Pinterest
Annual Report 2021

Plain-text annual report

Notice of 2022 
 Annual Meeting 
 & Proxy Statement 2021 Annual 
 Report NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To our stockholders: You are cordially invited to attend the 2022 annual meeting of stockholders (‘‘annual meeting’’) of Pinterest, Inc., a Delaware corporation (‘‘Pinterest’’ or the ‘‘company’’). The annual meeting will be held exclusively online at www.virtualshareholdermeeting.com/PINS2022 on Thursday, May 26, 2022, at 8:00 a.m. Pacific Time, for the following purposes: 1. To elect the three Class III nominees for director named in the accompanying proxy statement to hold office until the 2025 annual meeting and until their successors have been duly elected and qualified, or until their office is otherwise vacated. 2. To ratify the audit committee’s selection of Ernst & Young LLP as the company’s independent registered public accounting firm for the fiscal year 2022. 3. To approve, on an advisory non-binding basis, the compensation of our named executive officers (‘‘say-on-pay’’). 4. To conduct any other business properly brought before the annual meeting. These proposals, as well as instructions for accessing the virtual annual meeting, are more fully described in the accompanying proxy statement and a list of registered stockholders as of the record date will be accessible during the meeting at www.virtualshareholdermeeting.com/PINS2022. The record date for the annual meeting is March 30, 2022. Only stockholders of record at the close of business on that date may vote at the annual meeting or any adjournment thereof. By Order of the Board of Directors /s/ Christine Flores Christine Flores General Counsel & Corporate Secretary San Francisco, California April 13, 2022 Important notice regarding the availability of proxy materials for Pinterest’s 2022 annual meeting of stockholders: The notice, proxy statement and annual report are available at www.proxyvote.com. TABLE OF CONTENTS PROPOSAL 1: ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Board Structure and Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Director Selection and Recruitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Board Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Governance Practices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR . . . . . . . . . . . . . . . . . . Principal Accountant Fees and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pre-Approval Policies and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Audit Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PROPOSAL 3: ADVISORY NON-BINDING VOTE ON OUR NAMED EXECUTIVE OFFICERS' COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Compensation Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Compensation Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Compensation Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CEO PAY RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EQUITY COMPENSATION PLAN INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Executive Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certain Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delinquent Section 16(a) Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stockholder Proposals for the 2023 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VOTING AND ANNUAL MEETING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Meeting Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Voting Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proxy Materials Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 10 12 13 15 16 18 20 20 21 21 22 22 28 29 34 35 36 36 37 39 40 40 41 42 42 43 44 Note about our websites and reports and forward-looking statements: Website references are provided in this proxy statement for convenience only. The content of any referenced websites or reports, including any other websites or reports referenced or discussed in this proxy statement, are not deemed to be part of, nor incorporated by reference into, this proxy statement. We assume no liability for the content contained on the referenced websites. This proxy statement may contain ‘‘forward-looking statements’’ within the meaning of the ‘‘safe harbor’’ provisions of the Private Securities Litigation Reform Act of 1995, which statements are subject to substantial risks and uncertainties and are based on estimates and assumptions. All statements other than statements of historical facts included in the proxy statement, including statements about the company’s goals, progress or expectations with respect to corporate responsibility, sustainability, corporate governance, executive compensation and other matters, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as ‘‘may,’’ ‘‘might,’’ ‘‘will,’’ ‘‘objective,’’ ‘‘intend,’’ ‘‘should,’’ ‘‘could,’’ ‘‘can,’’ ‘‘would,’’ ‘‘expect,’’ ‘‘believe,’’ ‘‘design,’’ ‘‘estimate,’’ ‘‘predict,’’ ‘‘potential,’’ ‘‘plan’’ or the negative of these terms, and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the forward-looking statements expressed or implied in this proxy statement. Such risks, uncertainties and other factors include those risks described in ‘‘Risk Factors’’ and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ in the company’s most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (‘‘SEC’’) and other subsequent documents we file with the SEC. Headquarters | 505 Brannan Street, San Francisco, California 94107 | (415) 762-7100 Investor Relations Website | investor.pinterestinc.com PROXY STATEMENT FOR THE 2022 ANNUAL MEETING OF STOCKHOLDERS To Be Held Online at 8:00 a.m. Pacific Time on Thursday, May 26, 2022 This proxy statement is furnished in connection with the solicitation of your proxy by our board of directors (‘‘board’’) to vote at the 2022 annual meeting of stockholders (‘‘annual meeting’’), including at any adjournments or postponements of the annual meeting. This proxy statement contains information to be voted on at the annual meeting and certain other information required by Securities and Exchange Commission (‘‘SEC’’) rules. In accordance with SEC rules, we are making our proxy materials available at www.proxyvote.com with an option to request a printed set be mailed to you. We expect to begin mailing a notice of internet availability of proxy materials on April 13, 2022, to all stockholders of record entitled to vote at the annual meeting. This notice contains instructions for viewing the proxy materials and voting online and requesting a printed set of proxy materials. You are cordially invited to attend the annual meeting on Thursday, May 26, 2022, at 8:00 a.m. Pacific Time, which we are holding exclusively online via live webcast at www.virtualshareholdermeeting.com/PINS2022. Whether or not you expect to attend the annual meeting, please vote online, as instructed in these materials, as promptly as possible in order to ensure your representation at the annual meeting. Even if you have voted by proxy, you may still vote at the virtual annual meeting by following the instructions under ‘‘Voting and Annual Meeting Information’’. 1 PROPOSAL 1: ELECTION OF DIRECTORS Our board is currently comprised of nine members. In accordance with our amended and restated certificate of incorporation, our board is divided into three staggered classes of directors. At the annual meeting, three Class III directors will be elected for a three-year term. Each director’s term continues until the election and qualification of his or her successor, or until their office is otherwise vacated. Each of the nominees standing for election at the annual meeting currently serves as a director. Two of the three director nominees, namely, Leslie Kilgore and Ben Silbermann, were elected by our stockholders prior to our initial public offering in April 2019 (‘‘IPO’’) pursuant to the provisions of a voting agreement entered into by certain stockholders that terminated upon the completion of our IPO. In October 2020, our board appointed Salaam Coleman Smith as a Class III director until the annual stockholders’ meeting in 2022. Ms. Smith was recommended to our nominating and corporate governance committee (which we refer to throughout this proxy statement as the ‘‘governance committee’’) by an individual consultant of the company. Upon recommendation by our governance committee, the board has nominated Leslie Kilgore, Ben Silbermann and Salaam Coleman Smith for election for a term of three years (through the 2025 annual stockholders' meeting) and until their successors have been duly elected and qualified, or until their office is otherwise vacated. THE BOARD RECOMMENDS A VOTE FOR EACH DIRECTOR NOMINEE 2 Corporate Governance Our Board of Directors The following table provides summary information about each of our current directors, including the three nominees for election at the annual meeting. Name Class Age Director Since Term Expires In Jeffrey Jordan Leslie Kilgore Jeremy Levine Gokul Rajaram Fredric Reynolds Evan Sharp Benjamin Silbermann Salaam Coleman Smith Andrea Wishom*** I III I I II II III III II 63 2011 2023 56 48 2019 2022 2011 2023 47 2020 2023 71 39 39 52 52 2017 2024 2019 2024 2008 2022 2020 2022 2020 2024 Other Public Company Boards Airbnb; Accolade Our Committee Membership Governance Committee Netflix; Nextdoor Compensation Committee* (chair); Audit Committee Shopify The Trade Desk; Coinbase Governance Committee (chair) Compensation Committee Mondelez International**; Raytheon Technologies Audit Committee (chair) None None None None Gap; Enjoy Technology Audit Committee; Governance Committee Nextdoor Compensation Committee Principal Occupation Managing Partner, Andreessen Horowitz Former Chief Marketing Officer, Netflix Partner, Bessemer Venture Partners Corporate Development and Strategy Lead, DoorDash Former EVP & CFO, CBS Corporation Co-Founder & Advisor, Pinterest Co-Founder, Chairman, President & CEO, Pinterest Former EVP, ABC Family President, Skywalker Holdings (*) Our talent development and compensation committee is referred to as ‘‘compensation committee’’ throughout this proxy statement. (**) Mondelez International announced on April 6, 2022 that Mr. Reynolds will not be standing for re-election on their board at their annual meeting on May 18, 2022. (***) Lead Independent Director. 3 Board Diversity Our board is composed of a diverse group of individuals, with diverse backgrounds, experience and skills relevant to our company. Many of the directors have senior leadership experience at major U.S. and international companies. In these positions, they have also gained experience in areas such as management, financial planning, public company governance, sales and marketing, media and content, e-commerce and international business. Many of our directors have experience serving on boards and board committees of other public companies, and have an understanding of corporate governance practices and trends and different business processes, challenges and strategies. Further, our directors also have other experience that makes them valuable members of the board, including experience in established or growing technology companies. The diversity, skills and experience of our directors as described below, provide us with a diverse range of perspectives and judgment necessary to guide our strategies and monitor their execution. The following charts reflect the age, gender and independence of the members of our board continuing in office following the annual meeting, assuming the election of all nominees: Age Gender Independence 2 61+ 3 51-60 4 <51 3 Female 2 Non-independent 6 Male 7 Independent 4 The following reflects the experience and expertise of the members of our board continuing in office following the annual meeting, assuming the election of all nominees: 7 7 7 6 5 9 7 5 Class III Director Nominees for Election at the 2022 Annual Meeting Leslie Kilgore Former Chief Marketing Officer, Netflix, Inc. Director since 2019 Leslie Kilgore served as Chief Marketing Officer of Netflix, Inc., an online entertainment service, from 2000 to 2012. From 1999 to 2000, she served as Director of Marketing of Amazon.com, Inc., an online retail company. Ms. Kilgore held various positions, including Brand Manager, at The Procter & Gamble Company, a manufacturer and marketer of consumer products, from 1992 to 1999. Ms. Kilgore served on the board of LinkedIn Corporation from 2010 to 2016 and Medallia, Inc. from July 2015 to October 2021. In addition to her public company boards, she currently serves on the board of Discord Inc. Our committees Compensation Committee (chair); Audit Committee (member) Other current public boards Netflix, Inc. (member of audit committee); Nextdoor Holdings, Inc. (chair of compensation committee) Education Master of Business Administration, Stanford University Graduate School of Business; Bachelor of Science, Wharton School of Business at the University of Pennsylvania Relevant experience Extensive experience as a marketing executive with internet retailers and consumer product companies and experience as a board member of public and private companies 5 Benjamin Silbermann Co-Founder, Chairman, President and CEO, Pinterest Director since 2008 Benjamin Silbermann is a Co-Founder of Pinterest and has served as our Chief Executive Officer since 2008 and also our President since 2012. Prior to co-founding Pinterest, Mr. Silbermann worked at Google, a technology company, from 2006 to 2008. Our committees None Other current public boards None Education Bachelor of Arts, Yale University Relevant experience Deep knowledge and understanding of our company, strategy and business as our President and CEO and experience with product development Salaam Coleman Smith Former EVP, The Walt Disney’s ABC Television Group Director since 2020 Salaam Coleman Smith served as Executive Vice President at The Walt Disney’s ABC Television Group, a multinational broadcast television group from 2014 to 2016, overseeing Strategy and Programming for ABC Family’s Freeform channel. Prior