Good afternoon, and thank you for joining us. Welcome to today's Pinterest Fourth Quarter Earnings Conference Call. My name is Jordan, and I'll be coordinating your call today. [Operator Instructions]

I'm now going to hand over to Neil Doshi, Head of Investor Relations, to begin. Neil, please go ahead.

Neil Doshi - Director, Investor Relations

Thank you, Jordan. Good afternoon, and thank you for joining us. Welcome to Pinterest's earnings call for the fourth quarter and full year ended December 31, 2021. I'm Neil Doshi, Head of Investor Relations for Pinterest. Joining me today on the call are Ben Silbermann, Pinterest President and CEO; and Todd Morgenfeld, our Chief Financial Officer and Head of Business Operations.

Now, I'll cover the safe harbor. Some of the statements that we make today regarding our performance, operation and outlook, including the impact of the 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. In addition, our results, trends and outlook for Q1 2022 and beyond are preliminary and are not 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 Forms 10-Q and 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

Thanks, Neil, and hi, everyone. Thank you for joining the call. 2021 was an important year for Pinterest. We remained laser-focused on helping everyone get inspiration for their lives, and building a dedicated space online to plan and create their futures. We believe that the demand for a positive place to plan your future will only continue to grow over the long term. That's why we spent the past year investing heavily in evolving how we inspire Pinners by building a new publishing platform for creators. We believe that when we connect Pinners not just with great ideas, but also with the great creators behind them in rich new formats like short-form video, their overall experience is more inspirational.

And when people are more inspired, they do more planning and shopping. Advertisers are able to reach consumers with more intent and that in turn drives more value for Pinterest. In 2021, we made our publishing tools available in 37 markets and launched 150 new features, many of which were released in October. So, it's still very early, but we're already seeing signs of promise, specifically a rise in session frequency and time spent from people who followed multiple creators. This supports our hypothesis that our investments in native content can be engagement-accretive over time. We believe that with sustained investment, we'll see these trends grow as more and more Pinners find and follow creators they love.

We know we're building this new platform in a challenging environment. In Q4, we saw our monthly active users decrease 6% year-over-year to 431 million. This was primarily due to the continued unwinding of the pandemic, lower traffic coming from search, and increasing competition for user retention. We're clear-eyed about these recent headwinds and we believe that over the long term, our new publishing platform will deepen engagement by Pinners. We're also continuing to improve the core experience to help surface the most relevant content at the right time. With shopping, we're building a more dedicated experience to help people discover and buy what they love as well as expanding our test of seamless checkout.

We're also working to improve the advertiser experience, helping them optimize their budgets and more effectively measure performance with the changing privacy landscape. And we're working to build on the business milestones we achieved in 2021, where we surpassed $2 billion in revenue for the year, growing revenue 52% over the previous year. We also posted our first full year of GAAP profitability. Our aspiration is to build an end-to-end platform that gives people great inspiration and the tools to buy to make and to do those ideas for their lives, all in a space that's both positive and encouraging. We believe that the world needs this and that's why we're increasing our investment to build it and I'm confident that our team is up to the task.

So, now I'll turn it over to Todd who will share more.

Todd Morgenfeld - Chief Financial Officer

Thanks, Ben. I'll share some further details on the trends that we saw in the fourth quarter and provide a preliminary outlook for the first quarter of 2022. We were pleased with the financial results that we delivered in the fourth quarter. Revenue grew 20% year-over-year to $847 million with an adjusted EBITDA margin of 41%.

While most of the details about our financial performance are in our shareholder letter, I'd like to provide some additional color. Strength in the quarter came from large retailers, mid-sized and managed small advertisers, and international markets. This was offset by muted demand from CPG advertisers who continue to face pressure from supply chain issues. Furthermore, with the continued distribution and placement of Idea Pins during the quarter, we estimate that the negative impact to our fourth quarter year-over-year revenue growth was in the mid-single digits similar to the third quarter. This impact was factored into our guidance for the fourth quarter.

I wanted to take a couple of minutes to discuss fourth quarter engagement, particularly in the U.S. Our U.S. monthly active users declined 12% year-over-year to $86 million, primarily due to pandemic easing relative to the year-ago quarter. We also believe that time spent on competing video app platforms contributed to the year-on-year declines. Furthermore, our monthly active users were negatively impacted from lower search traffic due to Google's November algorithm updates. In fact, more than half of the Q3 to Q4 sequential decline in U.S. monthly active users was attributable to Google's algorithm update, starting in mid-November. We're examining the overall impact from recent search algorithm changes as it appears to be more persistent than we've seen historically. Our teams are working diligently to understand this, but it may take some time.

