Pinterest Inc Earnings - Q2 2026 Analysis & Highlights
Pinterest reported strong Q2 2026 results driven by record user growth and accelerating monetization through AI-powered ad platform improvements and go-to-market transformation, with particular strength in the UCAN region offsetting international headwinds from regulatory pressures and difficult comparisons.
Key Financial Results
Revenue of $1,180 million in Q2 2026, representing 18% year-over-year growth (up 17% on a constant currency basis), with strength led by conversion and consideration objectives.
Global monthly active users reached 640 million, growing 11% year-over-year and marking the 12th consecutive quarter of record users and 11th straight quarter of double-digit user growth.
Adjusted EBITDA of $311 million with an adjusted EBITDA margin of 26%, up 130 basis points versus Q2 last year.
Free cash flow of $270 million in Q2 2026, with trailing 12-month free cash flow of nearly $1.3 billion, representing 94% free cash flow conversion.
Ad impressions grew 16% year-over-year, with deceleration from prior quarters partly driven by lapping the ramp in ad impressions from previously under-monetized international markets.
Ad pricing increased 1% year-over-year, driven in part by stronger demand in UCAN and higher relative mix of UCAN ad impressions.
Cost of revenue was $245 million, up 25% year-over-year and up 6% versus Q1, driven by the full quarter impact from tvScientific and investment in additional GPU capacity.
Non-GAAP operating expense was $629 million, up 13%, primarily driven by sales and marketing due to brand campaign and sales head count investments, as well as R&D to support AI and product initiatives.
Business Segment Results
US and Canada (UCAN) revenue was $880 million, growing 18% year-over-year, representing a 5-point acceleration sequentially.
UCAN growth reflected pockets of large retailer spend acceleration due to ROAS enhancements and AI-driven bidding optimizations, as well as Asia-based cross-border retailer spend into UCAN.
Strong year-over-year growth in UCAN outside of largest retailers continued across mid-market, managed SMB, and emerging verticals, with many advertisers benefiting from Pinterest Performance+ campaigns.
Europe revenue was $213 million, growing 12% on a reported basis or 7% on a constant currency basis, driven by retail.
Rest of world revenue was $87 million, growing 38% on a reported basis or 32% on a constant currency basis.
US and Canada region had 106 million MAUs growing 4%, Europe had 157 million MAUs growing 8%, and rest of world markets had 377 million MAUs growing 15%.
Europe and rest of world growth moderated in Q2 due to deliberate leadership and structural changes to go-to-market organization and more difficult last year comparisons, including lapping reseller ramps and cross-border spend influxes.
Asia-based cross-border retailers faced incremental pressure mid-quarter from regulatory actions, particularly in Europe, with pressure continuing into Q3.
Capital Allocation
$58 million allocated towards share repurchases in Q2 2026.
Year-to-date share repurchases exceeded $2 billion, retiring nearly 111 million shares.
Entered into a capped call transaction for $99 million, protecting against dilution from previously issued convertible notes up to a price of $30.59 per share.
Cash, cash equivalents and marketable securities totaled $1.3 billion at quarter end.
Net dilution for Q2 was down 12% year-over-year, leading to growth in Q2 non-GAAP EPS of 30%.
Industry Trends and Dynamics
Over 96% of text-based searches on Pinterest are unbranded, such as "cool running shoes" or "new fall wardrobe ideas," representing a great moment for marketers to meet prospective customers with clear commercial intent who haven't yet decided what to buy.
More than 80 billion monthly searches occur on Pinterest, with the vast majority visual and over half commercial, and over 16 billion boards created on the platform.
Gen Z represents over half of Pinterest's user base and is the largest and fastest-growing cohort.
39% of Gen Z now thinks of Pinterest as a first place to go search, with more than 70% of Gen Z seeing Pinterest as more personalized.
Strength in retail vertical continues, with smaller but faster growing emerging verticals including financial services, travel and health.
Paid clicks to advertisers on Pinterest are up well over 5 times over the last three years.
Competitive Landscape
Search market continues to fragment with a small number of horizontal general purpose platforms but more vertical specific experiences solving distinct consumer needs, a trend happening for more than two decades.
General purpose AI applications are discovering it's very hard to be all things to all people and have pulled back from many vertical specific experiences.
Pinterest's proprietary Taste Graph, built on years of visual curation signals from user searches, saves, and boards, provides deep understanding of products and style that is highly relevant to how people shop and to each individual's taste and interests.
Pinterest's multimodal models outperform closed models by 34 percentage points on the relevancy of shopping recommendations.
Pinterest Assistant is differentiated by being built on the Taste Graph and being visual first, consistent with the experience users expect from Pinterest.
Macroeconomic Environment
Foreign exchange expected to be a modest headwind in Q3 after providing a 1-point tailwind in Q2.
Prime Day shifted from Q3 last year into Q2 this year, resulting in approximately 0.5-point benefit to Q2 and representing roughly 0.5-point headwind to Q3.