to joining The Walt Disney Company, Ms. Smith worked at Comcast NBCUniversal, a multinational media company since 2003, where she served as President of Style Network from 2008 to 2013. Prior to joining Comcast NBCUniversal, Ms. Smith worked at Viacom Inc., a multinational mass media conglomerate for nearly ten years where she served as a senior executive within MTV Networks International Division and helped oversee Nickelodeon’s global expansion in Europe, Asia, and Latin America. Ms. Smith has served as a board member for several non-profit organizations, including Women in Cable Telecommunications and Dress For Success. In addition to her public boards, she also serves of the board of Scopely, an online gaming company since December 2021. Our committees Audit Committee (member); Governance Committee (member) Other current public boards Gap, Inc. (member of compensation and management development committee); Enjoy Technology Inc. (chair of nominating and corporate governance committee) Education Bachelor of Science in Industrial Engineering, Stanford University Relevant experience Strong expertise in global media, multi-platform content, brand development, strategic planning, financial management, consumer-centric insights and C-level management experience 6 Class II Directors Continuing in Office Until the 2024 Annual Meeting Fredric Reynolds Former Executive Vice President and Chief Financial Officer, CBS Corporation Director since 2017 Fredric Reynolds served as Executive Vice President and Chief Financial Officer of CBS Corporation, a mass media company, from 2006 to 2009. From 2001 to 2005, he served as President and Chief Executive Officer of Viacom Television Stations Group and as Executive Vice President and Chief Financial Officer of Viacom Inc., a mass media company, from 2000 to 2001. He also served as Executive Vice President and Chief Financial Officer of Westinghouse Electric Corporation, a predecessor of CBS Corporation. Prior to that, Mr. Reynolds held several positions at PepsiCo, a food and beverage corporation, for twelve years, including Chief Financial Officer or Financial Officer at Pizza Hut, Pepsi Cola International, Kentucky Fried Chicken Worldwide and Frito Lay. Mr. Reynolds served on the board of AOL, Inc. from 2009 to 2015, Hess Corporation from 2013 to 2019 and MGM Corporation from January 2010 to March 2022. Our committees Audit Committee (chair) Other current public boards Mondelez International, Inc. (chair of audit committee and member of finance committee)*; Raytheon Technologies (chair of audit committee, member of governance and public policy committee and member of compensation committee) Education Bachelor in Business Administration, University of Miami; Certified Public Accountant Relevant experience Extensive financial, leadership and media expertise, management experience in a broad range of companies and service on the board of public companies *Mondelez International announced on April 6, 2022 that Mr. Reynolds will not be standing for re-election on their board at their annual meeting on May 18, 2022. Evan Sharp Co-Founder and Advisor, Pinterest Director since 2019 Evan Sharp is a Co-Founder of Pinterest and currently serves as a consultant to Pinterest. Previously, he served as our Chief Design & Creative Officer until October, 2021. While employed at Pinterest, he oversaw the creative, product and design teams since 2011. He was previously a product designer at Facebook, a social media company, from 2010 to 2011. Since October 2021, he has served as a consultant at LoveFrom, a design firm. Andrea Wishom President, Skywalker Holdings LLC Director since 2020; Lead Independent Director Andrea Wishom has served as President of Skywalker Holdings, LLC, a private holding company and family office since November 2017. She oversees over a billion dollars in assets for various business units, human resources, finance, and all philanthropic and creative aspects for the Our committees None Other current public boards None Education Bachelor of Arts in History, University of Chicago Relevant experience Deep knowledge and understanding of our business as a co-founder and experience with product development and design Our committees Compensation Committee (member) Other current public boards Nextdoor Holdings, Inc. (member of compensation committee) 7 company. Before joining Skywalker, Ms. Wishom spent over 20 years at Harpo Productions, an American multimedia production company. At Harpo Productions she held various production, programming, development and executive roles for The Oprah Winfrey Show, Harpo Studios and OWN: The Oprah Winfrey Network and most recently as the Executive Vice President. In addition to her public company board, Ms. Wishom currently serves on the board of Tory Burch LLC. Education Bachelor of Arts in English, University of California, Berkeley Relevant experience Extensive experience in media industry and C-suite-level management experience 8 Class I Directors Continuing in Office Until the 2023 Annual Meeting Jeffrey Jordan Managing Partner, Andreessen Horowitz Director since 2011 Jeffrey Jordan has served at Andreessen Horowitz, a venture capital firm, since 2011 and most recently as a Managing Partner. Previously, Mr. Jordan served as President and Chief Executive Officer of OpenTable, Inc., an online restaurant reservation service company, from 2007 to 2011. He served as President of PayPal, Inc., an internet-based payment system company then owned by internet retail company eBay Inc., from 2004 to 2006, and as Senior Vice President and General Manager of eBay North America from 1999 to 2004. He also served as Chief Financial Officer of Hollywood Entertainment, a video rental company and as President of its subsidiary, Reel.com. Previously, Mr. Jordan served in various capacities at The Walt Disney Company, an entertainment company, for eight years, most recently as Senior Vice President and Chief Financial Officer of The Disney Store Worldwide. Prior to that, he worked for the Boston Consulting Group, Inc., a management consulting firm. Mr. Jordan currently serves on the board of several private companies, including Instacart and previously served on the board of OpenTable, Inc. from 2007 to 2013. Jeremy Levine Partner, Bessemer Venture Partners Director since 2011 Jeremy Levine has served as a partner at Bessemer Venture Partners, a venture capital firm, since 2001, where his investment experience includes entrepreneurial startups and high growth companies including consumer internet, consumer software and business software and services. Prior to joining Bessemer, Mr. Levine was Vice President of Operations at Dash.com Inc., an internet software publisher, from 1999 to 2001. Prior to Dash, Mr. Levine was an Associate at AEA Investors, a management buyout firm, where he specialized in consumer products and light industries, from 1997 to 1999. Previously, Mr. Levine was with McKinsey & Company, a management consultant firm, as a management consultant from 1995 to 1997. Mr. Levine previously served on the board of directors of MINDBODY Inc. from 2010 to 2017 and Yelp from 2005 to 2019. Mr. Levine currently serves on the board of many private companies. Our committees Governance Committee (member) Other current public boards Airbnb, Inc. (chair of nominating and corporate governance committee and member of the audit, risk and compliance committee); Accolade, Inc. (member of compensation committee) Education Master of Business Administration, Stanford University Graduate School of Business; Bachelor of Arts, Amherst College Relevant experience Extensive experience as a venture capitalist and as a C-suite-level officer and director of technology companies Our committees Governance Committee (chair) Other current public boards Shopify, Inc. (member of nominating and governance committee) Education Bachelor of Science, Duke University Relevant experience Extensive experience with technology companies, serving on the boards of directors of public and private companies, and experience as a venture capitalist 9 Gokul Rajaram Corporate Development and Strategy Lead, DoorDash, Inc. Director since 2020 Gokul Rajaram has served in various roles at DoorDash, a food ordering service, since November 2019, most recently as their Corporate Development and Strategy Lead. Previously, from 2013 to 2019, Mr. Rajaram led several product development teams at Block, Inc. (previously named Square, Inc.), a financial technology company, most recently as the Caviar Lead. Prior to Block, Inc., Mr. Rajaram served as Product Director of Ads at Facebook, Inc., a social media company, from 2010 to 2013. Previously, Mr. Rajaram was Product Management Director for Google AdSense, an online advertising company. He previously served on the board of RetailmeNot, Inc. and Course Hero, Inc. Our committees Compensation Committee (member) Other current public boards The Trade Desk Inc. (member of compensation committee and audit committee); Coinbase Global Inc. (member of the compensation committee) Education Master of Computer Science, University of Texas; Master of Business Administration, The Massachusetts Institute of Technology; Bachelor of Computer Science, Indian Institute of Technology, Kanpur Relevant experience Extensive experience with product development and as an officer and director of technology companies, including public companies Board Structure and Role Our board is currently comprised of nine directors and is divided into three classes with each class consisting of one-third of the total number of directors and each class having a three-year term. Board Leadership Structure Our Co-Founder, President and CEO, Benjamin Silbermann, currently serves as chairman of the board and Andrea Wishom serves as lead independent director. Although our bylaws do not require that the positions of chairman and CEO be combined, we believe that this structure is in the best interest of our company given Mr. Silbermann's deep understanding of our business and culture, as well as his leadership in shaping and driving the company’s strategic priorities and business plans. This structure also facilitates a regular flow of information between management and the board and provides a clear chain of command. Our chairman, amongst other things: • • • • presides over meetings of the board; consults with the lead independent director on the agenda for board meetings; consults, as needed, on evaluating and recommending candidates for election to the board; and oversees the activities of the board. In addition, our corporate governance guidelines provide that one of our independent directors should serve as our lead independent director at any time when our CEO serves as the chairman or if the chairman is not otherwise independent. We have structured the lead independent director role in a manner that we believe reinforces the independence of the board and serves as an effective balance to a combined chair and CEO. Among other things, the lead independent director: • • presides over meetings of the board at which the chairman is not present, including executive sessions of our independent directors; coordinates the activities of the other independent directors, including establishing the agenda for executive sessions and meetings with other non-management directors; 10 • • • consults with the chairman on the agenda for board meetings, board materials, meeting calendars and schedules; serves as a liaison between the chairman and independent directors; and performs any additional duties as the board may otherwise determine. The board believes that its selection of the current leadership structure is not impacted by the board's risk oversight function and the board would be effective in overseeing risk, as described in the ‘‘Board’s Role in Risk Oversight’’ section below, under a variety of leadership frameworks. Board’s Role The board is elected to oversee management and stockholders’ long-term interests. A key function of the board is reviewing, approving (where appropriate) and actively monitoring management’s execution of the company’s long-term strategic goals. The board actively engages on Pinterest matters throughout the year, including at quarterly board meetings and meetings of each committee, where they receive updates from key management personnel. The board and committees also have meetings as needed in between their quarterly meetings. Directors also regularly engage with, and provide counsel to, management through informal calls and meetings. Our board oversees management’s performance on behalf of our stockholders. The primary responsibilities of the board include: reviewing and overseeing the company's strategic direction and objectives; succession planning for the CEO and key executives; overseeing the company's risk exposure; overseeing the company's legal and regulatory compliance; monitoring the company's accounting and financial reporting practices and controls; evaluating the board's composition, performance and effectiveness, and overseeing the company's talent development and management. Board’s Role in Risk Oversight Our board is responsible for overseeing how we manage risk at Pinterest. This is carried out both at the full board level and through each of the standing committees. The board and each committee meet periodically with senior management to review risk oversight matters and periodically receive reports from management on these matters. The full board is responsible for monitoring and assessing strategic risk exposure, including determining the nature and level of risk appropriate for the company, and the committees are responsible for monitoring and assessing risks inherent in their respective oversight functions as follows: • Our audit committee oversees our enterprise risk management program and significant financial risk exposures and certain legal, regulatory and operational risk exposures, including with respect to information security, data protection and privacy. • Our talent development and compensation committee (which we refer to as ‘‘compensation committee’’ throughout this proxy statement) oversees significant compensation and other employee-related risk exposures, including risks and exposures associated with leadership assessment, management succession planning, executive compensation programs and arrangements and talent and leadership development and management, including matters relating to the attraction, development and retention of a diverse and talented workforce. • Our governance committee oversees significant governance risk exposures, including, with respect to corporate governance, board effectiveness and board and leadership succession planning. Director Independence At least a majority of our board members, including all members of our audit, compensation and governance committees, are required to be independent under New York Stock Exchange (‘‘NYSE’’) listing rules. The board, with the assistance of the governance committee, considers all relevant facts and circumstances when making its independence determinations. A substantial majority of our board – seven out of nine directors – is independent. 