Looking at users by platform, U.S. monthly active users coming to Pinterest from the web, desktop and mobile web, declined around 30% year-over-year, while U.S. monthly active users coming to Pinterest from mobile apps, who account for a significant majority of our impressions and our revenue, declined around 6% year-over-year. We're taking a number of steps to increase engagement on Pinterest. First, we're investing in native video content in a creator-led content ecosystem. In the long run, we believe that this can be engagement and revenue-accretive. As Ben mentioned, the early data make us cautiously optimistic, but bending the curve on overall engagement will require us to scale this effort with sustained execution over several quarters.

In the near term, we plan to invest in our core discovery and planning engines to provide our users with a richer, even more personalized experience across our various surfaces. We plan to apply more data and larger models to our sophisticated machine learning stock to help with content recommendations, home feed personalization and an improved search experience for existing, previous and new users who come to Pinterest.

Turning to our preliminary outlook for Q1. In my remarks last quarter, I noted that engagement trends on Pinterest had not yet returned to pre-pandemic norms, specifically to the mix of at-home versus out-of-home use cases that we saw in 2019. In Q4, these trends began to normalize. For example, the propensity of Pinners to adopt use cases like home decor or cooking in the fourth quarter of 2021 was similar to what we saw in the fourth quarter of 2019.

As we revert to our pre-pandemic use case mix, we expect that the pandemic unwind will be a less meaningful engagement headwind as we move through 2022, particularly after mid-March when we will lap the widespread easing of lockdown restrictions. That said, engagement headwinds from search algorithm changes and from time spent on competing platforms are more persistent and could potentially disrupt normal seasonal trends. Given this context, we think it's most helpful to tell you where we - what we know today. As of Tuesday, February 1st, U.S. monthly active users were approximately 86.6 million and global monthly active users were approximately 436.8 million.

On the revenue side, we expect Q1 revenue to grow in the high teens on a percentage basis year-over-year. Please note that our Q1 revenue guide takes into account a few considerations. First, the macro environment remains challenging for our CPG advertisers, who are still dealing with supply chain and other macroeconomic issues. We believe this headwind could persist for a few quarters. Second, we continue to monitor the impact that higher CPAs could have on our more price-sensitive advertisers. There are some exogenous factors that appear to be resulting in higher CPAs, including overall demand for digital ads from advertisers.

On Pinterest, specifically, if engagement declines continue, we could eventually expect to see some constraints on our monetizable supply, and in turn higher CPAs. This supply constraint is not something that we're seeing today, but we're monitoring it carefully. At the same time, we're investing in a number of opportunities to monetize our existing supply and to help advertisers achieve their goals. Third, our investment in Idea Pins and native video content will likely be a modest headwind to revenue in future quarters as it was in Q4. However, we believe that Idea Pins will be both engagement and revenue accretive over time.

Finally, I want to touch on expenses. Non-GAAP operating expenses in the fourth quarter grew 27% year-over-year. This year, we plan to accelerate our investments in the business in accordance with our key strategic priorities of inspiring content, shopping, our Pinner experience, and advertiser success. We expect our first quarter non-GAAP operating expenses to grow around 10% quarter-over-quarter sequentially as we continue to scale our investments in our native content ecosystem, our core Pinner experience and headcount across research and development, and sales and marketing. For the full year, we expect non-GAAP operating expenses to grow around 40% year-over-year. The sequencing of that spend may change from quarter-to-quarter, but we'd suggest you look at the quarterly growth cadence in 2021 as a likely template.

Thank you to our teams at Pinterest, our advertising partners, our creators and all the people that come to Pinterest to find inspiration.

And with that, we can open it up for questions.

Question & Answers

Operator

Thank you. [Operator Instructions] Our first question comes from Ross Sandler of Barclays. Ross, the line is yours.

Ross Sandler - Barclays - Analyst

Hey. And now, Ben, there's not really a nice way to ask this, so I'll just try to ask it anyway. But there has been some recent press reports that pointed to a number of senior executives leaving the company recently. So, can you just comment on what's going on with that? Is that not accurate? And how you feel about the senior management ranks as we look at your agenda in '22?

And then, you guys said that the watch tab is one of the fastest growing products in history. So, any way to just put some numbers around how big this could be in '22, is it still too early or are you expecting this to be a needle mover in terms of engagement? Thanks a lot.

