Pinterest Inc.
10/29/2026 | Press release | Distributed by Public on 10/29/2026 14:19
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from these forward-looking statements as a result of many factors, including those discussed in "Risk Factors" and "Note About Forward-Looking Statements" included elsewhere in this Quarterly Report on Form 10-Q.
Overview of Third Quarter Results
Our key financial and operating results as of and for the three months ended September 30, 2026, unless noted otherwise, are as follows:
•Revenue was $1,173.9 million, an increase of 12% on a reported and constant currency basis compared to the three months ended September 30, 2025.
•Monthly active users ("MAUs") were 661 million, an increase of 10% compared to September 30, 2025.
•Share-based compensation expense was $291.7 million, an increase of $56.6 million compared to the three months ended September 30, 2025.
•Income from operations was $30.3 million, a decrease of $28.2 million compared to the three months ended September 30, 2025.
•Net income was $21.5 million and Adjusted EBITDA was $339.2 million.
•Net cash provided by operating activities was $936.6 million and free cash flow was $881.9 million during the nine months ended September 30, 2026.
•Cash, cash equivalents and marketable securities was $1,470.0 million.
•Headcount was 5,192.
Trends in User Metrics
Monthly Active Users. We define an MAU as an authenticated Pinterest user who visits our website, opens our mobile application or interacts with Pinterest through one of our browser or site extensions, such as the Save button, at least once during the 30-day period ending on the date of measurement. The number of MAUs does not include Shuffles users unless they would otherwise qualify as MAUs. We present MAUs based on the number of MAUs measured on the last day of the current period. We calculate average MAUs based on the average of the number of MAUs measured on the last day of the current period and the last day prior to the beginning of the current period. MAUs are the primary metric by which we measure the scale of our active user base.
Quarterly Monthly Active Users
(in millions)
Note: U.S. and Canada, Europe and Rest of World may not sum to Global due to rounding. Europe includes Russia and Turkey for our reporting of Revenue, MAUs and ARPU by geographic region.
As of September 30, 2026, global MAUs increased compared to September 30, 2025 primarily due to our ongoing investments in relevance and personalization.
Trends in Monetization Metrics
Revenue. We calculate revenue by user geography based on our estimate of the geographic location of our users when they perform a revenue-generating activity. The geography of our users affects our revenue and financial results because we currently only monetize certain countries and currencies and because we monetize different geographies at different average rates. Our revenue in U.S. and Canada and, to a lesser extent, Europe is higher primarily due to the relative size and maturity of the digital advertising markets in these geographies.
Quarterly Revenue
(in millions)
Note: Revenue by geography in the charts above is geographically apportioned based on our estimate of users' geographic location when they perform a revenue-generating activity. This allocation differs from our disclosure of revenue disaggregated by geography in the notes to our condensed consolidated financial statements where revenue is geographically apportioned based on our customers' billing addresses. U.S. and Canada, Europe and Rest of World may not sum to Global and quarterly amounts may not sum to annual due to rounding.
Average Revenue per User. We measure monetization of our platform through our average revenue per user metric. We define ARPU as our total revenue in a given geography during a period divided by average MAUs in that geography during the period. We calculate ARPU by geography based on our estimate of the geography in which revenue-generating activities occur. We present ARPU on a U.S. and Canada, Europe and Rest of World basis because we currently monetize users in different geographies at different average rates. Our ARPU in U.S. and Canada and, to a lesser extent, Europe is higher primarily due to the relative size and maturity of the digital advertising markets in these geographies.
Quarterly Average Revenue per User
For the three months ended September 30, 2026, global ARPU was $1.80, which represents an increase of 1% compared to the three months ended September 30, 2025. For the three months ended September 30, 2026, U.S. and Canada ARPU was $8.38, an increase of 10%, Europe ARPU was $1.21, a decrease of 7%, and Rest of World ARPU was $0.23, an increase of 9% compared to the three months ended September 30, 2025.
We use MAUs and ARPU to assess the growth and health of the overall business and believe that these metrics best reflect our ability to attract, retain, engage and monetize our users, and thereby drive revenue.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the United States ("GAAP"), we consider certain non-GAAP financial measures, as described below.
We use Adjusted EBITDA to evaluate our operating results and for financial and operational decision-making purposes. We define Adjusted EBITDA as net income (loss) adjusted to exclude depreciation and amortization expense, share-based compensation expense, payroll tax expense related to share-based compensation, interest income (expense), net, other income (expense), net, provision for (benefit from) income taxes and certain other non-recurring or non-cash items impacting net income (loss) that we do not consider indicative of our ongoing business performance. We believe Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the income and expenses that it excludes.