11 The board has affirmatively determined that Mr. Jordan, Ms. Kilgore, Mr. Levine, Mr. Rajaram, Mr. Reynolds, Ms. Smith and Ms. Wishom do not have relationships that would interfere with the exercise of their independent judgment in carrying out the responsibilities as a director and each of these directors is ‘‘independent’’ as that term is defined under the listing standards of the NYSE. Also, former director Michelle Wilson was independent during the period she served on the board. In making these determinations, the board considered the current and prior relationships that each of these directors has with our company and all other facts and circumstances our board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director and the transactions involving them. The board also took into account that Pinterest from time to time engages in business in the ordinary course with entities where our directors are employed, serve on the board or otherwise provide services to such entities. Attendance at Board and Committee Meetings We encourage all our directors to attend and actively participate in all meetings of the board and any committees on which they serve. In 2021, the board held 15 meetings, and each director attended 75% or more of the aggregate number of meetings of the board and of the committees on which he or she served during the year. Directors are also encouraged to attend the annual stockholders' meetings. All the directors then serving on the board attended the 2021 annual stockholders' meeting. Director Selection and Recruitment The governance committee is responsible for, among other things, overseeing succession planning for directors and ensuring that we have a qualified board to oversee management’s execution of the company’s strategy and safeguard the long-term interests of stockholders. In this regard, the governance committee is charged with identifying, evaluating and recommending potential director candidates. In identifying potential candidates for board membership, the governance committee considers recommendations from directors, stockholders, management and others, including, from time to time, executive search firms to assist it in locating qualified candidates. The governance committee does not distinguish between nominees recommended by stockholders and other nominee recommendations. Once potential director candidates are identified, the governance committee, with the assistance of management, undertakes an extensive vetting process that considers each candidate’s diverse background, experience, qualifications, independence and fit with the board’s priorities. As part of this vetting process, the governance committee, as well as other members of the board and the CEO, conducts a series of interviews with the candidates. If the governance committee determines that a potential candidate meets the needs of the board and has the desired qualifications and experiences, it recommends the candidate’s nomination or appointment to the full board for consideration. The governance committee strives to maintain an engaged, independent board with broad and diverse experience and judgment that is committed to representing the long-term interests of our stockholders. The governance committee considers a wide range of factors when selecting and recruiting director candidates, including achieving: • • • an experienced and qualified board. The governance committee seeks directors with a record of accomplishment in their chosen fields that are relevant to our company and its industry. diversity. The governance committee seeks candidates representing a diversity of occupational and personal backgrounds, knowledge, skills, qualifications and viewpoints so that the board provides effective oversight of the management of the company. The governance committee reviews the board’s effectiveness in balancing these considerations when assessing the composition of the board. board refreshment. We believe that Pinterest benefits from fostering a mix of experienced directors with a deep understanding of the company and its industry and those who bring fresh perspectives. We have added three new directors to our board since our IPO in April 2019. 12 • • ideal board size. The board has nine directors which includes three Class I directors, three Class II directors and three Class III directors. The board believes this size works well as it provides a sufficient number of directors on the board to achieve an appropriate mix of experience and meet its oversight responsibilities, while promoting accountability and efficiency. a board with strong personal attributes. We believe that all of our directors should possess the following personal attributes: high integrity and good judgment, absence of legal or regulatory impediments, independence of mind and strength of character to effectively represent the best interests of all stockholders and provide practical insights and diverse perspectives, ability to act in an oversight capacity, appreciation for the issues confronting a public company, adequate time to devote to the board and its committees, and willingness to assume broad, fiduciary responsibilities on behalf of all stockholders. Stockholder Recommendations of Director Candidates The governance committee considers director candidates recommended by stockholders. Stockholders may recommend a candidate by writing to the Corporate Secretary at the company’s address listed on the first page of this proxy statement, and including all information that our bylaws require for director nominations. Board Evaluation The lead independent director and the governance committee oversee the performance and annual self-evaluation process for the board and each standing committee, including conducting surveys of director observations and suggestions on the effectiveness of the board. The governance committee chair and lead independent director discuss with the board and may make recommendations to the chairman of the board on any changes as they deem necessary. Board Committees Our board has established three standing committees - an audit committee, a compensation committee and a governance committee, and the composition and responsibilities of each are described below. The board has determined that each member of each committee is independent and meets the NYSE and SEC independence standards for serving on such committee, as applicable. The board also has determined that, in accordance with the SEC and NYSE rules, each member of the audit committee is financially literate and Mr. Reynolds is an audit committee financial expert. Members serve on these committees until their resignation or until otherwise determined by the board. The board has adopted written charters for each of the audit committee, compensation committee and governance committee which are available at https://investor.pinterestinc.com/governance/governance-documents. Each of the committees has authority to engage legal counsel or other experts or consultants as it deems appropriate to carry out its responsibilities. The board may establish other committees as it deems necessary or appropriate from time to time. 13 Current members Fredric Reynolds (chair) Leslie Kilgore (member) Salaam Coleman Smith (member) Number of meetings held in 2021 12 Current members Leslie Kilgore (chair) Gokul Rajaram (member) Andrea Wishom (member) Number of meetings held in 2021 8 Audit Committee The audit committee is primarily responsible for: • overseeing the company's financial and accounting reporting processes, including disclosure controls, internal audit function, internal controls and audits of the company's consolidated financial statements; • appointing or changing the company's auditors and reviewing their independence, qualification and performance; • overseeing significant financial matters, including tax planning, financial risk exposure, dividends and share issuances and repurchases; and • overseeing the company's enterprise risk management program, compliance with applicable legal and regulatory requirements and information security, data protection and privacy program. Talent Development and Compensation Committee The compensation committee is primarily responsible for: • overseeing the compensation of the company's directors and employees; • establishing, reviewing and reporting the compensation of our executive officers; • administering the company's equity-based and certain other compensation plans; • • evaluating the post service arrangement and benefits of our executive officers, including the CEO; reviewing the operation and structure of the company's compensation program; and • evaluating the company's programs and practices relating to talent and leadership development and management, including matters relating to the attraction, development and retention of a diverse and talented workforce. 14 Nominating and Corporate Governance Committee The governance committee is responsible for: • evaluating the size, composition, organization and governance of the board and its committees; Current members Jeremy Levine (chair) Jeffrey Jordan (member) Salaam Coleman Smith (member) Number of meetings held in 2021 4 • • • assisting the board in identifying and evaluating candidates qualified to be appointed as a board member; recommending potential candidates to the board for its approval to propose such candidates to the stockholders for election to the board; reviewing and recommending to the board the independence determinations of the directors as well as recommending to the board the composition of each committee; and reviewing the performance and annual self-evaluation of the board and each of its committees. • Other Governance Practices Corporate Governance Guidelines The board has adopted corporate governance guidelines, which you can find on our website (https://investor.pinterestinc.com/governance/governance-documents), that we believe reflect the board’s commitment to governance practices that enhance corporate responsibility and accountability. The board annually reviews these guidelines, along with the charters for the board’s standing committees (the audit committee, compensation committee and governance committee), so that our policies and programs continue to reflect good corporate governance practices. Code of Ethics We have adopted a code of business conduct and ethics applicable to our directors and employees, including our CEO, CFO and other executive officers and all persons performing similar functions. A copy of that code is available on our website (https://investor.pinterestinc.com/governance/governance-documents). We intend to disclose on our website any future amendments to, or material waivers from, the code to the extent applicable to our executive officers or directors and required to be disclosed within four business days following the amendment or waiver. No Compensation Committee Interlocks or Insider Participation None of the members of the compensation committee is currently, or has been at any time, one of our officers or employees. None of our executive officers currently serve, or have served during the last year, as a member of a board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board or compensation committee. Communications with the Board and Stockholder Engagement We have a process by which stockholders and any other interested parties may directly communicate with the board or any of its directors, including the lead independent director. Those who wish to communicate with the board or any of its directors may do so by sending written communications addressed to the Corporate Secretary at the company’s address which can be found on the first page of this proxy statement. These communications are reviewed by the Corporate Secretary or Assistant 15 Secretary to determine whether they are appropriate for presentation to the board or such director. The purpose of this screening is to avoid having the board consider irrelevant or inappropriate communications (such as advertisements, solicitations, and product inquiries). In addition, members of our investor relations team and our management meet with our stockholders from time to time to address their questions and concerns about our business and the company. We also update our board on investor feedback, when appropriate. Corporate Responsibility Our mission is to give people the inspiration to create a life they love. We have ongoing efforts to address environmental, social, and governance (ESG) priorities to further our mission and help deliver sustainable long-term value to our stakeholders. Below we describe highlights of our on-going ESG efforts. We also regularly post company initiatives and information in our newsroom at https://newsroom.pinterest.com and https://investor.pinterestinc.com/investor-overview. Governance Our board and board committees oversee