Ben Silbermann - Co-founder and Chief Executive Officer

Sure, Ross. Thank you for your questions in turn. So, first of all, taking a step back, a lot of people are coming out of the pandemic and they're reassessing their careers. And so, along with many companies, we see, what some people are calling, the great employee reshuffle. But based on conversations with some of our peers, we believe that our attrition rate, it's roughly in line with others. I'll also remind everyone that we've been hiring pretty aggressively. We grew our headcount by 27% over the last year. The tech has covered - tech press has covered some recent departures, and many of the folks in articles that were named are people that joined pre-IPO several years ago. They joined a relatively small private company. They made an incredible contribution. I'm grateful for what they've done, and I'm excited for a lot of them to take their next step in bigger roles at smaller companies, or in some cases, changing industries entirely. I'd also say that we just have an amazing bench of talent here at Pinterest and this provides our existing employees to just take on more responsibility and to step in the new leadership roles, which we're just thrilled about. Finally, we've been able to welcome some great senior talent in new areas, where we're making investments, including shopping and content. So, that's kind of the story there.

Your second question is about the watch tab. I'm glad to say that we're not breaking out engagement by surface just yet, but we're really optimistic, even though it's early days, on the creator effort, in general, in the watch tab specifically. And yeah, I would just remind folks why we're making the investment and why we're excited about it. The first reason we're making the investment really comes down to the core value proposition on Pinterest, which is to provide inspiration, and we think, short-form video and connecting people with real creators is just an enormous opportunity to advance that vision in new ways. Short-form video is being adopted all over the industry. But today, what we see from most of our competitors is that the innovation on short-form video has been focused on entertainment, while Pinterest is more focused on providing inspiring and useful experiences that can help people get ideas, and then, actually realize them by making, by buying or by doing something in real life.

The second reason that we're excited is we think that over time, the creator's effort can increase both time spent on the platform, but also the frequency with which people visit. People often come to Pinterest when something is going on in their life. They might want to remodel their home, they might want to take on a new life project or plan a trip, and that's fantastic, but the engagement tends to be more periodic.

If you look at a lot of the largest platforms in the world, they're either social networks with a strong messaging component, which pulls you back or they have some sort of publish-subscribe mechanism between creators and their audiences. And up until late last year, Pinterest had neither. It was really buoyed by the utility of the platform, we think, by connecting people to inspiring creators who can share their passions and their ideas every day. Over the long term that can shift, so we're in really early days, but we're excited about both improving the core experience for users and the net impact it will have on the business.

Todd Morgenfeld - Chief Financial Officer

Operator, next question?

Operator

Our next question comes from Eric Sheridan of Goldman Sachs. Eric, the line is yours.

Eric Sheridan - Goldman Sachs - Analyst

Thank you so much for taking the question. Maybe two, if I can. As we exit '21, I'd love to look back and reflect on some of the learnings you had from some of the international expansion efforts, both on the investment side and building out versus what you've seen as monetization has started to come through in some of those international markets?

And in the release, you talk a little bit about some of the markets you're expanding into in '22, can we again frame it in terms of like what some of those investments might be versus what you see as some of the market opportunities, especially in a market the size of a Japan? Thanks.

Todd Morgenfeld - Chief Financial Officer

Yeah. Thanks, Eric. It's a great question because we're obviously one of the biggest growth drivers and clearest opportunities for us to continue the momentum we've had with our great traction with revenue performances through international markets. I think, the thing that we - it starts with building a great team. We have some tremendous country leaders. We have some great sales leadership and I'm really excited about the folks that we brought on board, and we've had a lot of hiring over the last year, and we've just done a great job of bringing the right people into Pinterest with the right leadership team. So, that's one.

More broadly, we often get the question, why weren't we monetizing internationally quicker, and part of the reason was we wanted to get the user experience and the advertising experience right both for our Pinners and to make sure we are delivering great results to our advertisers when we started to monetize internationally. And that's what we've done. We've proven that our full-funnel advertising platform works in the U.S. We've built the right ad tech stack against that, we have the right go-to-market model and the right coverage model that we've built out in the U.S. And what we've been able to do internationally is start to replicate the same trends. There is a lot of learning and a lot of education and sales that needs to happen because of the nature of this platform.

