Two reasons why Gen Z is turning to Pinterest: CEO

Last week, Pinterest (PINS) reported its first quarter earnings revealing revenue rose 23% year-over-year to $740 million, exceeding analysts' expectations by $40 million, with its adjusted earnings rising to $0.20 per share. Part of its explosive growth can be seen by an influx of Gen Z users by utilizing AI-driven recommendations.

Yahoo Finance Anchors Brian Sozzi and Akiko Fujita are joined by Pinterest CEO Bill Ready at the Milken Global Institute Conference to discuss the company's performance, the future of AI, the potential ban of TikTok, and more.

On the company's use of AI, Ready says: "We now use models that are 100 times larger than the models that we were using a couple of years ago. That led to roughly have a 10 percentage point improvement in relevancy of recommendations we make to our users."

He continues with the benefits AI has brought the company and, in turn, the users of the platform: "We've also been doing things to design our product to create great signal for that AI. So for example, we've really leaned into human curation of scale, so it's not just users coming to Pinterest to shop, they come to Pinterest and curate and put together outfits, put together room designs, and so when those users say 'I put this handbag with this dress and this pair of shoes'...that gives us really great signal to make better and better recommendations to our users by training the AI on that really unique signal, and importantly, it's helping users to do things that help them to take action in their real life..."

Watch the video above to hear the two reasons why Ready says Gen Z is flocking to Pinterest.

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This post was written by Nicholas Jacobino