ESG matters associated with their respective areas of responsibility. In particular: • Our audit committee is responsible for oversight of the company’s enterprise risk management program, including risks arising from information security, data protection and privacy. • Our compensation committee reviews and oversees the development, implementation and effectiveness of policies, objectives and strategies relating to the attraction, retention and development of our talent and our diversity, equity and inclusion efforts, as well as other aspects of our human capital management, including executive leadership development and succession planning. • Our nominating committee considers and addresses matters relating to governance, director succession, board refreshment and diversity as well as stockholder engagement. For more information on the responsibilities of board committees please see ‘‘Board Committees’’ above. People To attract and retain great talent, we strive to create opportunities for our employees to grow and develop in their careers, supported by competitive compensation, benefits and health and wellness programs, and by programs that are intended to foster diversity, equity and inclusion and build connections between our employees and their communities. Diversity, equity and inclusion: We value and seek inclusion and diversity across all levels in our organization, including within our leadership. Our board includes directors from various backgrounds, industries, skills and experience. Our board of nine directors is comprised of seven independent directors, three women and is racially diverse. Our leadership team includes leaders with diverse skills, experience, racial backgrounds and genders. We strive to create an inclusive and diverse workplace where all of our employees are empowered to bring their whole, authentic selves to work every day. We seek and respect diverse perspectives which also helps us create a more inclusive and diverse product and foster a culture of well-being and engagement that helps us to continue attracting, developing and retaining the best talent. We have published an annual inclusion and diversity report since 2015 which we make publicly available on our website. Our latest diversity report can be found at https://newsroom.pinterest.com. We believe it is important to hold ourselves accountable to creating an inclusive and diverse workforce. Our inclusion and diversity report includes our commitment to inclusion and diversity, representation and workforce demographics data, and our inclusion and diversity initiatives and programs across the company to advance our mission. 16 We have employee communities that are aligned around dimensions of inclusion and diversity, such as gender, ethnicity, sexual orientation or other shared attributes, which we believe help build community and enable opportunities for development. We also offer our employees training courses to educate them on inclusion and diversity issues and practices. Earlier this year, we also welcomed Nichole Barnes Marshall as our Global Head of Inclusion and Diversity. Compensation and benefits: We are committed to the health, safety and wellness of our employees. We provide our employees and their families with access to a variety of flexible and convenient health and wellness programs that are intended to support their physical and mental health by providing tools and resources to help them improve or maintain their health. In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, as well as the communities in which we operate, and which are designed to comply with government regulations. Currently, the majority of our employees work from home and we have implemented additional safety measures for employees continuing critical on-site work. We provide robust compensation and benefits programs to help meet the needs of our employees. In addition to highly competitive salaries, our programs (which vary by role/country/region) also include equity awards, a 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts, flexible paid time off, family leave, family care resources, flexible work schedules, employee assistance programs and charitable donation matching, among many others. We continue to review and update our compensation and benefits. For example, we recently enhanced our family leave benefits for birthing and adoptive parents effective January 1, 2022 and increased our 401(k) matching limits. Amongst other initiatives, we launched an ombuds program intended to give every employee the opportunity to engage confidentially with neutral, trained professionals for impartial and independent support in navigating challenging situations in the workplace. Pay Equity: Pinterest remains committed to maintaining pay equity across gender and race. This means equal pay for comparable work. In a dynamic workplace, maintaining pay equity requires vigilance and ongoing monitoring. Twice a year we analyze compensation and make adjustments when necessary to continue to stand by this very important commitment. Learning and development: We are committed to helping our employees create a career that is inspiring, impactful and ultimately time well spent. We have programs to help foster open and ongoing conversation around career growth goals both in the long term and short term. We also have workshops dedicated to help employees learn new skills and develop their careers. We set aside a dedicated personal learning and development budget for our employees. Community Philanthropy: We believe our social impact and philanthropy initiatives are core to our brand and our identity and our philanthropic strategy is focused on expanding emotional well-being and place-based giving across Pinterest’s global footprint. Our philanthropy efforts focus on making an impact in three areas: • • • Expanded Employee Volunteerism: The company launched an expanded volunteer service program that grants employees five volunteer days off to support civic and community engagement activities every calendar year. Donation Match: Pinterest recently increased its donation matching program and matches funds to eligible nonprofits, dollar for dollar, up to $1,000 per employee each year. Charitable Giving: Back in 2019, we set aside approximately 2.5 million shares of our class A common stock for charitable donations. We have also set up a donor advised fund to which we have contributed 750,000 shares of our class A common stock. Currently, the primary focus of the grantmaking is in the area of emotional well-being, particularly increasing awareness, reducing stigma, supporting innovations in the field, and tackling inequities in access and 17 disparities in outcomes. In addition, the program includes a place-based community giving portfolio, and a reserve for responsive grantmaking to tackle urgent or emerging challenges, like the COVID-19 pandemic and support for organizations tackling racial and other inequities. Product: People come to Pinterest to discover ideas, get inspired and focus on themselves and their futures. To help us cultivate an inspired community, we have robust guidelines and standards for content created and/or published on our platform. Among the industry-leading policy decisions we have made over the years include: establishing guidelines that clarify that Pinterest is not a place to spread harmful misinformation, banning political campaign ads on our platform and efforts to prevent the monetization of search terms related to the COVID-19 pandemic. Most recently we expanded our misinformation guidelines to prohibit conspiracy theories, misinformation and disinformation relating to climate change. Further, we have released inclusive product features such as try on for various skin tones. We also updated our advertising guidelines to prohibit advertisements relating to weight loss. We also publish a bi-annual Transparency Report which is available on our website and highlights information on our efforts to moderate content on our platform, including the number of Pins we deactivated for violating our policies and the information and deactivation requests we received from law enforcement and government agencies. We work hard to identify and deactivate harmful content from our site, and our content policies and moderation practices continue to evolve with industry best practices. Suppliers: We also have a robust supplier code of conduct that lays out our expectations of our suppliers on matters relating to, amongst others, workplace safety, security and privacy, protecting the environment, human rights and diversity and inclusion. Our supplier code of conduct is publicly available on our investor relations website. Planet Across the company, we are working to understand and minimize our environmental footprint. We have completed various energy and water saving projects, including installing a wastewater re-pipe to save fresh water and a lighting retrofit project to save electricity in our offices. We have various partnerships to reduce waste, including our partnership with Revivin to donate used laptops and other equipment to communities and organizations in need and our partnership with Copia to redistribute food to local communities. Finally, we have an employee group - PinPlanet - focused on mobilizing employees, Pinners and business partners on issues relating to sustainability. Director Compensation The compensation committee regularly reviews and assesses the form and amount of compensation payable to our independent directors and, with the assistance of an external compensation consultant, recommends any appropriate adjustments to the full board for approval. In February 2021, the board approved a revised Non-Employee Director Compensation Policy, pursuant to which our independent directors received the following compensation in 2021 on a pro-rata basis. Under the updated Non-Employee Director Compensation Policy, we reimbursed our independent directors for reasonable out of pocket travel expenses in 2021 since the approval of the updated policy. Annual retainer Additional annual retainer for lead director Additional annual retainers for committee service Cash Compensation (1) Audit Committee Compensation Committee Governance Committee Initial grant of RSUs (4) Annual grant of RSUs (5) Equity Compensation (3) Chair $25,000 $20,000 $10,000 $ 50,000 $ 37,500(2) Member $ 12,500 $ 10,000 $ 5,000 $400,000 $260,000(6) (1) Paid in quarterly installments on a prospective basis, pro-rated for directors whose service commences during the year. 18 (2) (3) (4) (5) (6) Increased from $20,000 pursuant to the updated Non-Employee Director Compensation Policy approved by the board in February 2021. Amounts represent the approximate grant date fair value of RSUs that will be settled in shares of Class A common stock. All awards granted pursuant to the updated Non-Employee Director Compensation Policy vest, in addition to the schedules below, upon a change in control of the company. Award vests, subject to the director’s continued service, in equal annual installments on the first three anniversaries of the director’s commencement of service. Applies only to directors appointed after the IPO which was in April 2019. Award vests, subject to the director’s continued service, in full on the earlier of the first anniversary of the grant date or the day prior to the company’s next annual meeting. Increased from $250,000 pursuant to the updated Non-Employee Director Compensation Policy approved by the board in February 2021. Benjamin Silbermann and Evan Sharp, do not receive any additional compensation for their services as a director. The following table sets forth information regarding compensation earned by or paid to our non-employee directors during 2021. 2021 Director Compensation Table Name Jeffrey Jordan Leslie Kilgore Jeremy Levine Gokul Rajaram Fredric Reynolds Salaam Coleman Smith Michelle Wilson(3) Andrea Wishom Fees Earned or Paid in Cash ($) 55,000 78,333 60,000 57,916 75,000 65,416 55,625 81,875 Stock Awards ($) (1)(2) 259,959 259,959 259,959 259,959 259,959 259,959 — 259,959 All Other Compensation ($) — — — — — — — — Total ($) 314,959 338,292 319,959 317,875 334,959 325,375 55,625 341,834 (1) (2) (3) Reported amounts represent the aggregate grant date fair value of RSUs granted during 2021, as computed in accordance with Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) Topic 718. See Notes to Consolidated Financial Statements included in our 2021 annual report on Form 10-K for the assumptions used in calculating the grant date fair value. These amounts do not reflect the actual economic value that may be realized from such awards. As of December 31, 2021, Mr. Jordan has 3,981 RSUs outstanding, Ms. Kilgore has 10,819 RSUs outstanding, Mr. Levine has 3,981 RSUs outstanding, Mr. Rajaram has 17,176 RSUs outstanding, Mr. Reynolds has 10,231 RSUs outstanding, Ms. Coleman Smith has 8,505 RSUs outstanding and Ms. Wishom has 11,631 RSUs outstanding. Ms. Wilson has no outstanding RSUs. Represents compensation received until Ms. Wilson’s retirement from the board at the 2021 annual meeting. 