What we found - and you had ask questions in the past about which kinds of advertisers find success on Pinterest. What we've learned is that those that value being on an inspiration-driven platform, one that is brand safe, advertisers that value unique insights and the commercial mindset of users long before they buy something, and who are open therefore to longer attribution windows, those are the advertisers that find success. And so, we're seeing that same playbook, which takes a little longer to unfold to build those relationships, generate that kind of understanding in the advertising community, but when it pays off, it's paying off with great traction and great growth in those markets that we've opened, most notably in Western Europe.

You asked the question about 2022. We - in terms of growth, we're opening up in a couple of more countries in Latin America. So, Colombia, Chile and Argentina will open this year. So, extending their reach within Latin America. And then, as you mentioned, we're really excited to start monetizing in a very deep ad market in APAC and in Japan. So, all of that work is on track and I would expect us to continue to see some contribution from those markets by the end of this year, but it takes time. And reflecting on your question, we opened Latin America last year and while we've seen some early contribution, we've got a long way to go, and I think that's exciting for the future growth potential of the company.

Eric Sheridan - Goldman Sachs - Analyst

Great. Thanks for the color, guys.

Todd Morgenfeld - Chief Financial Officer

Operator, next question?

Operator

Our next question comes from Mark Mahaney of Evercore ISI. Mark, please go ahead.

Mark S. Mahaney - Evercore ISI - Analyst

Okay, thanks. I'll just ask about MAUs or the monthly active users. And I know you talked about this a little bit before, but just please double click on it. The - what's going to cause North American MAUs to stabilize, and then, to start growing again? Like what series of steps are you going to be looking for in order to gain conviction that you'll be able to get back to kind of that reasonable growth you had pre-COVID, and then, the COVID rise and fall? Thanks.

Todd Morgenfeld - Chief Financial Officer

Yeah. Mark, I don't know if - I'm happy to start, and then, Ben can weigh in a little bit on the product work that we're doing. I think, the short answer to your question is, we're investing in our short-form video content creator-led content native content ecosystem to address exactly that point, and we think that's the path toward enriching the user experience and building connections to shopping experiences over time that will drive frequency of use, more people to the platform and over time, a connection to shopping and commercial activity that will differentiate the platform, both with respect to users and advertisers. So, that's the overall longer-term answer.

We're also focused on making the user experience more rewarding this year by leveraging the data we have, increasing personalization, improving our recommendation engine. So, continuing a lot of the things that we've talked about over the last couple of years to further build out a really rewarding user experience. And I think that will drive more people to the platform for more things in their life, more session frequency, and ultimately, more conversions, and economic activity.

I don't know if it came through clearly before, but the - in terms of stability, we're looking at a couple of things. One is, last quarter we talked a lot about the pandemic, impact we had, the benefit of the pandemic. From an engagement standpoint, when folks locked down, we shifted - user behavior shifted to more at-home use cases versus out-of-home use cases. And because of our strength in use cases associated with at-home activities, we benefited. That reversed last year in the spring when out-of-home use cases became more prevalent and we saw the unwinding of some of those engagement gains and user growth.

We, from Q3 to Q4, did see a large impact globally and in the U.S. from the search algorithm changes from Google. And so, sequential growth, the bulk of that decline Q3 to Q4 was not pandemic-related, it was more related to search algorithm changes that drove less search-related traffic to Pinterest. If you stripped out the impact of that, we were actually up in terms of direct mobile app users globally in the high single digits year-over-year. Internationally, we were up 11%. In the U.S., we were down around 6%. So, much more resilient engagement with respect to the users who are the deepest, most-dedicated resilient users and drive the bulk of our impressions, time spent and revenue. I don't know if that's helpful.

Ben, I don't know if you want to pile on with respect to the investments we're making in product.

Ben Silbermann - Co-founder and Chief Executive Officer

Todd, I think, you did a great job of giving an overview. Mark, the only thing I would add is, we've talked about kind of three different kinds of investments that we're making, investment in creators and investment in shopping. So, when people see things, they can buy them. And then, of course, investment in our core personalization and discovery experiences. But if you take a step back as a user, like our aspiration is to build one coherent experience, where all three of those things play an important role.

Today, there are places to connect with your friends, there are places to be entertained, but our vision is to build kind of an inspiration to realization platform, where you visit, you connect with creators that are aligned with your interests, we understand your taste and we recommend individual products, and then, you can eventually buy those things directly. And that end-to-end experience is something that doesn't exist online. So, these three investments will play out over time. I would say that creators is the earliest. Most of those features just launched in October, but it adds an important new element. This year, we'll continue to improve our shopping experiences, we'll expand our test in native checkout and we'll build more dedicated and personalized services on top of the shopping API, and then, we're always investing in tech core personalization relevance, and that's really been buoyed by advances in machine learning and computer vision, which are core competencies for the company.