We use constant currency revenue to evaluate our operating and financial results. We calculate constant currency revenue by translating our current period revenue using the corresponding prior period's monthly exchange rates for currencies other than the U.S. dollar. We believe constant currency revenue provides useful information to investors because it excludes the effects of foreign currency volatility that are not indicative of our core operating results.
We present free cash flow because we believe it provides useful information to investors about the amount of cash generated from operations, after purchases of property and equipment, that can be used to strengthen our balance sheet or invest in our business among other things. We define free cash flow as net cash provided by operating activities less purchases of property and equipment. Free cash flow is not intended to represent our residual cash flow available for discretionary expenditures.
We present these non-GAAP financial measures because we believe they provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to key metrics we use for financial and operational decision-making. We present these non-GAAP financial measures to assist investors in seeing our operating results through the eyes of management and because we believe that these measures provide an additional tool for investors to use in comparing our core business operating results over multiple periods with other companies in our industry.
Adjusted EBITDA, constant currency revenue and free cash flow should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures rather than net income (loss), revenue and net cash provided by operations, the nearest GAAP equivalents. For example,
•Adjusted EBITDA excludes:
•certain recurring, non-cash charges such as depreciation of fixed assets and amortization of acquired intangible assets, although these assets may have to be replaced in the future; and
•share-based compensation expense and related payroll tax expense, which have been and will continue to be for the foreseeable future, significant recurring expenses and an important part of our compensation strategy.
•Constant currency revenue excludes the effect of changes in foreign currency exchange rates, which have an actual effect on our operating results; and
•Free cash flow does not reflect our future contractual commitments arising from purchases of property and equipment.
In addition, these non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP, and may differ from similarly titled measures used by other companies (if used at all), which reduces their usefulness as comparative measures.
Because of these limitations, you should consider these non-GAAP financial measures alongside other financial performance measures, and our other financial results presented in accordance with GAAP.
Adjusted EBITDA
The following table presents a reconciliation of net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA (in thousands):
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Net income (loss) | $ | 21,515 | $ | 92,108 | $ | (98,741) | $ | 139,785 | ||||||||||||||||||
| Depreciation and amortization | 10,895 | 7,205 | 28,563 | 19,143 | ||||||||||||||||||||||
|
Share-based compensation (1)
|
288,249 | 235,136 | 830,099 | 649,796 | ||||||||||||||||||||||
|
Payroll tax expense related to share-based compensation
|
5,618 | 5,194 | 25,777 | 27,333 | ||||||||||||||||||||||
| Interest (income) expense, net | (6,022) | (28,536) | (31,142) | (83,851) | ||||||||||||||||||||||
| Other (income) expense, net | 1,232 | (144) | 3,521 | (15,623) | ||||||||||||||||||||||
| Provision for (benefit from) income taxes | 13,613 | (4,912) | 21,210 | (21,602) | ||||||||||||||||||||||
|
Restructuring charges (2)
|
4,107 | - | 65,539 | - | ||||||||||||||||||||||
| Non-cash charitable contributions | - | - | 12,198 | 13,495 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 339,207 | $ | 306,051 | $ | 857,024 | $ | 728,476 | ||||||||||||||||||
(1)Excludes share-based compensation expense of $3.4 million and $17.6 million for the three and nine months ended September 30, 2026, respectively, which is included in restructuring charges.
(2)We have excluded restructuring charges associated with the Restructuring Plan from Adjusted EBITDA because they are non-recurring and not reflective of our ongoing business operations or the underlying trends in our business.
Constant currency revenue
The following table presents revenue and period-over-period changes on an as reported and constant currency basis (in thousands, except percentages):
|
Three Months Ended September 30, |
% Change | Nine Months Ended September 30, | % Change | |||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | As Reported |
Constant Currency(1)
|
2026 | 2025 | As Reported |
Constant Currency(1)
|
|||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 1,173,929 | $ | 1,049,205 | 12 | % | 12 | % | $ | 3,361,097 | $ | 2,902,420 | 16 | % | 15 | % | ||||||||||||||||||||||||||||||||||
(1)On a constant currency basis, revenue for the three and nine months ended September 30, 2026 was $1,174.1 million and $3,327.8 million, respectively, due to a $0.2 million unfavorable and $33.3 million favorable impact of changes in foreign exchange rates for the respective periods.