Video transcript

Pinterest is on.Well, a little bit of a hot streak that I don't think the market really has caught on just yet.Let's talk to Pinterest.See, Bill, red Bill.Good to see you at the mil conference.I've seen you all around the world in California.Yeah.Yeah.Good to see you again.Seven straight quarters of what ma U acceleration growth.We uh well, you know, so it is a fantastic quarter but it is really the culmination of initiatives that we've been putting in place over the course of the last nearly two years.And, you know, we hit all time high end users, 518 million monthly active users and we've accelerated seven quarters in a row on users across every generation and across every geography.But we're really winning is with Gen Z. Gen Z is now 40% of the users on our platform and our fastest growing demographic.That's one people in their late twenties.Yeah, it's, it's what they're doing on pictures.It spans, you know, sort of uh teenagers through, you know, college graduates and sort of folks early in their career, but they're coming for two primary reasons one, we've really improved the action ability on the platform.Uh Pinterest is where Gen Z goes to shop.And so Pinterest had previously been great at window shopping, but you couldn't really get to the things that you found over the last two years.We've really been opening the stores making it really easy for users to connect to the things that they find on Pinterest.And you know, that led to us more than doubling the number of clicks we sent to advertisers year on year in Q four and in Q one.Um so that, that action ability and shopp ability is really resonate, resonating.But then positivity is really resonating as well.We've really invested in making Pinterest a more positive alternative to traditional social media.And when you ask Gen Z, they will tell you that they see Pinterest as an oasis away from the toxicity that they see on much of the rest of social media.And that's cutting through.Uh and it's a great example of doing well by doing good.I want to get back to that because I know that that's something you've been very focused on.Literally since you started at Pinterest when you talk about shop though, is that the power of your A I any new A I you're releasing behind the scenes to help people shop on the platform?Absolutely.So A I has been a massive tailwind for us.And so, you know, we've done a few things, one, we really lean heavily into large language models.Uh Next gen A I like uh GP U serving things like that.We now use models that are 100 times larger than the models that we were using a couple of years ago.That led to more roughly a 10% point improvement and relevancy of the recommendations we make to our users.But we've also been doing things to design our product to create great six for that A I.So for example, we've really leaned into human curation at scale.So it's not just that users come to Pinterest to shop, they come to Pinterest and curate and put together outfits, put together room designs.And so when those users say, oh I put this handbag with this dress and this pair of shoes or to put together a room in this aesthetic, I choose this lamp and this sofa and this rug that gives us really great signal to make better and better recommendations to our users by training the A I on that really unique signal.And importantly, it's helping users to do things that help them take action in their real life, not just keep them glued to a screen, but actually make their life in the real world better as well.I'll put this question to you.So Warren Buffett's annual shareholder meeting, he sounded concerned on an A I after someone I guess made a video of him talking now I asked IBM CEO, does he share those?He says, no, they're fantastic.What's your views?I, I think like any technology, you know, the A I is neither good nor bad but it can be used for good or bad.And so I think, you know, it's a totally appropriate conversation to be talking about what could the harms be and how do you avoid those harms?And on our side of it, we're trying to prove that you can use the A I for good.So we've done things like inclusive A I.Uh we've launched features uh you know, like inclusive A I that we're doing that creates diversified defaults on our feeds.Uh We're tuning the A I for positivity.So uh roughly a year ago, we saw each other last at the Cannes Festival, we launched the inspired internet pledge where we committed to measuring emotional well being outcomes on our platform.And so we're tuning into A I to serve more things to help us just come away, feeling better about themselves.And so body positivity is an example of that where we've launched body type A I so that people see people are able to see a more representative set, they can choose the body type that represents the best, see a more representative set um of not just what the average fashion model looks like, but what they look like and what real people look like.Uh We've done the same thing with like uh skin tone filters and hair pattern filters.And so these are examples where you can use the A I for good and that's what we've been focused on is like how to use A I for good.And you can also use A I to avoid some of the bad things as well.We've used A I A lot to get bad actors off the platform and build safety features through A I.So again, A I is neither good nor bad.Like any technology can be used for either.So we're focused on how do we use it for good and how do we also use it to avoid the harms that, that, that could be possible.You and I in the past have talked about tiktok, what a ban might be.It is what it is, but is the best possible thing that could happen to the internet is something like this gets banned and doesn't exist in the US.So we can go back to focusing on other things and getting life done.Um You know what I would say, you know, uh rather than comment on any one platform, you know, we're not sitting back hoping for the demise of other platforms.You know, we have accelerated with Gen Z because we're doing something really unique in the world of social media.And you know, it's, it's on two fronts.Users come to Pinterest with intent.We're not an entertainment based platform most of social media is entertainment based, they use is a lean back, entertainment consumption mode.You just come to Pinterest with intent and purpose, whether it's to shop or to make or to do or to buy, they're coming with some intent and purpose and we're helping them fulfill that intent and purpose.So that action ability is very different than much of the rest of social media and the positivity that we're investing in around, you know, making sure that the A I for positivity, tuning for emotional well being outcomes and more positive emotional well being outcomes.You hear it from Gin Z users, they will tell you they come to Pinterest because they see it as an oasis away from the toxicity of the rest of social media.So again, you know, is it understandable that regulators are going to, you know, pay attention, governments regulators will look and pay attention if they think there are potential harms.That totally makes sense.But we're not sitting around waiting for government action.We're focused on avoiding those harms on our platform, tuning for positivity and giving Gen Z something that's really great that's different from the rest of social media before I let you go tell me if I have this somewhat, right?So you have a part deal with our partnership with Amazon and Google do investors.Are they under appreciating how those two partnerships will change your cash flow and your earnings over the next few years.Well, what I would say is, you know, I, I think you are seeing, you know, the acceleration in our ad business really cutting through with advertisers.First and foremost, do we perform for advertisers?We more than double the number of clicks we sent to advertisers in Q four and we did it again in Q one actually accelerate even further because of Amazon.It is really because the action ability that we're bringing to the platform and that's through a combination of efforts.A lot of it is retailers coming to us directly.But then we've also, as you noted, augmented that first party demand on our platform with third party demand coming from Amazon, uh who we've been working with for coming upon a year, Google, we added more recently the national market.And so that is helping to bring more stoppable actionable inventory on to the platform, but it really is a composite effect.And what I would say is that when you step back from it all, Pinterest is firing on all cylinders.If you look at the initiatives I laid out when I came in nearly two years ago that we went through our investor day last September, you know, our strength uh has been broad based, you know, we, we roughly doubled our revenue growth rate from Q four to Q one.We doubled it from H one to H two last year, we doubled again from Q four to Q one and we've accelerated user growth in every geography with every generation.And so it is really all the initiatives we've laid out on action, ability and positivity, better performance for advertisers.All those initiatives are hitting and performing well.Uh And so the strength is broad based turnaround continues to Pinterest.Uh P see, Bill red.Good to see you, see, we'll see, I can hopefully no uh sunburn for both of us this year.