So, Pinterest is really charting a different course. I know, in these calls everything gets reduced down into time spent in ads, and it's, of course, fundamental things that we look at all the time, but we're really focused on owning this inspiration to realizations space in the market, we think that's very differentiated from social networks and from pure entertainment platforms. And the three investments that Todd mentioned on creators, shopping and personalization are all driving towards that common mission.

Mark S. Mahaney - Evercore ISI - Analyst

Thank you, Ben. Thank you, Todd.

Operator

Our next question comes from Brian Nowak of Morgan Stanley. Brian, please go ahead.

Brian Nowak - Morgan Stanley - Analyst

Sure. Thanks for taking my question. Let me ask one about sort of the investment areas on the advertising or the monetization side. I mean, I know you typically have a pretty robust pipeline of different types of innovation that you're focused on to deliver more return for your advertisers. As you look into 2022, what are the products or areas, Ben, where maybe you're most excited to really invest in and roll out that you think can really move the revenue for you, and also really deliver more return for your advertisers throughout 2022?

Ben Silbermann - Co-founder and Chief Executive Officer

Sure, Brian. I'll talk about four kind of themes that our advertising and shopping team to keep in mind, and then, I'll go into them in a little bit more detail. And the first one we talked about before, but it's automation. So, we're going to continue our automation journey, especially automating ad campaign management. The second is going to be relevance and optimization. Third, which Todd touched on, was international expansion. And then, finally shopping. And I'll just like walk through them individually and I think together they will give you some more color on the journey that we're on.

So, look, just starting with automation, we still believe that we have a lot of runway as we automate ad campaign management. I mean, our goal has always been that an advertiser should be able to shop with their budget, their goals and their content, and Pinterest should take care of the rest, and we're still pretty far away from doing that. So, in the past, you heard us talking about bidding automation, but this year, our investments are really directly linked to providing more value to mid-size and small advertisers that are a natural fit for Pinterest. And so, that should result in increasing the efficiency of our ads marketplace and delivering greater value.

Second is relevance. This is sort of the thing that never stops, but we really believe we have room to improve our relevance engines, which should further improve the efficiency of our ads. Again, underlying that is leveraging our Taste Graph and leveraging machine learning, so when people see ads, they feel just like content. Our third, we talked a little bit about international advertisers. Todd did a great job of covering that. We're expanding to new markets and I'm really excited that the team that we built there and the playbook that we've developed over the last few years, we're kind of learning with each subsequent market how to get off our feet a little bit quicker.

And then, finally, when we look across all of our surfaces, we know that the shopping surface, in particular, the surface with the highest commercial intent, has got huge headroom for monetization. So, we're investing in building that great consumer experience first, but we see year-over-year increases in the number of people doing product searches, amount of time that they're spending on shopping surfaces. And we're also simplifying our shopping ad formats, so brands can just more easily promote their products. So, there is a lot there.

We'll be experimenting with Idea Pins' monetization, we expect that to lag. We're going to wait for that creator economy to sort of get up to speed, but we think there is some pretty significant drivers of future revenue growth that we're still in the early innings of pursuing.

Brian Nowak - Morgan Stanley - Analyst

Okay. Thanks, Ben.

Operator

Our next question comes from Rich Greenfield of LightShed Partners. Rich, the line is yours.

Rich Greenfield - LightShed Partners - Analyst

Hi, thanks for taking the question. Last year, there was obviously a lot of speculation surrounding Salesforce acquiring - you were looking to acquire. I guess the question is, especially when you sort of highlight, Ben, the challenges of platform changes and how tweaks, I guess, that you are looking at what happened with iOS 14, 15 and Meta looking at sort of the way Google continues their algorithm. I guess, it all just sort of begs the question is, the size and scale look increasingly important in the broader media tech ecosystem, and I guess, even commerce ecosystem, I would say. How do you think about sort of where Pinterest fits in? Are you open to consolidation? Like how do you think about sort of where ultimately you need to be to accomplish what you want?

Ben Silbermann - Co-founder and Chief Executive Officer

Sure, Rich. Well, I think, there's two parts of the answer. First, as CEO and fiduciary, I'm always keeping an open mind, but I really do believe that we have a pretty unique place in the market. And I touched on it before, but I can go into a little bit more detail.