Free cash flow
The following table presents a reconciliation of net cash flows provided by operating activities, the most directly comparable financial measure calculated and presented in accordance with GAAP, to free cash flow (in thousands):
|
Nine Months Ended September 30, |
||||||||||||||
| 2026 | 2025 | |||||||||||||
| Reconciliation of free cash flow | ||||||||||||||
| Net cash provided by operating activities | $ | 936,641 | $ | 893,051 | ||||||||||
| Less: | ||||||||||||||
| Purchases of property and equipment | (54,758) | (21,530) | ||||||||||||
| Free cash flow | $ | 881,883 | $ | 871,521 | ||||||||||
Components of Results of Operations
Revenue. We generate revenue by delivering ads on our website, mobile application and connected TV platforms. Advertisers purchase ads directly with us or through their relationships with advertising agencies. We recognize revenue only after transferring control of promised goods or services to customers, which occurs when a user clicks on an ad contracted on a cost per click ("CPC") basis or views an ad contracted on a cost per thousand impressions ("CPM") basis or cost per day ("CPD") basis. We recognize revenue over the service period for ads contracted on a CPD basis, which do not contain minimum impression guarantees.
Cost of Revenue. Cost of revenue consists primarily of expenses associated with the delivery of our service, including the cost of hosting our website and mobile application. Cost of revenue also includes personnel-related expense, including salaries, benefits and share-based compensation for employees on our operations teams, payments associated with partner arrangements, credit card and other transaction processing fees, amortization of acquired intangible assets and allocated facilities and other supporting overhead costs.
Research and Development. Research and development consists primarily of personnel-related expense, including salaries, benefits and share-based compensation for our engineers and other employees engaged in the research and development of our products, and allocated facilities and other supporting overhead costs.
Sales and Marketing. Sales and marketing consists primarily of personnel-related expense, including salaries, commissions, benefits and share-based compensation for our employees engaged in sales, sales support, marketing and customer service functions, advertising and promotional expenditures, services provided by third-party resellers, professional services, amortization of acquired intangible assets and allocated facilities and other supporting overhead costs. Our marketing efforts also include user- and advertiser-focused marketing expenditures.
General and Administrative. General and administrative consists primarily of personnel-related expense, including salaries, benefits and share-based compensation for our employees engaged in finance, legal, human resources and other administrative functions, professional services, including outside legal and accounting services, charitable contributions, non income-based taxes and allocated facilities and other supporting overhead costs.
Restructuring. Restructuring consists of expenses associated with our global restructuring plan, including employee severance and other personnel costs, share-based compensation expense related to workforce reductions and office space reductions that include abandonment charges related to our operating lease right-of-use assets.
Interest and Other Income (Expense), Net. Interest and other income (expense), net consists primarily of interest earned on our cash equivalents and marketable securities, foreign currency exchange gains and losses, amortization of debt issuance costs and interest expense for our convertible senior notes.
Provision for (Benefit from) Income Taxes. Provision for (benefit from) income taxes consists primarily of income taxes in foreign jurisdictions and U.S. federal and state income taxes.
Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) adjusted to exclude depreciation and amortization expense, share-based compensation expense, payroll tax expense related to share-based compensation, interest income (expense), net, other income (expense), net, provision for (benefit from) income taxes and certain other non-recurring or non-cash items impacting net income (loss) that we do not consider indicative of our ongoing business performance. See "Non-GAAP Financial Measure" for more information and for a reconciliation of net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA.
Results of Operations
The following tables set forth our condensed consolidated statements of operations data (in thousands):
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Revenue | $ | 1,173,929 | $ | 1,049,205 | $ | 3,361,097 | $ | 2,902,420 | ||||||||||||||||||
|
Costs and expenses (1):
|
||||||||||||||||||||||||||
| Cost of revenue | 261,585 | 212,325 | 757,491 | 614,604 | ||||||||||||||||||||||
| Research and development | 428,079 | 371,253 | 1,259,878 | 1,062,542 | ||||||||||||||||||||||
| Sales and marketing | 336,997 | 296,679 | 1,029,121 | 863,674 | ||||||||||||||||||||||
| General and administrative | 112,823 | 110,432 | 354,220 | 342,891 | ||||||||||||||||||||||
| Restructuring | 4,107 | - | 65,539 | - | ||||||||||||||||||||||
| Total costs and expenses | 1,143,591 | 990,689 | 3,466,249 | 2,883,711 | ||||||||||||||||||||||
| Income (loss) from operations | 30,338 | 58,516 | (105,152) | 18,709 | ||||||||||||||||||||||
| Interest income (expense), net | 6,022 | 28,536 | 31,142 | 83,851 | ||||||||||||||||||||||
| Other income (expense), net | (1,232) | 144 | (3,521) | 15,623 | ||||||||||||||||||||||
| Income (loss) before provision for (benefit from) income taxes | 35,128 | 87,196 | (77,531) | 118,183 | ||||||||||||||||||||||
| Provision for (benefit from) income taxes | 13,613 | (4,912) | 21,210 | (21,602) | ||||||||||||||||||||||
| Net income (loss) | $ | 21,515 | $ | 92,108 | $ | (98,741) | $ | 139,785 | ||||||||||||||||||
|
Adjusted EBITDA (2)
|
$ | 339,207 | $ | 306,051 | $ | 857,024 | $ | 728,476 | ||||||||||||||||||
(1)Includes share-based compensation expense as follows (in thousands):
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Cost of revenue | $ | 7,574 | $ | 5,173 | $ | 20,620 | $ | 14,228 | |||||||||||||||
| Research and development | 191,114 | 152,907 | 544,327 | 418,328 | |||||||||||||||||||
| Sales and marketing | 48,925 | 40,324 | 140,024 | 109,370 | |||||||||||||||||||
| General and administrative | 40,636 | 36,732 | 125,128 | 107,870 | |||||||||||||||||||
| Restructuring | 3,445 | - | 17,558 | - | |||||||||||||||||||
| Total share-based compensation | $ | 291,694 | $ | 235,136 | $ | 847,657 | $ | 649,796 | |||||||||||||||
(2)See "Non-GAAP Financial Measure" for more information and for a reconciliation of net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA.