19 PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR The audit committee has sole responsibility for the appointment, compensation and oversight of our independent registered public accounting firm. At the annual meeting, you are being asked to ratify the audit committee’s selection of Ernst & Young LLP (‘‘EY’’) to serve as our independent auditor for the year ending December 31, 2022. EY has served as our independent auditor since 2013. The audit committee believes that the continued retention of EY as our independent auditor is in the best interests of Pinterest and its stockholders. Representatives of EY are expected to be present at the annual meeting. They will have an opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate stockholder questions. The board, upon recommendation of the audit committee, is submitting the selection of EY to stockholders for ratification as a matter of good corporate governance. If stockholders do not ratify the selection of EY, the audit committee will review its future selection of our independent auditor in light of that result. Even if the selection is ratified, the audit committee may, in its discretion, appoint a new independent auditor at any time during the year if it determines that such a change would be in the best interests of the company and its stockholders. THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF ERNST & YOUNG LLP Principal Accountant Fees and Services The following table represents aggregate fees for EY services for the years ended December 31, 2021 and 2020 (in thousands): Audit fees(1) Audit-related fees(2) Tax fees(3) All other fees(4) Total fees 2021 2020 3,736 — 1,000 128 4,864 3,087 — 772 115 3,974 (1) (2) (3) (4) Consist of fees for services rendered in connection with the annual audit of our consolidated financial statements and audit of internal control over financial reporting, reviews of our quarterly condensed consolidated financial statements, services provided in connection with statutory and regulatory filings, and consultations on accounting matters directly related to the audit. There were no audit-related fees for the years ended December 31, 2021 and 2020. Consist of fees for services rendered for tax compliance, tax advice and tax planning. Consist of fees for all other services not included in the categories set forth above. 20 Pre-Approval Policies and Procedures It is the policy of the audit committee to pre-approve, near the beginning of each fiscal year, all audit and permissible non-audit services to be provided by the independent auditor during that fiscal year. The audit committee also may pre-approve particular services during the fiscal year on a case-by-case basis. The audit committee has delegated to the chair of the audit committee the authority to pre-approve such specific services on a case-by-case basis for which the aggregated estimated fees do not exceed $200,000. The audit committee or chair, as applicable, considers whether the provision of any non-audit services is compatible with maintaining the independence of our independent auditor, and solicits the input of management and the independent auditor on this issue. In 2021, the audit committee pre-approved all services provided to the company by EY pursuant to the policies and procedures described above, and the audit committee determined that all non-audit services provided to the company by EY were compatible with the maintenance of EY’s independence in the conduct of its auditing functions. Audit Committee Report The audit committee has reviewed and discussed with management the audited financial statements for the fiscal year ended December 31, 2021. The audit committee has discussed with Ernst & Young LLP (‘‘EY’’), our independent registered public accounting firm, the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (‘‘PCAOB’’) and the SEC. The audit committee has also received the written disclosures and the letter from EY required by applicable requirements of the PCAOB regarding the firm’s communications with the audit committee concerning independence and has discussed with EY the firm’s independence. Based on the foregoing, the audit committee has recommended to the board that the audited financial statements be included in our 2021 annual report on Form 10-K. Members of the Audit Committee Fredric Reynolds (Chair) Leslie Kilgore Salaam Coleman Smith 21 PROPOSAL 3: ADVISORY NON-BINDING VOTE ON OUR NAMED EXECUTIVE OFFICERS' COMPENSATION In accordance with Section 14A of the Securities Exchange Act of 1934, we are providing our stockholders with the opportunity to express their view, on an advisory non-binding basis, on the compensation of our named executive officers (commonly known as a say-on-pay vote). This say-on-pay proposal gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole. This vote is not intended to address any specific element of compensation but rather the overall compensation of our named executive officers and our compensation philosophy, policies and practices described in this proxy statement. Please read the ‘‘Compensation Discussion and Analysis’’ and the compensation tables and narrative disclosure that follow for information about our executive compensation program, including details of the fiscal 2021 compensation of our named executive officers. Our compensation committee believes that these policies and practices are effective in implementing our compensation philosophy and achieving our compensation program goals. As an advisory vote, the outcome of the vote on this proposal is not binding. However, our management team, our board and our compensation committee, which is responsible for designing and administering our executive compensation program, value the opinions expressed by our stockholders, and will consider the outcome of this vote when making future executive compensation decisions. Unless our board modifies its policy on the frequency of holding say-on-pay votes, the next say-on-pay vote will occur at the 2023 annual meeting. THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL, ON AN ADVISORY NON-BINDING BASIS, OF OUR NAMED EXECUTIVE OFFICERS' COMPENSATION Compensation Discussion and Analysis This Compensation Discussion and Analysis describes the compensation program for our chief executive officer, our chief financial officer, and our three other highest paid executive officers (commonly referred to as ‘‘named executive officers’’ or ‘‘NEOs’’). For 2021, our NEOs were: • • • • • Benjamin Silbermann, our Co-Founder, President and Chief Executive Officer (our ‘‘CEO’’) Evan Sharp, our Co-Founder and former Chief Design and Creative Officer Christine Flores, our General Counsel and Corporate Secretary Todd Morgenfeld, our Chief Financial Officer and Head of Business Operations (our ‘‘CFO’’) Naveen Gavini, our Senior Vice President of Products Effective as of October 15, 2021, Evan Sharp resigned from his role as Chief Design and Creative Officer and became an advisor to Pinterest. He also remains a member of our board. On February 11, 2022, Christine Flores informed the company of her intention to leave the company effective October 1, 2022. 22 Compensation Philosophy and Program Objectives. Our executive compensation program is guided by these objectives: drive achievement of Pinterest’s long-term mission; • • motivate team collaboration (company first, individual function second); • attract and retain top talent by compensating competitively based on the executive’s value and performance; and • align the interests of our executives with those of our stockholders. Framework. To achieve these objectives, our executive compensation program has two compensation elements: base salary and long-term equity incentive compensation. In addition, our NEOs are eligible to participate in the standard benefit plans offered to our other employees and are eligible for post-employment compensation in certain situations as described below. We generally do not provide our NEOs with perquisites or other personal benefits and do not have any defined benefit pension, supplemental executive retirement or non-qualified deferred compensation plans. Pay mix. The majority of our executive compensation is delivered in the form of equity awards. For details, see the 2021 Summary Compensation Table below. We believe that this pay mix, including equity compensation in the form of time-based full-value awards (restricted stock units (‘‘RSU’’) and restricted stock awards (‘‘RSA’’)) vesting over at least four years, effectively supports all of our compensation objectives, including achievement of our long-term mission, motivating and paying for team and company performance, and aligning our executives’ interests with those of our stockholders. Linking pay with performance. As described above, the majority of our NEOs’ target total direct compensation is linked to the value of our stock, which reflects how we create value over the long term. In addition, executives are eligible to receive periodic grants following the annual review cycle. When determining the amount of such awards, the compensation committee considers the company’s performance against financial, operational and strategic objectives as well as each named executive officer’s individual contribution to that performance. In assessing executive performance, the compensation committee considers both, the objectives the executive helped the company achieve as well as how they helped achieve those objectives, including whether they demonstrated leadership behaviors consistent with our values. Governance. We endeavor to maintain sound governance standards through the administration of our executive compensation program. The following table summarizes our compensation governance policies and practices. What We Do What We Don't Do ✓ fully independent compensation committee ✓ independent compensation consultant to the compensation committee ✓ annual review of the compensation program, best practices and market trends ✓ majority of executive compensation tied to stock value ✓ annual review of succession plans for key officers ✓ ‘‘double trigger’’ termination required for vesting in equity in connection with change in control ✓ annual stockholder advisory non-binding vote on our compensation program (say on pay) x x x x x x pension and executive retirement plans significant perquisites to executive officers supplemental executive benefits employee and director hedging and pledging of our equity securities tax gross-ups on change in control payments dividends or equivalents on unvested equity awards The compensation committee, in consultation with its external compensation consultant, will continue to assess and update our executive compensation program so that it best supports Pinterest’s long-term mission and growth. 23 Compensation-Setting Process The compensation committee reviews our executive compensation program annually to assess whether it continues to be aligned with our compensation philosophy and program objectives as described above. The compensation committee updates the program as needed and also evaluates and establishes target total direct compensation opportunities for each of our NEOs. The compensation committee’s decision making for our NEOs' compensation is guided by the factors listed below. The compensation committee does not weigh these factors in any predetermined manner, and no single factor is determinative in selecting compensation elements and setting compensation levels. Members of the compensation committee apply their business judgment and consider all of this information in light of their experience and knowledge of the company, the competitive market, and each NEO. The factors that the compensation committee considers include: • • • • • • • • our executive compensation program objectives; our performance against the financial, operational and strategic objectives established by the compensation committee and the board; each of our named executive officer’s roles and responsibilities, qualifications, knowledge, skills, experience, and marketability including on a relative basis to other similarly situated executives at the companies in our compensation peer group; the performance of each of our NEOs, based on a qualitative assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function, ability to collaborate across the company and demonstration of leadership behaviors consistent with our values, and potential to contribute to our long-term financial, operational and strategic objectives; an analysis of competitive market data (as described below); the unrealized value and other terms of the outstanding unvested equity awards held by each of our named executive officers; feedback from investors on our executive compensation program, including through the say-on-pay vote; and the recommendations of our CEO with respect to the compensation of our other NEOs. Say-on-pay vote. In setting the form and amount of compensation for our NEOs, the compensation committee also considers the voting results from our most recent say-on-pay vote as well as specific input provided by stockholders throughout the year. At our 2021 annual stockholders’ meeting, stockholders expressed a high level of support for our executive compensation program, with 98.8% of the votes cast in favor. The compensation committee did not make any significant changes to our executive compensation program. Competitive positioning. For purposes of comparing our executive compensation against the competitive market and to guide compensation levels and practices, the compensation committee developed a peer group for 2021 in consultation with our external compensation consultant. In developing the peer group, the compensation committee's goal was to include companies that would be relevant and useful for compensation decision-making, recognizing the individual qualifications and marketability of our NEOs. This resulted in a peer group comprised of: • • • publicly traded companies, mainly headquartered in the San Francisco Bay Area; in internet and software-related industries; and with revenue from $0.7 billion to $13 billion. 24 For 2021, the compensation peer group consisted of the following companies: Activision Blizzard, Inc.* eBay Inc* Slack Technologies, Inc. VMware, Inc.* Adobe Inc.* Electronic Arts Inc.* Snap Inc Arista Networks, Inc. Expedia Group, Inc.* Splunk Inc Workday, Inc. Yelp Inc* Autodesk, Inc. Block, Inc.** Intuit Inc.* Lyft, Inc.