First, there is a huge audience that's coming to Pinterest for something that's fundamentally different than what they come to other platforms. They're not coming to check with friends, they're actually coming to envision their future and to plan for it. And increasingly, we're getting better and better at helping them do that planning and connecting with the people that can share the knowledge and the inspiration to advance that, and then, eventually, connecting to the retailers and to the individual products they need. I really think that planning your future, that's a fundamental human need, that's not going away, and we're laser-focused on targeting that need above all the other ones.

Second thing I'd say is that Pinterest sits at this pretty interesting intersection of a few trends that are really secular growth trends in the industry. Commerce is one of those and we have a lot of people coming with specific intent to do something, but they may not have settled on the specific product they're looking for, and I think that space of shopping, not just buying, but actually shopping, discovering what you're looking for, finding something on the lines of your taste, that's still quite open.

And then, finally, we're investing in a creator ecosystem and online video, and I truly believe that video and mobile video, it's still in its infancy as an industry. I believe that we're going to see verticalization happen over time and we're well-positioned to pioneer new media formats to do both inspiration, but also allow creators to facilitate action, and providing different revenue models for them, and being a real source of economic growth for that new creator business. So…

Rich Greenfield - LightShed Partners - Analyst

And just to be clear…

Ben Silbermann - Co-founder and Chief Executive Officer

What we've laid out over the last few years. Yeah?

Rich Greenfield - LightShed Partners - Analyst

So, just to be clear, when - I think, Todd made a comment about the potential risk to growth on sort of engagement tied to competition. Is - I mean, we're speaking specifically about TikTok or is there something else beyond something like TikTok that you're looking at competitively that could have impact in the future?

Ben Silbermann - Co-founder and Chief Executive Officer

Sure. I mean, look, we take all competition seriously. I would argue that competition for kind of user attention and time right now, it's probably the most competitive industry in the world. So, of course, TikTok we think about, we think about Meta, we think about Google, but we also really try to focus on what we can offer that's differentiated and that was the spirit of the last answer. And so, I hope that's helpful.

Rich Greenfield - LightShed Partners - Analyst

Yeah. Thank you.

Operator

Our next question comes from Doug Anmuth of J.P. Morgan. Doug, please go ahead.

Steve - J.P. Morgan - Analyst

Great. This is Steve on for Doug. Thanks for taking my question. To the first one. Do you have any views to share why Google algorithm changes are impacting you guys more recently, and how do you think about direct traffic mix this year and then, going forward? And then, secondly, could you give us an update on where you are with the native checkout and the timing for that moving beyond just the tech space?

Todd Morgenfeld - Chief Financial Officer

Yeah. I think, a couple of questions in there. One was around direct traffic and search-driven traffic, and then, the other was on native checkout. On the second, we just started piloting and testing native checkout, and we look forward to continuing to scale and broaden those efforts over the course of the year. So, it's still pretty early days.

On the direct traffic mix, I tried to lay out a couple of ways I've been thinking about it. One was the bridge on sequential and year-over-year trends with respect to MAUs, and I wanted to give you a little bit more color on that direct usage, mobile app usage to give some color on the difference between search-driven traffic and search-driven MAUs versus those that are direct for the reason that you described. The truth is that Google makes algorithm changes regularly. We did see another one in November that had a material impact, which is why we're calling it out. It's not the first time it's happened and we are working on how to best factor that into our product mix and respond to it, but the long-term answer is to have a robust native content ecosystem, which we're building. And I think that will be the long-term answer on engagement.

Steve - J.P. Morgan - Analyst

Got it. Thank you.

Todd Morgenfeld - Chief Financial Officer

Thanks.

Operator

Our next question comes from Colin Sebastian with Baird. Colin, please go ahead.

Colin Sebastian - Robert W. Baird & Co. - Analyst

All right. Thanks, guys. Good afternoon. Two for me as well. I guess, first off, I wanted to follow up on some of disparity in performance between the mobile app and desktop. I know you - a lot of the work you've done on personalization and native content, for example, might be more concentrated in the app. If that's true, is the app usage and engagement level or trend, is that a better gauge for what overall the platform looks like down the road in terms of engagement?

And then, secondly, I know you added a Chief Content Officer from YouTube. I think, Malik's experience was with a lot of premium content and native content creation. And so, I'm wondering if YouTube's strategy in those areas serves as somewhat of a template for what you hope to achieve with respect in video brought onto the platform. Thank you.