The following table sets forth our condensed consolidated statements of operations data (as a percentage of revenue):
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of revenue | 22 | 20 | 23 | 21 | |||||||||||||||||||
| Research and development | 36 | 35 | 37 | 37 | |||||||||||||||||||
| Sales and marketing | 29 | 28 | 31 | 30 | |||||||||||||||||||
| General and administrative | 10 | 11 | 11 | 12 | |||||||||||||||||||
| Restructuring | - | - | 2 | - | |||||||||||||||||||
| Total costs and expenses | 97 | 94 | 103 | 99 | |||||||||||||||||||
| Income (loss) from operations | 3 | 6 | (3) | 1 | |||||||||||||||||||
| Interest income (expense), net | 1 | 3 | 1 | 3 | |||||||||||||||||||
| Other income (expense), net | - | - | - | 1 | |||||||||||||||||||
| Income (loss) before provision for (benefit from) income taxes | 3 | 8 | (2) | 4 | |||||||||||||||||||
| Provision for (benefit from) income taxes | 1 | - | 1 | (1) | |||||||||||||||||||
| Net income (loss) | 2 | % | 9 | % | (3) | % | 5 | % | |||||||||||||||
Three and Nine Months Ended September 30, 2026 and 2025
Revenue
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | % change | 2026 | 2025 | % change | ||||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Revenue | $ | 1,173,929 | $ | 1,049,205 | 12 | % | $ | 3,361,097 | $ | 2,902,420 | 16 | % | |||||||||||||||||||||||
Revenue for the three and nine months ended September 30, 2026 increased by $124.7 million and $458.7 million, respectively, compared to the three and nine months ended September 30, 2025 primarily due to growth from our consideration and, to a lesser extent, awareness objectives. Revenue increased 12% and 16% on a reported and 12% and 15% on a constant currency basis for the three and nine months ended September 30, 2026, compared to the three and nine months ended September 30, 2025, respectively. Revenue growth was primarily driven by 1% and 4% respective increases in ARPU supported by a 10% increase in average MAUs for the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025. The number of advertisements served increased by 17% and 19% while the price of advertisements decreased by 4% and 2% for the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025, respectively.
Revenue based on our estimate of the geographic location of our users increased by 14% and 15% in U.S. and Canada to $894.2 million and $2,524.5 million, and Rest of World revenue increased by 24% and 38% to $87.1 million and $245.6 million for the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025, respectively. Europe revenue was flat at $192.6 million for the three months ended September 30, 2026 primarily due to lower advertising demand and increased by 11% to $590.9 million for the nine months ended September 30, 2026.
Cost of Revenue
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | % change | 2026 | 2025 | % change | ||||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 261,585 | $ | 212,325 | 23 | % | $ | 757,491 | $ | 614,604 | 23 | % | |||||||||||||||||||||||
| Percentage of revenue | 22 | % | 20 | % | 23 | % | 21 | % | |||||||||||||||||||||||||||
Cost of revenue for the three and nine months ended September 30, 2026 increased by $49.3 million and $142.9 million, respectively, compared to the three and nine months ended September 30, 2025. These increases were due to higher infrastructure costs, which increased by $28.4 million and $87.4 million, respectively, due to increased users and engagement and investments in additional GPU capacity, as well as higher payments associated with partner arrangements.
