to first reactivate their most performance objectives and are holding off on brand objectives in general. So they’re really using products like oCPM or traffic objectives and are driving a ton of kind of ROI accountability there. Then, in an effort that’s been going on all year and will continue are what I call more mid-market advertisers. And those are folks where they’re often very sophisticated advertisers, but they don’t have a dedicated sales person. So when we talk about some of the product investments that we’ve made this year, last year was really about very small businesses providing mobile interfaces. This year has really been about tools and automation to help those folks scale. And the example of automatic bidding that Todd provided is a pretty significant one. And the reason it’s significant is because not only do you get the benefits of efficiency that Todd mentioned — like Kiehl’s was an example advertiser. They saw 47% increase in clicks with the same budget and a higher CTR. But it also means that they’re doing a lot less work, so they don’t need a dedicated sales person to be managing their budgets.

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We don’t have as many of what you would describe as remnant advertisers. But overall, performance objectives have grown faster both because of the macroeconomic environment, kind of a return to performance, and the fact that when brand budgets exited, it decreased the cost per conversion. You had fewer people contending for those same conversion objectives, so people can get more value. And we take that as actually a really good sign for where we want to take the business in the future.

Heath Terry — Goldman Sachs — Analyst

Great. I guess one follow-up to that is, when you look at the mix of your performance advertisers that are focused on or primarily buying sort of minimum bid advertising — maybe that’s another way to think of kind of the remnant buyers that are out there — what percentage of your average — and I’m not expecting actually give a percentage. But when you look at the mix of your performance advertisers, how much would you say are sort of focused on that minimum bid inventory that’s available there? And how have you seen that? As you’ve been able to attract more premium performance advertisers over time — and I see my ad filled with ads for Apple TV, which I wouldn’t have expected that would have been there a year ago for a variety of reasons. But when you see more premium performance advertisers coming into the mix, how would you say that has shifted away from those sort of minimum bid advertisers?

Ben Silbermann — Co-Founder and Chief Executive Officer

Yeah. I think what I hear you’re getting at is like how many folks have very, very low cost-per-acquisition and can still make money and how many have higher ones. Everyone is actually minimum bid. It’s the nature of an auction that no one wants to pay more than demand is. But look, as we grow the number of advertisers, there are more and more folks that have the ability to get a lot of lifetime value out of an acquisition. So, we expect that as you get more liquidity, that will increase prices over time. And our job is to provide as much value as possible. And so, things like automatic bidding and other efforts to improve machine learning and targeting provide more efficiency for advertisers across the board.

Heath Terry — Goldman Sachs — Analyst

Great. Thank you very much.

Operator

Your next question comes from Stephen Ju with Credit Suisse. Your line is open.

Stephen Ju — Credit Suisse — Analyst

Okay. Thank you very much. So I guess one of the interesting disclosure points at the time of the pre-announcement was that there wasn’t much in the way of travel-related sector revenue despite what we have understood to be one of the main use cases for your users. So right now, the travel sector’s lack of presence ended up being less of a headwind for you. But what has been holding these advertisers back until now and what can you do to onboard them as we eventually recover from this crisis?

And second, on the letter, you talk about hundreds of merchants lined up to join shopping. So from an operational standpoint, how long does it typically take to onboard an interested party into shopping once they make the decision to start spending with Pinterest? Thank you.

Ben Silbermann — Co-Founder and Chief Executive Officer

Yeah, Steven, your first question was really about travel. And I think that the reason that travel hasn’t been as large of a sector as it is a use cases because the vast majority of travel is very focused on last click acquisition travel. So I think, Expedia advertising on Google on building machine. I think that the way to unlock that is to do what we’ve done for many verticals, which is show the disproportionate value of catching people early in travel inspiration planning, and then bringing them down closer and closer to a transaction. I will say that when we look at our plans for increasing kind of purchasing activity on Pinterest, travel is not the first place that we’re optimizing for. We think there’s a really big opportunity in a lot of our core shopping verticals, which is why shopping and conversion-driven events continues to be a focus. So think about things like home decor, apparel and general shopping, there is a huge opportunity to take people from getting ideas, all the way down to buying things, and that’s really the thesis of a lot of the shopping efforts.