World Cup-related spend provided nearly 1-point benefit in Q2 that will not repeat in Q3.
Asia-based cross-border retailers impacted by regulatory actions, particularly in Europe, creating incremental pressure mid-quarter with pressure continuing in Q3.
Growth Opportunities and Strategies
Pinterest Assistant, an AI conversational layer made available to vast majority of US users as of end of July, helps users answer research questions and move from idea to finished plan or purchase entirely on Pinterest.
Pinterest Assistant enables users to generate product comparisons, step-by-step instructions, and visual forward guidance, with memory and conversational history creating more personalized experience.
Pinterest Assistant built on Taste Graph using compact, fit-for-purpose proprietary models and open source models post-trained in Pinterest's own secure cloud infrastructure, achieving cost per transaction at less than 8% of comparable closed proprietary models.
Pinterest Performance+ campaigns deliver meaningfully better ROAS and faster spend growth than non-adopters, with approximately 30% of lower funnel revenue running through Performance+ campaigns as of Q1.
Smart Assembly, a new Pinterest Performance+ creative capability, allows advertisers without existing shopping product catalogs to upload multiple images with Pinterest automatically building and serving the best performing ad, delivering 6% improvement in click-through rate on average in early alpha testing.
Business Assistant, a conversational AI collaborator for advertisers currently in beta, combines advertiser's business context with Pinterest platform insights to surface actionable recommendations including relevant trends, top performing Pins, and optimization opportunities.
Pilot integrations between large and sophisticated advertisers' in-house measurement systems and Pinterest's AI bidding systems allow optimization toward unique set of desired outcomes, with initial group seeing strong performance contributing to Q2 results.
Shopping ads delivery systems improved at deciding which products to show, when to show them, and how to allocate budgets against highest value advertiser opportunities, including improving product selection for large catalogs and increasing variety of relevant products users see.
tvScientific capabilities expected to be fully integrated directly into Pinterest Performance+ in 2027, turning Pinterest into full funnel search, social and CTV platform performance solution and opening access to larger and incremental budget pools.
UCAN playbook focused on clear seller accountability, better packaging of commercial moments, and tighter connection between product performance and advertiser conversations being applied internationally.
New international leadership sharpening global go-to-market approach and bringing more global discipline to how performance selling is driven internationally.
Testing expansion of third-party demand in Europe to broaden demand.
Restructuring account coverage teams and realigning incentives for mid-market and managed SMB go-to-market efforts to better serve this cohort over time.
Updates to ad delivery models drove 28% improvement in ROAS during testing for SMB advertisers using Pinterest Performance+ with ROAS bidding.
Simpler campaign creation flow targeted for early next year will put best practice setup in place from the very start.
Financial Guidance and Outlook
Q3 2026 revenue expected in range of $1,190 million to $1,210 million, representing 13% to 15% growth year-over-year.
Q3 2026 adjusted EBITDA expected in range of $335 million to $355 million.
Q3 non-GAAP cost of revenue expense expected to be roughly flat versus Q2 2026 due to accelerated recognition of certain contractual benefits associated with recently executed multiyear infrastructure agreement.
Q3 primary area of year-over-year investment will be sales and marketing and R&D to support AI and product initiatives.
Modest headwinds from cost of revenue as percentage of revenue expected in second half of 2026 as result of investments in additional GPU capacity and impact from inclusion of tvScientific.
Full year 2026 adjusted EBITDA margins now expected at approximately 30% versus prior expectation of approximately 29%, given first half revenue outperformance.
Near- to medium-term margins expected to be consistent with long-term range provided at Investor Day of 30% to 34%.
Company expects to be profitable on full year GAAP net income basis.
Strong growth in UCAN expected to continue in Q3.
Q3 represents most difficult comparison of year for Europe region in particular.
AI and Technology Strategy
Every pin a user sees on Pinterest is personalized and served by AI, with full transition to GPU serving completed more than two years ago.
Company uses blended model approach including own compact, fit-for-purpose proprietary models, open source models, and in very limited cases, select closed third-party models.
Centralized model routing layer optimizes production traffic for right balance of quality, cost, latency, and reliability, reserving more capable, higher cost models for complex work while using lighter, lower cost options for routine tasks.
Open source models post-trained on Pinterest's highly unique data deliver superior performance for use cases compared to closed third-party models.
Weekly pull requests per engineer increased 45% in July versus last year while incident rates and service uptime remained relatively consistent, demonstrating improved velocity without compromising reliability.
AI adoption expected to grow over time with both AI-related compute and token spend growing, with investments planned and included in outlook.
User Engagement and Platform Dynamics
100% of reported users are logged in and 85% come to Pinterest directly through mobile app, meaning company is not heavily reliant on third parties for traffic.
Searches and boards created continued to grow faster than users in Q2 in UCAN.
Pinterest transformed into AI-powered shopping assistant with highly differentiated signal from human taste and curation at scale.
Feedback loop of AI personalization getting more personalized with every user interaction helps users discover what they want before they have exact words, brand, or product in mind.