Research and Development
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | % change | 2026 | 2025 | % change | ||||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Research and development | $ | 428,079 | $ | 371,253 | 15 | % | $ | 1,259,878 | $ | 1,062,542 | 19 | % | |||||||||||||||||||||||
| Percentage of revenue | 36 | % | 35 | % | 37 | % | 37 | % | |||||||||||||||||||||||||||
Research and development for the three and nine months ended September 30, 2026 increased by $56.8 million and $197.3 million, respectively, compared to the three and nine months ended September 30, 2025. These increases were primarily due to $38.2 million and $126.0 million respective increases in share-based compensation expense and 7% and 12% increases in personnel expenses for the three and nine months ended September 30, 2026.
Sales and Marketing
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | % change | 2026 | 2025 | % change | ||||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Sales and marketing | $ | 336,997 | $ | 296,679 | 14 | % | $ | 1,029,121 | $ | 863,674 | 19 | % | |||||||||||||||||||||||
| Percentage of revenue | 29 | % | 28 | % | 31 | % | 30 | % | |||||||||||||||||||||||||||
Sales and marketing for the three and nine months ended September 30, 2026 increased by $40.3 million and $165.4 million, respectively, compared to the three and nine months ended September 30, 2025. These increases were primarily due to $14.0 million and $44.8 million respective increases in marketing expenses, 9% and 14% increases in personnel expenses primarily due to higher headcount, $8.6 million and $30.7 million increases in share-based compensation expense and, for the nine months ended September 30, 2026, a $29.0 million increase in outsourced services costs.
General and Administrative
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | % change | 2026 | 2025 | % change | ||||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| General and administrative | $ | 112,823 | $ | 110,432 | 2 | % | $ | 354,220 | $ | 342,891 | 3 | % | |||||||||||||||||||||||
| Percentage of revenue | 10 | % | 11 | % | 11 | % | 12 | % | |||||||||||||||||||||||||||
General and administrative for the three and nine months ended September 30, 2026 increased by $2.4 million and $11.3 million, respectively, compared to the three and nine months ended September 30, 2025. These increases were primarily due to $3.9 million and $17.3 million respective increases in share-based compensation expense. For the nine months ended September 30, 2026, this increase was offset by a $15.4 million non-income based tax benefit related to the repeal of Canada's digital services tax.
Restructuring
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | % change | 2026 | 2025 | % change | |||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||
| Severance and other personnel costs | $ | 1,118 | $ | - | NM | $ | 45,265 | $ | - | NM | ||||||||||||||||||||||||||||
| Share-based compensation | 3,445 | - | NM | 17,558 | - | NM | ||||||||||||||||||||||||||||||||
|
Office space reductions (1)
|
(456) | - | NM | 2,716 | - | NM | ||||||||||||||||||||||||||||||||
| Total Restructuring | $ | 4,107 | $ | - | NM | $ | 65,539 | $ | - | NM | ||||||||||||||||||||||||||||
(1)Office space reductions were negative for the three months ended September 30, 2026 due to gains recognized in connection with early terminations of office leases abandoned in the first quarter of 2026.
NM = Not meaningful
In January 2026, we initiated a global restructuring plan (the "Restructuring Plan") to support our transformation initiatives, including but not limited to (i) reallocating resources to AI-focused roles and teams that drive AI adoption and execution, (ii) prioritizing AI-powered products and capabilities, and (iii) accelerating the transformation of our sales and go-to-market approach. As part of the Restructuring Plan, we commenced a workforce reduction of less than 15% as well as office space reductions. The Restructuring Plan was completed during the third quarter of 2026.
Interest and Other Income (Expense), Net
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | % change | 2026 | 2025 | % change | ||||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Interest income (expense), net | $ | 6,022 | $ | 28,536 | (79) | % | $ | 31,142 | $ | 83,851 | (63) | % | |||||||||||||||||||||||
| Other income (expense), net | (1,232) | 144 | (956) | % | (3,521) | 15,623 | (123) | % | |||||||||||||||||||||||||||
| Interest and other income (expense), net | $ | 4,790 | $ | 28,680 | (83) | % | $ | 27,621 | $ | 99,474 | (72) | % | |||||||||||||||||||||||
Interest and other income (expense), net for the three and nine months ended September 30, 2026 decreased by $23.9 million and $71.9 million, respectively, compared to the three and nine months ended September 30, 2025, primarily due to lower returns on our cash equivalents and marketable securities, driven by lower invested balances.