* Spotify Technology SA* Zillow Group, Inc. TripAdvisor, Inc. Zoom Video Communications, Inc. Crowdstrike Holdings, Inc. Okta, Inc. Twilio Inc DocuSign, Inc. Dropbox, Inc. Palo Alto Networks Inc Twitter, Inc. ServiceNow Inc Uber Technologies, Inc* * Companies marked with an asterisk were added to the peer group for 2021. No companies were removed from the 2020 peer group. ** Formerly named Square, Inc. The above compensation peer group for 2021 was approved by the compensation committee in December 2020, with input from our external compensation consultant. As described above, compensation decisions are not based solely on competitive market data. Rather, the market data serves as one point of reference to aid in understanding the competitive market for executive positions in our industry. When making compensation decisions, the compensation committee does not specifically target compensation for our NEOs at a certain percentile of compensation data for other individuals with similar roles at the peer companies. Instead, the committee considers all of the data, including individual compensation data where available, as well as the many qualitative factors unique to each of our NEOs, including their responsibilities, qualifications, knowledge, performance, and marketability which are not adequately reflected in percentile-based data. In addition to publicly available compensation data, the committee may also review compensation survey data for the peer group and broader groups for supplemental, secondary reference. The compensation committee reviews our compensation peer group at least annually and adjusts its composition as warranted, taking into account changes in our business and that of the companies in our peer group, as well as changes in our executives. Compensation Elements for 2021 Base salaries. Consistent with our compensation philosophy and focus on long-term value creation, base salaries are not a major portion of the target total direct compensation for our NEOs. The compensation committee may adjust the base salaries of our NEOs as part of its annual executive compensation review and in the event of a promotion or significant change in responsibilities. In establishing base salary amounts and adjustments, the compensation committee generally considers the factors described above. For 2021, after considering both the company’s and each NEO’s performance during the prior year as well as their expected future contributions, market data, and value and terms of unvested equity awards, the compensation committee maintained salaries at 2020 levels and did not make additional equity awards to our NEOs. The table below sets forth the base salaries for each of our NEOs as of December 31, 2021 (or, for Mr. Sharp, as of the date of his transition to an advisor role): Named Executive Officer Ben Silbermann Evan Sharp Christine Flores Todd Morgenfeld Naveen Gavini Base Salary $197,100 $330,000 $345,000 $360,500 $350,000 Long-term equity incentive compensation. Consistent with our compensation philosophy and focus on our long-term mission and value creation, the majority of our NEOs’ target total direct compensation has historically been delivered in the form of RSUs and RSAs vesting over four or five years. In establishing 25 the amount and terms of these awards, the compensation committee generally considers the factors described above under the Compensation-Setting Process. NEOs may receive larger awards upon hire or in connection with a promotion or significant change in responsibilities, and do not necessarily receive awards every year. In consideration of the company’s and each NEO’s performance during 2020 and the unrealized value and terms of unvested equity awards, the compensation committee did not grant new equity awards to NEOs in 2021. The amounts reflected as ‘‘Stock Awards’’ for 2021 in the 2021 Summary Compensation Table below are a result of an accounting modification of Mr. Sharp's unvested equity awards in connection with his transition to an advisor and accounting modification in connection with certain amendments to the executive severance agreements we made for executive officers (except Ben Silbermann and Evan Sharp) as described in ‘‘Post-Employment Compensation Arrangements.’’ Benefits. Our named executive officers are eligible to participate in the same employee benefits that are generally available to all our full-time employees, subject to the satisfaction of certain eligibility requirements. These benefits include medical and dental insurance, life insurance, short- and long-term disability insurance and commuter benefits. In addition, we maintain a Section 401(k) savings plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax-advantaged basis by deferring eligible compensation up to certain limits as set forth in the Internal Revenue Code. We make matching contributions to the Section 401(k) plan. In addition, we have the ability to make discretionary cash contributions to the Section 401(k) plan, though we did not do so in 2021. Participants are immediately fully vested in both their own contributions and any company contributions. In structuring these benefit programs, we seek to provide an aggregate level of benefits that is comparable to those provided by similarly situated companies. We do not provide any non-qualified deferred compensation benefits and do not have any defined benefit pension or supplemental executive retirement plans. Perquisites and other personal benefits. We do not view perquisites or other personal benefits as important to achieving our compensation objectives. Accordingly, we maintain a general benefits program for all employees and do not provide perquisites or other personal benefits to our executive officers except where we believe it is appropriate to achieve our compensation objectives and to assist our executive officers in the performance of their duties. During 2021, our named executive officers did not receive any perquisites or other personal benefits, except for benefits that are generally available to all our employees. Post-Employment Compensation Arrangements What we do. We have entered into executive severance and change in control agreements with each of our named executive officers. These agreements provide severance payments and, except for Ben Silbermann and Evan Sharp, partial vesting in equity if the named executive officer’s employment is terminated without cause as well as ‘‘double-trigger’’ change in control payments and full vesting of equity in the event that the named executive officer’s employment is terminated without cause or the executive resigns for good reason within a specified period before and after a change in control of the company. We do not provide any of our named executive officers with a ‘‘gross-up’’ or other reimbursement payment for any tax liability as a result of the application of Sections 280G or 4999 of the Internal Revenue Code. Why we do it. We believe that having reasonable and competitive post-employment compensation arrangements is essential to attracting and retaining highly qualified executives as well as facilitating their transition from the company when appropriate. These severance arrangements are designed to provide reasonable compensation to executives who leave the company under certain circumstances to facilitate their transition to new employment. In addition, they are designed to align the interests of our named executive officers and our stockholders in the event of a potential change in control of the company by helping our executives maintain focus on pursuing corporate transactions that are in the best interests of our stockholders regardless of whether those transactions may result in their own job loss. We seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing executive to sign a separation and release agreement acceptable to us as a condition to receiving post-employment compensation. In December 2021, to improve Pinterest’s ability to attract and retain highly qualified executives as well as facilitate their transition from the company when appropriate, the compensation committee approved 26 changes to the executive severance and change in control agreement for our named executive officers, except for Ben Silbermann and Evan Sharp, as described below. The CEO remains eligible for the severance benefits under his original agreement. In addition, Evan Sharp remains eligible under his original agreement for accelerated vesting in equity only upon a qualifying termination connected to a change in control in recognition of his continued service as an advisor and board member. • • For a termination without cause not connected to a change in control, the cash severance payment was increased from 6 to a maximum of 24 months of salary and cost of health benefits continuation declining to a minimum of 12 months for each month of service. Since each of our NEOs has been an employee of Pinterest over 12 months, they would be entitled to 12 months of salary and cost of health benefits continuation coverage. The equity benefit was increased from none to vesting in equity that would otherwise have vested had the executive remained employed for 12 months following termination. For termination without cause or good reason following a change in control (‘‘double trigger’’), the cash severance payment was increased from 6 to 12 months of salary and cost of health benefits continuation coverage. There was no change for the equity treatment. The compensation committee does not consider the specific amounts payable under these post-employment compensation arrangements when establishing the annual compensation of our named executive officers. We believe, however, that these arrangements are an important component of competitive compensation packages. For a description of the terms of these agreements, as well as an estimate of the potential payments payable under these agreements, see ‘‘Potential Payments upon Termination or Change in Control’’ below. Roles and Responsibilities Role of our compensation committee. The compensation committee performs the responsibilities of the board relating to the compensation of directors and employees, including executive officers. The compensation committee has overall responsibility for reviewing our compensation philosophy and strategy, overseeing our compensation and benefits policies generally, and overseeing and evaluating the compensation plans, policies, and practices applicable to our CEO as well as our other executive officers. The compensation committee also oversees management of risks for succession planning and compensation; and evaluates the company’s programs and practices relating to talent and leadership development and management, including matters relating to the attraction, development and retention of a diverse and talented workforce. The compensation committee operates pursuant to a written charter, which is available on our website (see the first page of this proxy statement). Role of our chief executive officer. In discharging its responsibilities, the compensation committee works with members of our management, including our CEO. Management assists the compensation committee by providing information on corporate and individual performance, market compensation data, and management’s perspective on compensation matters. The compensation committee solicits and reviews our CEO’s recommendations with respect to adjustments to base salaries, long-term equity incentive compensation opportunities, program structures, and other compensation-related matters for our named executive officers (other than with respect to his own compensation) and considers his recommendations as one of the factors in determining compensation. Our CEO recuses himself from all discussions and recommendations regarding his own compensation and is not present when his compensation is discussed. Role of our compensation consultant. Pursuant to its charter, the compensation committee has the authority to retain the services of external compensation advisors, as it determines in its sole discretion, including compensation consultants and legal, accounting, and other advisors. The compensation committee makes all determinations regarding the engagement, fees, and services of these advisors, and any such advisor reports directly to the compensation committee or the chair of the committee. We continued to engage Compensia, Inc. as the executive compensation consultant for the compensation committee after evaluating that firm’s independence pursuant to applicable SEC and NYSE rules and determining that Compensia’s work did not give rise to any conflict of interest. Compensia did not provide any services to us other than advice and support with respect to executive and director compensation, including: the levels of overall compensation and each element of compensation for our executives; peer 27 group selection and data collection; market trends for executive and director compensation; equity compensation; a risk assessment of our compensation programs; and input on this Compensation Discussion and Analysis. Other Compensation Policies and Practices Employment arrangements. Although our named executive officers are employed ‘‘at-will’’ and their employment can be terminated at any time for any reason with or without cause, we have entered into employment agreements or offer letters with each of our named executive officers to establish an initial base salary and eligibility to participate in our employee benefit programs. Anti-hedging and pledging policies. Under our insider trading policy, our employees, including our executive officers, and non-employee directors are prohibited from the following transactions: entering into hedging or monetizing transactions or similar arrangements with respect to our securities, including collars, equity swaps, exchange funds and forward contracts; holding our securities in a margin account or pledging our securities as collateral for a loan, unless approved in advance; short selling our securities; and engaging in any transaction in publicly traded options in our securities, including puts or calls or other derivative securities. Compensation risk considerations. The compensation committee has reviewed our compensation policies and practices, in consultation with its external compensation consultant, to assess whether they encourage our employees to take inappropriate risks. After reviewing and assessing our