Todd Morgenfeld - Chief Financial Officer

Colin, why don't I start with the question on the search-driven traffic, and then, I'll let Ben talk about the team and leadership piece. We've talked - remember, back to our - when we were marketing the company on the roadshow, we talked about a lot of our user growth being different on Pinterest versus social media. It's not some viral product where if you join you immediately invite seven of our friends. It's much more linear in terms of growth and it's driven largely by word of mouth. Search-driven traffic is kind of a way of getting word of mouth, that it's automated and you're looking for a new idea, content that's recommended to you and you discover Pinterest.

So, it's an important top of funnel growth driver, and it's also an important revisitation driver. For those reasons, we think it's an important part of our engagement because it's a source of revisitation and therefore, reducing churn, ultimately, our MAUs are a byproduct of that, and it introduces people to Pinterest potentially for the first time to solve new problems in their life.

I want to give the color on the mobile app usage, because that is where people spend the bulk of their time impressions and revenue opportunity, but the two are very important when considered together. So, that's why we've broken it out the way we did.

Ben Silbermann - Co-founder and Chief Executive Officer

Yeah. Colin, and as you pointed out, we welcomed Malik from YouTube as our first Chief Content Officer. It kind of reflects the role and the importance of content on the platform going forward. Look, I would say that there are a few things. One is, as a company, we have a lot to learn about audience development and we're really impressed with kind of Malik's analytical problem solving as well as experience in both kind of premium and user-generated content.

The other thing that I was really interested in is that Pinterest really wants to be a place where the content that we serve to folks is nourishing, is positive, and is inspirational. I think, over the last few years, a lot of our users have appreciated that while many services online kind of have quite a bit of polarization or toxicity or sometimes content that they don't feel like is enriching. Pinterest has tried to have a little bit of a tighter focus on something that's positive and inspiring and that's because that's core to our mission, right. If you're thinking about being inspired for your life, it's important that you're in an environment where the content is positive overall. And so, looking at some of his experience working with more positive content ecosystem, whether it's like YouTube Kids or on the premium side, I thought brought some really important insight.

I'd also share that we're building a whole team. And so, there's always a lot of attention on leaders, but I'm excited about the team's ability to move fast and innovate, and really chart its own path, because I think that all of these content platforms, while in their initial days, they may look similar, they're going to end up looking different and verticalizing. And so, we're going to need to really follow kind of the Pinterest users and develop a content offering that really works towards our mission of inspiring them in their day-to-day life.

Colin Sebastian - Robert W. Baird & Co. - Analyst

Great. Thank you.

Operator

Our next question comes from Lloyd Walmsley of UBS. Lloyd, please go ahead.

Akaash Agarwal - UBS - Analyst

Hi. Yeah, this is Akaash Agarwal on for Lloyd. Two questions, if I may. The first is, can you talk about trends and higher frequency metrics like weekly active users or maybe overall time spent? Are you seeing this outperform relative to MAU?

And then, the second question would just be, you mentioned how some of the newer formats are driving increases in frequency. What are you seeing with respect to shopping, in particular, are you seeing consumers who leverage their shopping functionality actually come back with greater frequency or is it more Story Pins, Idea Pins and videos? Thank you.

Todd Morgenfeld - Chief Financial Officer

I can start. Thanks for the questions. So, on the additional metrics that you were asking about weekly active users, time spent, etc., we do disclose the ratio in our public filings on an annual basis around weekly active users as a percentage of monthly active users, and that's been pretty stable over the last few years. So, that's the answer on one.

With respect to shopping, we are seeing a much better user experience enabled by a lot of the investments we've been making over the last few years. Dedicated shopping surfaces that allow users to go from idea to purchase in a much more natural kind of shopping - in a much more natural shopping journey. And at the same time, we've dramatically improved the amount of inventory we can serve with our catalog ingestion work and the APIs that we've developed. As a result of that, we've seen a number of users who are engaging in shopping surfaces grow pretty meaningfully and we're up 20% sequentially from Q3 to Q4, and 20% year-over-year. So, really encouraging. And I think, there are a lot of connections that we can build over the next few years across this native video ecosystem, our creator-led content ecosystem, coupled with a lot of the shopping investments we're making should make a really differentiated experience on Pinterest.

You may have also noted that we got some press a couple of days ago on the AR - some of the AR products we've been shipping that has really improved from a technology perspective our ability to deliver pretty interesting shopping experiences. So, really excited about some of the innovation that our teams have built.

Akaash Agarwal - UBS - Analyst

Thank you.

Operator

Our next question…

Todd Morgenfeld - Chief Financial Officer

Operator, next question?