Provision for (Benefit from) Income Taxes
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | % change | 2026 | 2025 | % change | ||||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Provision for (benefit from) income taxes | $ | 13,613 | $ | (4,912) | (377) | % | $ | 21,210 | $ | (21,602) | (198) | % | |||||||||||||||||||||||
Provision for income taxes for the three and nine months ended September 30, 2026 was primarily due to tax deficiencies from shared-based compensation. Benefit from income taxes for the three and nine months ended September 30, 2025 was primarily due to excess tax benefits from share-based compensation.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The legislation includes provisions that allow for the immediate expensing of domestic U.S. research and development expenses and other changes to the U.S. taxation of profits derived from foreign operations. The provisions of the OBBBA have multiple effective dates from 2025 through 2027. The changes effective in 2026 are included in our income taxes for the three and nine months ended September 30, 2026 and were not material.
Net Income (Loss) and Adjusted EBITDA
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2026 | 2025 | % change | 2026 | 2025 | % change | |||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 21,515 | $ | 92,108 | (77) | % | $ | (98,741) | $ | 139,785 | NM | |||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 339,207 | $ | 306,051 | 11 | % | $ | 857,024 | $ | 728,476 | 18 | % | ||||||||||||||||||||||||||
NM = Not meaningful
Net income for the three months ended September 30, 2026 was $21.5 million and net loss for the nine months ended September 30, 2026 was $98.7 million compared to net income of $92.1 million and $139.8 million for the three and nine months ended September 30, 2025. Adjusted EBITDA was $339.2 million and $857.0 million for the three and nine months ended September 30, 2026 compared to $306.1 million and $728.5 million for the three and nine months ended September 30, 2025, due to the factors described above. See "Non-GAAP Financial Measure" for more information and for a reconciliation of net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA.
Liquidity and Capital Resources
We finance our operations primarily through payments received from our customers. Our primary uses of cash are personnel-related costs and the cost of hosting our website and mobile application, as well as our stock repurchase program as described below. As of September 30, 2026, we had $1,470.0 million in cash, cash equivalents and marketable securities. Our cash equivalents and marketable securities are primarily invested in short-duration fixed income securities, including government and investment-grade corporate debt securities and money market funds. As of September 30, 2026, $135.9 million of our cash and cash equivalents was held by our foreign subsidiaries.
In October 2022, we replaced the $500.0 million revolving credit facility entered into in November 2018 with an amended and restated five-year $400.0 million revolving credit facility (the "2022 revolving credit facility") that contained an accordion option which, if exercised, would allow us to increase the aggregate commitments by up to $405.0 million provided we are able to secure additional lender commitments and satisfy certain other conditions.
In October 2023, we amended the 2022 revolving credit facility to increase our aggregate commitment to $500.0 million and reduce our accordion option from $405.0 million to $305.0 million. Interest on any borrowings under the 2022 revolving credit facility accrues at either an adjusted term Secured Overnight Financing Rate ("SOFR") plus 0.10% and a margin of 1.50% or at an alternative base rate plus a margin of 0.50%, at our election, and we are required to pay an annual commitment fee that accrues at 0.15% per annum on the unused portion of the aggregate commitments under the 2022 revolving credit facility.
The 2022 revolving credit facility also allows us to issue letters of credit, which reduce the amount we can borrow. We are required to pay a fee that accrues at 0.125% per annum on the average aggregate daily maximum amount available to be drawn under any outstanding letters of credit.
The 2022 revolving credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict our ability to incur indebtedness, grant liens, make distributions to holders of our stock or the stock of our subsidiaries, make investments or engage in transactions with our affiliates. The 2022 revolving credit facility also contains a financial maintenance covenant: a maximum net leverage ratio of consolidated debt to consolidated EBITDA no greater than 3.50 to 1.00, subject to an increase up to 4.00 to 1.00 for a certain period following an acquisition. The obligations under the 2022 revolving credit facility are secured by liens on substantially all of our domestic assets, including certain domestic intellectual property assets.
In October 2026, we entered into an amended and restated five-year $700.0 million revolving credit facility (the "2026 revolving credit facility") which replaced the 2022 revolving credit facility entered into on October 25, 2022, as amended in October 2023. The 2026 revolving credit facility also contains an accordion option which, if exercised, would allow us to increase our aggregate commitments by up to the greater of $1,000.0 million and 75% of consolidated EBITDA provided we are able to secure additional lender commitments and satisfy certain other conditions. Interest on any borrowings under the 2026 revolving credit facility accrues at either an adjusted term SOFR and a margin of 1.25% or at an alternative base rate plus a margin of 0.25%, at our election, and we are required to pay an annual commitment fee that accrues at 0.10% per annum on the unused portion of the aggregate commitments under the 2026 revolving credit facility.