Your second question is how much easier has it gotten for people to get on board with the shopping program. And I would say that we’re really proud of the progress. We’re always trying to remove friction from that. But one evidence of this is that, we’ve just seen a significant increase in the number of people that are uploading their catalogs. And we’re also seeing benefit from third-party integrations. So I mentioned before that the Shopify partnership is now live in the US and Canada, and that means that a mid-size retailer that’s using a platform like Shopify can get on board, and they’re not touching the code of their e-commerce site. It’s an option that they can select which gets the right measurement in place and gets their catalogs uploaded and put them in a position where they can begin advertising really easily. So there’s always more work to do there, and particularly for large advertisers. We not only have to make it technically easier, but we also have to wait for them to get out of complete shelter mode where they may not be touching anything on their site as they have a lot of their stores closed. But removing that friction and getting as many people seamlessly kind of uploaded through our catalog and through our first party measurement is a long-term strategic priority for the Company.

Stephen Ju — Credit Suisse — Analyst

Thank you.

Operator

Your next question comes from Doug Anmuth with J.P. Morgan. Your line is open.

Doug Anmuth — J.P. Morgan — Analyst

Thanks for taking the question. Just wanted to go back to the performance on — the discussion on performance-based advertising. So we’ve seen some other ad businesses in the last week or two that are majority performance-based that have seen less of a slowdown in this environment. So just curious what your view is on why the variation in deltas. And do you think that’s based on the verticals or categories in which your advertisers lie or perhaps just on earlier stage nature and perhaps the smaller number of advertisers? Thanks.

Ben Silbermann — Co-Founder and Chief Executive Officer

Look, I think that it has to do with the mix of advertisers that we’ve got. And so, one, even performance-based advertisers, there are some verticals that are disproportionately impacted, as well as some larger kind of — sorry, there is some verticals that are disproportionately impacted. And then, depending on the size of the business, they may be impacted more or less by physical store closure. So, part of the reason that we have a long-term strategy about increasing the numbers, so we’re not reliant on any particular size of advertiser or any particular vertical over time. But I think that you’re going to see varying changes across the different advertising platforms, driven a lot by this mix, by the nature of advertising they have in place.

Doug Anmuth — J.P. Morgan — Analyst

Thanks Ben.

Operator

Your next question comes from Michael Levine with Pivotal Research. Your line is open.

Michael Levine — Pivotal Research — Analyst

Just another sort of question on the shopping feed side. When advertisers choose not to do so, not participate because it feels like it’s one of the key things you guys could do to close the loop, I’m curious what the push back is? I guess I’m a little bit intrigued by Google announcing their PLA program. And I’m wondering if this is something you guys would be able to leverage greater, greater people participating in just cataloging their feed?

Ben Silbermann — Co-Founder and Chief Executive Officer

Yeah. So the question I heard was what’s the objection that we hear most often. I think that that’s changed over time. So initially, the objection was, how easy is it to get by catalog and measurement implemented? As we’ve improved on that, we’ve brought on more and more of those retailers. I think that candidly now for some of the large advertisers and the larger retailers, it’s just getting on their radar and giving them the time and space to do those integrations well. You got to remember, a lot of the folks, especially omni-channel folks, they have all of their stores closed, and so they’re not investing a lot of incremental time. But we take the Google expansion of PLAs into — and making them free is actually kind of a validation of the strategy we’ve been pursuing for a while, which is, we want to welcome as much high-quality inventory and then connect that to people who are in a browsing state. And we think that with a big player like Google, we can kind of ride that trend and continue to scale up the amount of inventory that’s available.

Operator

There are no further questions at this time.

Jane Penner — Head of Investor Relations

In that case, I think we’re ready to close the call, and I’ll hand it back over to Ben.

Ben Silbermann — Co-Founder and Chief Executive Officer

Yeah, I just wanted to thank everyone again for taking the time to join us. We appreciate the questions. And we look forward to continuing the conversation down the road. Have a good day.

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