Operator

Comes from - and your next question comes from Justin Post of Bank of America. Justin, please go ahead.

Justin Post - Bank of America - Analyst

Great. I'll ask just one. Revenue is really accelerated during the pandemic, and you were able to reach 32% margins for EBITDA last year. So just - it looks like you're going to be doing some more investing next year. What have you learned about the margin potential of the business, and any update on how you're thinking about long-term margins? Thank you.

Todd Morgenfeld - Chief Financial Officer

Thanks, Justin. While we did a - kind of a banner year with respect to performance, we - gross margins were at incredibly high levels by the end of the year. Our spend profile, we continue to invest aggressively. Our headcount growth, I think, a year ago, was like 15% in the fourth quarter. That ticked up a few points every quarter until we got to 27% in the fourth quarter of this year. We're investing in a lot further - more headcount growth going into next year.

I think, what we've proven is that we have a great business model and that the business is working. I think, we've also internally come to the view that the long-term potential of the company needs to be enabled by further investments over the course of this year, which is how we landed at the guidance that we suggested, which is a lot of confidence that when we make investments with the right plan, we know what we're looking at to gauge success and we hold ourselves to that. From an execution standpoint, we have a pattern of delivering great results.

That started a few years ago when we were building our - rebuilding our international audience. Our growth rate in international users had been ticking down and with concerted effort, the right investment plan and great execution, we turned that around and we accelerated our user growth outside of the U.S. That was fantastic. We built a monetization plan in the U.S. That was forward-investing in building a business and that worked well. We did the same thing for international monetization. And again, we've talked about this in the past, put a lot of investment in creating a compelling shopping experience from a user perspective and are now building a business around that. So, I'm confident that, like all of those other projects, our long-term focus, the strategic outcomes that we're looking for are the right answer for this business over the next few years, and accelerating our investments again next year will help us deliver against that.

Is that helpful?

Justin Post - Bank of America - Analyst

Yeah. Great. Thank you.

Todd Morgenfeld - Chief Financial Officer

Okay. Operator, we'll take our last question.

Operator

Our final question will come Rohit Kulkarni of MKM Partners. Rohit, please go ahead.

Rohit Kulkarni - MKM Partners - Analyst

Hey. Thank you. Two, if I could. One is the - just in the past, you had commented on in-home versus out-of-home use cases and kind of underlying engagement trending one way or the other. I just wanted to know that the only creators showcased in the letter is, travel bloggers. So, if you can just comment on like how are the - how is the engagement for say, out-of-homes, so, travel, beauty trending versus in-home use cases?

And another question is on managed versus full kind of automated advertising campaigns. If you could just call out what type of advertisers are choosing one versus the other. Is there a pathway that you think that - and another that goes from a managed seasonal ad campaign to a completely automated ad campaign? So, those were the questions. Thanks.

Todd Morgenfeld - Chief Financial Officer

Why don't I - I'll start with the second question. I think, we've seen a lot of success in our managed advertising community. Those that we cover both with respect to field sellers all the way through our kind of mid-market coverage team, and we've been making a lot of investments in automating our ad stack to make it easier for those advertisers to onboard, scale their spend and increasingly see the results of that spend.

We're not, at the point yet today, where that experience is as fully instrumented as we would like it to be to have an unmanaged long-tail advertiser base on the platform. And so, we've been focusing on the managed go-to-market model until we get that up and running. And we've been making the - all the right investments, seeing all the right returns. With respect to building that ad stack, it will just take some time before we get there. So, that's one.

I don't know, Ben, if you wanted to talk about use cases.

Ben Silbermann - Co-founder and Chief Executive Officer

Yeah. Rohit, I mean, Pinterest use cases have often reflected what's going on in broader society. So, as Todd mentioned, we saw a big change with the outbreak of the pandemic, and hopefully, we're seeing a little bit more of a return to normalcy. I think, we're all hoping for that. I'll also say, on Pinterest itself, we've always had historical strength and - in some core lifestyle verticals. One of our hopes is that as we scale the creator ecosystem and give creators the ability to directly build their own communities on Pinterest, we'll start to see some expansion and see different types of use cases emerge. It's still early days, but again, it's kind of one of the benefits if we can build that ecosystem. And so, we're excited to continue investing in that because we think it will advance our mission of inspiring people and helping them create a life they love.

Great. Thank you for joining our call everyone, and we'll see you next quarter.

Operator

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PINTEREST INC

Q4 2021

Earnings Transcript

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