The 2026 revolving credit facility also allows us to issue letters of credit, which reduce the amount we can borrow. We are required to pay a fee that accrues at 1.25% per annum on the average aggregate daily maximum amount available to be drawn under any outstanding letters of credit.
The 2026 revolving credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict our ability to incur indebtedness, grant liens, make distributions to holders of our stock or the stock of our subsidiaries, make investments or engage in transactions with our affiliates. During any period when we obtain an investment grade rating from at least two rating agencies (such period, an "IG Period"), we will no longer be subject to certain restrictive covenants (including covenants that restrict our ability to make asset sales, make distributions to holders of our stock or the stock of our subsidiaries, make investments or engage in transactions with affiliates). The 2026 revolving credit facility also contains a financial maintenance covenant: a maximum net leverage ratio of consolidated debt to consolidated EBITDA no greater than 3.50 to 1.00, subject to an increase up to 4.00 to 1.00 for a certain period following an acquisition. The obligations under the 2026 revolving credit facility are secured by liens on substantially all of our domestic assets, including certain domestic intellectual property assets, but upon our entering an IG Period, the obligations shall cease to be secured and the collateral released. We are in compliance with all covenants, and there are no amounts outstanding under the credit facility as of the filing of the Quarterly Report on Form 10-Q.
We believe our existing cash, cash equivalents and marketable securities and amounts available under our revolving credit facility will be sufficient to meet our working capital and capital expenditure needs over at least the next 12 months, though we may require additional capital resources in the future. We may elect to raise additional capital through the sale of additional equity to fund our future needs beyond the next 12 months.
As of September 30, 2026, we had outstanding convertible senior notes (the "Notes") for a principal amount of $1,000.0 million, which will mature on March 1, 2031, subject to earlier conversion, redemption or repurchase. In March 2026, we used the proceeds of the Notes to repurchase shares of our Class A common stock, as discussed below. Upon conversion of any Note, we will pay or deliver, as the case may be and subject to the indenture governing the Notes, cash and shares of our Class A common stock, if any. As of September 30, 2026, the Notes are not eligible for optional conversion.
In June 2026, we entered into privately negotiated capped call transactions (the "Capped Calls") with certain financial institutions at a cost of $99.2 million. The Capped Calls each have a conversion price of $22.72 up to a cap price of $30.59 per share, subject to certain adjustments. Refer to Note 5 of our condensed consolidated financial statements for further information on the Capped Calls.
In May 2026, we entered into a new private pricing addendum with Amazon Web Services ("AWS"), which governs our use of cloud computing infrastructure provided by AWS. Under the new pricing addendum, we are required to purchase at least $4,000.0 million of cloud services from AWS through May 2031. If we fail to do so, we are required to pay the difference between the amount we spend and the required commitment amount. As of September 30, 2026, our remaining contractual commitment is $3,692.9 million. We expect to meet our remaining commitment.
There have been no other material changes to our material cash requirements or non-cancelable contractual commitments since December 31, 2025.
Stock Repurchase Programs
In March 2026, our board of directors authorized a new stock repurchase program of up to $3,500.0 million of our Class A common stock (the "March 2026 program") and canceled the November 2024 program, under which $499.9 million had remained available for repurchase. Under the March 2026 program, we are authorized to repurchase, from time to time, shares of our Class A common stock through open market purchases, block transactions, privately negotiated purchase transactions or in such other manner as deemed advisable by management. In addition, we may establish one or more trading plans pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or enter into arrangements with brokers or other third parties for accelerated purchases of our Class A common stock. The March 2026 program does not obligate us to repurchase any specific number of shares and may be modified, suspended or discontinued at any time. The timing, manner, price and amount of any repurchases are determined by management in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions. During the nine months ended September 30, 2026, we repurchased and retired 28,950,481 shares of our Class A common stock through open market purchases under the March 2026 program for an aggregate purchase price of $551.0 million at an average price per share of $19.03. We also repurchased and retired 54,796,613 shares of our Class A common stock at an average price per share of $18.25 through an accelerated share repurchase agreement under the March 2026 program as described below. As of September 30, 2026, $1,948.0 million remained available for repurchases under the March 2026 program.
During the nine months ended September 30, 2026, we recorded $14.9 million of excise tax resulting from the Inflation Reduction Act of 2022 in relation to stock repurchases under the November 2024 and March 2026 programs.