compensation philosophy, policies, and practices, including the mix of fixed vs. variable and short- vs. long-term compensation, overall pay and incentive structures, the risk mitigating features built into our programs, and the independent board oversight of our programs, the compensation committee has determined that any risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the company as a whole. Tax deductibility considerations. Section 162(m) of the Internal Revenue Code generally disallows public companies to take a tax deduction for U.S. federal income tax purposes for compensation in excess of $1 million paid in a year to a covered employee. Once an individual has been determined to be a covered employee, the deduction limitation applies indefinitely. While Pinterest is not subject to Section 162(m) under transition rules for newly public companies, in approving the amount and form of compensation for our named executive officers, the compensation committee considers all elements of the cost of providing such compensation, including the potential impact of Section 162(m) in the future. However, the compensation committee believes that our stockholders’ interests are best served by retaining flexibility to award compensation that may result in non-deductible compensation expense. Therefore, the compensation committee has the discretion to pay compensation that is not deductible by virtue of the deduction limit of Section 162(m). Accounting considerations. In approving the amount and form of compensation for our named executive officers, the compensation committee considers the impact of FASB ASC Topic 718, which requires us to measure and recognize the compensation expense for all share-based payment awards made to our employees and directors, including RSUs and RSAs that may be settled for shares of our Class A and Class B common stock, based on the grant date fair value of these awards. Compensation Committee Report The compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based on their review and discussion, the compensation committee has recommended to the board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into the company’s 2021 annual report on Form 10-K. Members of the Compensation Committee Leslie Kilgore (Chair) Gokul Rajaram Andrea Wishom 28 Compensation Tables Summary Compensation The following table shows the compensation awarded or paid to, or earned by, our named executive officers for 2021, 2020 and 2019, as applicable, in accordance with the SEC’s rules for public companies. 2021 Summary Compensation Table Name and Principal Position Benjamin Silbermann Co-Founder, President & CEO Evan Sharp Co-Founder, Former Chief Creative & Design Officer Christine Flores General Counsel and Corporate Secretary Todd Morgenfeld Chief Financial Officer & Head of Business Operations Naveen Gavini(6) Senior Vice President of Products Year Salary ($) Bonus ($) 2021 197,100 2020 2019 197,100 197,100 2021 261,250 2020 2019 330,000 330,000 2021 345,000 2020 2019 345,000 345,000 2021 360,500 2020 2019 360,500 360,500 2021 330,114 — — — — — — — — — — — — — Stock Awards ($)(1) All Other Compensation ($)(2) Total ($) — 2,000 199,100 — 45,745,013 40,816,438(4) — 45,745,013 774,752(5) 4,440,772 — 1,650,351(5) 10,611,517 — 1,033,313(5) 2,000 280,000(3) 2,000 2,000 — 2,000 2,000 — 2,000 2,000 — 2,000 199,100 46,222,113 41,079,688 332,000 46,075,013 1,121,752 4,787,772 345,000 2,012,851 10,974,017 360,500 1,365,427 (1) (2) Unless otherwise noted, reported amounts represent the aggregate grant date fair value of RSAs and RSUs granted during the years shown, as computed in accordance with FASB ASC Topic 718. See Notes to Consolidated Financial Statements included in our 2021 annual report on Form 10-K for the assumptions used in calculating the grant date fair value. These amounts do not reflect the actual economic value that may be realized from such awards. Reflects matching 401(k) contributions unless otherwise noted. (3) Reflects Hart-Scott-Rodino Act filing fees paid on Mr. Silbermann’s behalf in connection with his Pinterest stock ownership. (4) Mr. Sharp resigned from his position as the Chief Design and Creative Officer of Pinterest, effective as of October 15, 2021, and currently serves as an advisor to Pinterest through the date of Pinterest’s 2024 annual meeting of stockholder pursuant to a consulting agreement dated October 13, 2021. Mr. Sharp's transition resulted in a modification of his RSU award granted prior to our IPO in 2019 for accounting purposes. The amount represents the aggregate incremental fair value of his modified award as computed in accordance with FASB ASC Topic 718 and does not reflect a new equity grant. (5) (6) The compensation committee approved an amended and restated executive severance and change in control agreement (the ‘‘Amended and Restated Severance Agreement’’) on December 15, 2021 for executive officers except Ben Silbermann. The Amended and Restated Severance Agreement resulted in modifications of outstanding RSU and RSA awards for Todd Morgenfeld, Christine Flores and Naveen Gavini. The amounts represent the aggregate incremental fair value of their modified awards as computed in accordance with FASB ASC Topic 718 and do not reflect new equity grants. See ‘‘Potential Payments upon Termination of Change in Control’’ below for additional details. In accordance with SEC rules, we have omitted 2020 and 2019 compensation for Mr. Gavini because he was designated an executive officer in 2021. 29 Grants of Plan-Based Awards The Company did not grant stock or other plan-based awards to our named executive officers in 2021. The following table shows certain information regarding accounting modifications during 2021 of previously granted equity awards Name Benjamin Silbermann Evan Sharp Christine Flores Todd Morgenfeld Naveen Gavini 2021 Grants of Plan-Based Awards Table Grant Date All Other Stock Awards: Number of Shares of Stock or Units (#) Grant Date Fair Value of Stock Awards($) — 10/12/2021 12/15/2021 12/15/2021 12/15/2021 — — — — — — 40,816,438(1) 774,750(2) 1,650,348(2) 1,033,740(2) (1) (2) The amount represents the aggregate incremental fair value related to the modification of Mr. Sharp’s outstanding RSU award for accounting purposes and does not reflect a new equity grant as explained in footnote 4 of the 2021 Summary Compensation Table above. The amount represents the aggregate incremental fair value of modified awards in connection with the Amended and Restated Severance Agreement for accounting purposes and does not reflect a new equity grant as explained in footnote 5 of the 2021 Summary Compensation Table above. 30 Outstanding Equity Awards The following table shows certain information with respect to the outstanding equity awards held by our named executive officers as of December 31, 2021. The vesting schedule applicable to each outstanding equity award is described in the footnotes to the table. For information with respect to the vesting acceleration provisions applicable to the equity awards held by our named executive officers, see ‘‘Potential Payments upon Termination or Change in Control’’ below. Outstanding Equity Awards at Fiscal 2021 Year-End Table Number of Securities Underlying Option Awards(1) Name Grant Date Unexercised Options Exercise Price Per Share ($) Unexercisable Exercisable Benjamin Silbermann Evan Sharp Christine Flores Todd Morgenfeld Naveen Gavini 4/25/13 3/21/19(4) 6/20/12 1/16/15 3/21/19(5) 8/1/18(6) 4/7/20(7) 8/1/18(8) 4/7/20(9) 4/30/18(10) 10/27/18(11) 2/5/19(12) 3/28/19(13) 4/7/20(14) 3,971,112 — 769,908 1,756,336 — — — — — — — — — — — — — — — — — — — — — — — — 1.878 — 0.574 4.416 — — — — — — — — — — Stock Awards(1) Shares or Units of Stock That Have Not Vested Expiration Date Number(2) Market Value(3) ($) 4/25/23 — — 1,166,667 — 42,408,345 6/20/22 1/16/25 — — — 1,166,667 — — — — — — — — — 233,332 294,872 466,664 641,025 6,250 3,123 25,000 15,625 463,953 — — 42,408,345 8,481,618 10,718,597 16,963,236 23,301,259 227,188 113,521 908,750 567,969 16,864,692 (1) (2) (3) (4) (5) (6) (7) (8) (9) All of the outstanding equity awards reported in this table were granted under either the 2009 Stock Plan (in the case of awards granted pre-IPO) or the 2019 Omnibus Incentive Plan (in the case of awards granted since our IPO). RSUs granted under the 2009 Stock Plan will be settled in shares of our Class B common stock. RSUs granted under the 2019 Omnibus Incentive Plan will be settled in shares of our Class A common stock and RSAs granted under the 2019 Omnibus Incentive Plan represent restricted shares of our Class A common stock. Awards granted prior to our IPO in April 2019 had vesting conditions that required satisfaction of both (i) a service-based vesting condition; and (ii) a liquidity-based vesting condition. The liquidity-based vesting condition was satisfied in connection with our IPO. The schedule associated with the service-based vesting condition varies for each grant of RSUs and RSAs as described below and is subject to the recipient’s continued service with the company through each such date. Based on the closing price of our Class A common stock of $36.35 per share as of December 31, 2021. The award provides that the service-based vesting condition will be satisfied for 5% of the total number of RSUs at the end of each three-month period during the five-year period commencing on April 20, 2019 and ending on April 20, 2024. The award provides that the service-based vesting condition will be satisfied for 5% of the total number of RSUs at the end of each three-month period during the five-year period commencing on April 20, 2019 and ending on April 20, 2024. The award provides that the service-based vesting condition will be satisfied for (i) 2.5% of the total number of RSUs at the end of each three-month period during the two-year period commencing on December 20, 2018 and ending on December 20, 2020; and (ii) 10% of the total number of RSUs at the end of each three-month period during the two-year period commencing on December 20, 2020 and ending on December 20, 2022. The award provides that the service-based vesting condition will be satisfied for 20% of the total number of RSAs at the end of each three-month period during the 15-month period commencing on December 20, 2022 and ending on March 20, 2024. The award provides that the service-based vesting condition will be satisfied for (i) 2.5% of the total number of RSUs at the end of each three-month period during the two-year period commencing on December 20, 2018 and ending on December 20, 2020; and (ii) 10% of the total number of RSUs at the end of each three-month period occurring during the two-year period commencing on December 20, 2020 and ending on December 20, 2022. The award provides that the service-based vesting condition will be satisfied for (i) 3% of the total number of RSAs at the end of each three-month period during the nine-month period commencing on March 20, 2020 and ending on December 20, 2020; and (ii) 18.2% of the total number of RSAs at the end of each three-month period during the 15-month period commencing on December 20, 2022 and ending on March 20, 2024. (10) The award provides that the service-based vesting condition will be satisfied for 6.25% of the total number of RSUs at the end of each three-month period during the four-year period commencing on March 20, 2018 and ending on March 20, 2022. (11) The award provides that the service-based vesting condition will be satisfied for 6.25% of the total number of RSUs at the end of each three-month period during the four-year period commencing on September 20, 2018 and ending on September 20, 2022. 31 (12) The award provides that the service-based vesting condition will be satisfied for 6.25% of the total number of RSUs at the end of each three-month period during the four-year period commencing on December 20, 2018 and ending on December 20, 2022. (13) The award provides that the service-based vesting condition will be satisfied for 6.25% of the total number of RSUs at the end of each three-month period during the four-year period commencing on March 20, 2019 and ending on March 20, 2023. (14) The award provides that the service-based vesting condition will be satisfied for (i) 4.37% of the total number of RSAs on June 20, 2020; (ii) 4.7% of the total number of RSAs at the end of each three-month period during the nine-month period commencing on June 20, 2020 and ending on March 20, 2021; (iii) 5.5% of the total number of RSAs at the end of each three-month period during the 12-month period commencing on March 20, 2021 and ending on March 20, 2022; (iv) 6.47% of the total number of RSAs at the end of each three-month period during the six-month period commencing on March 20, 2022 and ending on September 20, 2022; (v) 6.63% of the total number of RSAs on December 20, 2022; (vi) 7.6% of the total number of RSAs on March 20, 2023; and (vii) 8.09% of the total number of RSAs at the end of each three-month period during the 12-month period commencing on March 20, 2023 and ending on March 20, 2024. Option Exercises and Stock Vested The following table shows information regarding the number and value of shares of common stock acquired during 2021 by our named executive officers from the vesting of RSUs and RSAs and exercise of stock options. 