Accelerated Share Repurchase Agreement
In March 2026, we entered into an accelerated share repurchase agreement (the "ASR") with a financial institution to repurchase $1,000.0 million of our Class A common stock as part of our March 2026 program. Under the terms of the ASR, we made an up-front payment of $1,000.0 million, which we recorded as a reduction of stockholders' equity. We received an initial delivery of 41,279,670 shares of our Class A common stock in March 2026 and the remaining 13,516,943 shares in April 2026. In total, during the nine months ended September 30, 2026, we repurchased and retired 54,796,613 shares of our Class A common stock at an average price per share of $18.25 under the ASR.
For the nine months ended September 30, 2026 and 2025, our net cash flows and free cash flow were as follows (in thousands):
| Nine Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net cash provided by (used in): | ||||||||||||||
| Operating activities | $ | 936,641 | $ | 893,051 | ||||||||||
| Investing activities | $ | 176,011 | $ | (168,207) | ||||||||||
| Financing activities | $ | (1,427,657) | $ | (731,220) | ||||||||||
|
Free cash flow (1)
|
$ | 881,883 | $ | 871,521 | ||||||||||
(1)See "Non-GAAP Financial Measure" for more information and for a reconciliation of net cash provided by operating activities, the most directly comparable financial measure calculated and presented in accordance with GAAP, to free cash flow.
Operating Activities
Cash flows from operating activities consist of our net income (loss) adjusted for certain non-cash reconciling items, such as share-based compensation expense, depreciation and amortization, deferred income taxes, net amortization of investment premium and discount, non-cash charitable contributions and changes in our operating assets and liabilities. Net cash provided by operating activities increased by $43.6 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 primarily due to an increase in our net income as adjusted for certain non-cash items as well as an increase in accrued expenses and other liabilities offset by an increase in prepaid and other current assets which are both due to timing of payments to vendors.
Investing Activities
Cash flows from investing activities consist of capital expenditures for improvements to new and existing office spaces and acquisitions of businesses. We also actively manage our operating cash and cash equivalent balances and invest excess cash in short-duration marketable securities, the sales and maturities of which we use to fund our ongoing cash requirements. Net cash provided by (used in) investing activities increased by $344.2 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to an increase in net purchases and sales of marketable securities offset by a decrease in maturities of marketable securities and the acquisition of tvScientific.
Financing Activities
Cash flows from financing activities consist of tax remittances on release of RSUs and RSAs, repurchases of our Class A common stock, proceeds from the exercise of stock options and net proceeds from the issuance of the Notes. Net cash used in financing activities increased by $696.4 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to an increase in repurchases of our Class A common stock and the purchase of the Capped Calls offset by net proceeds from the issuance of the Notes.
Free cash flow
Free cash flow increased $10.4 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 and consists of net cash provided by operating activities less purchases of property and equipment. See "Non-GAAP Financial Measures" for more information and for a reconciliation of net cash flows provided by operating activities, the most directly comparable financial measure calculated and presented in accordance with GAAP, to free cash flow.
Critical Accounting Policies and Estimates
We prepare our condensed consolidated financial statements in accordance with GAAP. Preparing our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses as well as related disclosures. Because these estimates and judgments may change from period to period, actual results could differ materially, which may negatively affect our financial condition or results of operations. We base our estimates and judgments on historical experience and various other assumptions that we consider reasonable, and we evaluate these estimates and judgments on an ongoing basis. We refer to such estimates and judgments, discussed further below, as critical accounting policies and estimates.
Refer to Note 1 to our condensed consolidated financial statements for further information on our other significant accounting policies.
Revenue Recognition
We generate revenue by delivering ads on our website, mobile application and connected TV platforms. We recognize revenue only after transferring control of promised goods or services to customers, which occurs when a user clicks on an ad contracted on a CPC basis, or views an ad contracted on a CPM or CPD basis. We recognize revenue over the service period for ads contracted on a CPD basis, which do not contain minimum impression guarantees. We typically bill customers on a CPC, CPM or CPD basis, and our payment terms vary by customer type and location. The term between billing and payment due dates is not significant.
We recognize revenue only after satisfying our contractual performance obligations.
Income Taxes
We account for income taxes using the asset and liability method. We recognize deferred tax assets and liabilities for temporary differences between the financial reporting and tax bases of assets and liabilities using the enacted statutory tax rates in effect for the years in which we expect the differences to reverse. We establish valuation allowances to reduce the total deferred tax assets to the amount we believe is more likely than not to be realized. In assessing the need for a valuation allowance, we consider all available evidence, both positive and negative, including past operating results and estimates of future taxable income. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for (benefit from) income taxes in the period in which such determination is made.
We recognize tax benefits from uncertain tax positions when we believe it is more likely than not that the tax position is sustainable on examination by tax authorities based on its technical merits. We recognize taxes on Net Controlled Foreign Corporation Tested Income as incurred.
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