2021 Option Exercises and Stock Vested Table Name Shares Acquired (#) Value Realized ($)(1) Shares Acquired (#) Value Realized ($)(2) Option Award Exercises Stock Award Vestings Benjamin Silbermann Evan Sharp Christine Flores Todd Morgenfeld Naveen Gavini 1,222,167 — — — — 87,516,327 — — — — 466,667 466,667 306,248 466,664 223,111 32,441,520 32,441,520 19,103,748 27,471,343 13,126,901 (1) (2) The value realized on exercise is the difference between the closing price of our Class A common stock on the date of exercise minus the exercise price. The value realized on vesting is based on the closing price of our Class A common stock on the vesting date, or if such date was not a trading day, on the immediately preceding trading day. Potential Payments upon Termination or Change in Control On December 15, 2021, an amended and restated executive severance and change in control agreement was approved for certain of our executive officers, including Todd Morgenfeld, Christine Flores and Naveen Gavini. These agreements were updated to improve Pinterest’s ability to attract and retain executive talent and facilitate executive talent transitions. Ben Silberman remains eligible for the severance benefits under his original agreement and Evan Sharp remains eligible for accelerated vesting in equity only upon a qualifying termination connected to a change in control. The payments and benefits under these agreements are described in more detail and quantified below. All of the payments and benefits provided under these agreements are subject to the named executive officer’s execution of a general release of claims against the company and continued adherence to the terms of a confidential information and invention assignment agreement with the company. In addition to the above, the 2019 Omnibus Incentive Plan provides that in the event of termination upon death or disability, any employee who holds stock options or his or her beneficiary (in the event of death) may exercise any outstanding vested stock options at any time as follows: (i) in the event of disability, during six months following termination; and (ii) in the event of death, during 12 months following death or if earlier, termination. Termination without cause not involving a change in control. In the event of a termination without cause that is not in connection with a change of control, Mr. Silbermann would receive a lump sum cash payment of 6 months of base salary and 6 months of health benefits continuation, and the other NEOs (excluding Mr. Sharp) would receive a lump sum cash payment equal to a maximum of 24 months of salary and 24 months of health benefits continuation (which is reduced by one month for each month of service with us to a minimum of 12 months). Evan Sharp is not eligible for cash payments or benefits in the event of a termination without cause that is not in connection with a change of control. 32 Additionally, upon such a termination, each NEO, other than Mr. Silbermann and Mr. Sharp, will vest in the portion of each outstanding equity award that would otherwise have vested during the 12-month period following such termination. Involuntary termination involving a change in control. In the event of a termination without cause or a resignation with good reason, in each case, within 90 days prior to or one year following a change in control of the company, Mr. Silbermann would receive a lump sum cash payment of 12 months of base salary and 12 months of health benefits continuation, and the other NEOs (excluding Mr. Sharp) would receive a lump sum cash payment equal to a maximum of 24 months of salary and 24 months of health benefits continuation (which is reduced by one month for each month of service with us to a minimum of 12 months). Evan Sharp is not eligible for cash payments or benefits in the event of a double trigger termination. Additionally, upon such a termination, each NEO, including Mr. Silbermann and Mr. Sharp, will fully vest in all outstanding equity awards. Separately, upon a change in control of the company, in the event that a named executive officer’s equity awards are not assumed, substituted or otherwise continued or replaced with similar equity awards, such awards will vest in full regardless of whether the officer terminates employment. These payments and acceleration of vesting are subject to a ‘‘best net after-tax’’ provision to reduce the amounts paid in the event that they would trigger excise tax penalties and loss of deductibility under Sections 280G and 4999 of the Internal Revenue Code. Definitions. For purposes of these agreements: • • • ‘‘Cause’’ means any of the following: (i) executive fails to perform his or her duties and responsibilities; (ii) an act of dishonesty or misrepresentation that would cause serious injury, including reputational harm, to the company; (iii) executive’s unauthorized use or disclosure of any proprietary information or trade secrets; (iv) executive commits a material breach of any written agreement between executive and the company; (v) executive fails to comply with written policies or rules; (vi) executive willfully refuses to implement or follow a directive from supervisor; (vii) executive fails to perform the essential job duties associated with the position; (viii) executive’s intentional violation of any law or regulation; (ix) executive’s conviction of a felony, another crime involving moral turpitude or any crime (whether or not a felony) against the company; or (x) executive’s failure to comply with any reasonable investigation or formal proceeding. ‘‘Good Reason’’ means any of the following: (i) a material reduction in executive’s duties in effect immediately prior to the reduction, but the following are not material reductions: (x) a change of title alone, (y) any change made due to a Change in Control (as defined below), and (z) not being nominated to the board; (ii) a change in office location which increases the executive’s one-way commute by more than 35 miles; or (iii) executive’s base salary is reduced by more than ten percent. ‘‘Change in Control’’ means any of the following: (i) an acquirer owns more than 50% of the company’s stock; (ii) a merger or business combination; (iii) a majority of the board is replaced during a 12-month period by directors who are not supported by the existing board; or (iv) an acquiror acquires all or almost all of the company’s assets. A transaction shall not constitute a Change in Control if (x) its only purpose is to change the state of the company’s incorporation; and (y) the conversion of class B common stock into class A common stock resulted in an entity or person holding more than 50% of the total voting power of the company. Estimated payments as of December 31, 2021. The following table presents the estimated payments that each of our named executive officers would have been entitled to receive under these agreements assuming that a termination of employment and, where applicable, a change in control of the company had occurred as of December 31, 2021 and based on the closing price per share of our Class A common stock on the last trading day of the year ($36.35 on December 31, 2021). Amounts actually received if any of the named executive officers cease to be employed will vary based on factors such as the timing during the year of any such event, the company’s stock price, and any changes to our benefit arrangements and 33 policies. Amounts shown do not include: (i) benefits earned during the term of the named executive officer’s employment that are available to all benefit-eligible salaried employees; and (ii) the value of vested equity awards that the named executive officer is entitled to regardless of whether employment is terminated. 2021 Potential Termination Payments Table Name Benjamin Silbermann Evan Sharp Christine Flores Todd Morgenfeld Naveen Gavini Termination Without Cause ($) Benefit Termination Without Cause or for Good Reason in connection with Change in Control ($) Lump sum severance payment(1) Value of accelerated RSUs and RSAs(2) Total Lump sum severance payment(1) Value of accelerated RSUs and RSAs(2) Total Lump sum severance payment(1) Value of accelerated RSUs and RSAs(2) Total Lump sum severance payment(1) Value of accelerated RSUs and RSAs(2) Total Lump sum severance payment(1) Value of accelerated RSUs and RSAs(2) Total 115,831 — 115,831 — — — 356,525 8,481,618 8,838,143 391,977 16,963,236 17,355,213 350,487 8,208,448 8,558,935 231,663 42,408,345 42,640,008 — 42,408,345 42,408,345 356,525 19,200,215 19,556,740 391,977 40,264,495 40,656,472 350,487 18,682,119 19,032,606 (1) (2) Reported amounts are based on the 2021 base salary of each named executive officer and include the estimated cost of health insurance continuation coverage (paid in lump sum if the NEO elects such coverage) as of the end of the last fiscal year and the severance period specified in the Executive Severance & Change in Control Agreement. Reported amounts are based on (i) in the event of a termination without cause, the number of unvested RSUs and RSAs scheduled to vest within the following 12 months and (ii) in the event of a double trigger termination, the total number of unvested RSUs and RSAs as of the end of the last fiscal year, in each case, multiplied by the closing price per share of our Class A common stock on the last trading day of the year. The value set forth in the event of a double trigger termination is the same value that would apply in the event of a change in control of the company where the awards are not assumed or substituted (as described above). Evan Sharp Consulting Agreement. In connection with his transition to an advisor, on October 15, 2021, we entered into a consulting agreement with Mr. Sharp, which provides for a term extending to our 2024 annual meeting of stockholders. The consulting agreement provides for continued vesting in his outstanding equity awards, subject to his continued service as an advisor, and does not provide for any additional compensation. After October 15, 2022, either party may terminate the agreement upon 30 days’ written notice. Mr. Sharp is not eligible for severance in the event of such a termination by the company; however, Evan Sharp does remain eligible for equity acceleration under his original severance and change in control agreement. CEO PAY RATIO The following table presents the ratio of the total compensation of our CEO to that of our median employee for the year ended December 31, 2021. Chief Executive Officer total compensation Median Employee total compensation Ratio of Chief Executive Officer to Median Employee total compensation 199,100 284,887 0.7 to 1.0 This ratio is a reasonable estimate calculated in a manner consistent with SEC rules. To identify the median employee, we analyzed the compensation of all of our employees, excluding our CEO, whether employed on a full-time, part-time, temporary or seasonal basis as of December 31, 2021. We did not include any contractors or other non-employee workers in our employee population. 34 To identify the median employee, we used a consistently applied compensation measure consisting of the sum of base salary rate, actual bonus and the grant date fair value of equity awards granted during the 12-month period from January 1, 2021 through December 31, 2021 for all applicable employees as described above. In the case of non-U.S. employees, payments not made in U.S. dollars were converted to U.S. dollars using the average applicable currency exchange rates for the month of December 2021. Using the methodology described above, the median employee we identified is a full-time employee based in the United States. We calculated the total compensation for the median employee using the same methodology used to report the total compensation of our named executive officers in the 2021 Summary Compensation Table. The total compensation for our median employee was then compared to the total compensation of our CEO as reported in the ‘‘Total’’ column of our 2021 Summary Compensation Table in this Proxy Statement to determine the pay ratio. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, our pay ratio may not be comparable to the pay ratio reported by other companies. EQUITY COMPENSATION PLAN INFORMATION The following table provides information as of December 31, 2021, with respect to the shares of our common stock that may be issued under our 2009 Stock Plan and 2019 Omnibus Incentive Plan. Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (#) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($) Securities Remaining Available for Future Issuance under Equity Compensation Plans (#) 52,398,841(2) — 3.20(3) — 126,949,622(4) — Plan Category Plans approved by security holders(1) Plans not approved by security holders (1) (2) (3) (4) The 2019 Omnibus Incentive Plan provides that the number of shares reserved and available for issuance under the 2019 Omnibus Incentive Plan will automatically increase on each January 1, commencing on January 1, 2020 through and including January 1, 2029, in an amount equal to 5% of the total number of shares of Class A and Class B common stock outstanding on the immediately preceding December 31. Includes 11,468,345 shares of Class B common stock issuable upon vesting of RSUs awarded under our 2009 Stock Plan and 15,505,044 shares of Class B common stock issuable upon exercise of outstanding options granted under our 2009 Stock Plan. Each share of our Class B common stock is convertible at any time at the option of the holder into one share of our Class A common stock. Each share of our Class B common stock will convert automatically into one share of our Class A common stock upon any transfer, whether or not for value, except certain transfers to entities, including certain charities and foundations, to the extent the transferor retains sole dispositive power and exclusive voting control with respect to the shares of Class B common stock, and certain other transfers described in our amended and restated certificate of incorporation. Upon the death or permanent incapacity of each holder of Class B common stock who is a natural person, the Class B common stock held by that person or his or her permitted estate planning entities will convert automatically into Class A common stock. However, shares of Class B common stock held by Benjamin Silbermann or his permitted estate planning entities or other permitted transferees will not convert automatically into Class A common stock until a time that is between 90 and 540 days after his death or permanent incapacity, as determined by the board of directors. In addition, all shares of Class B common stock will automatically convert into shares of Class A common stock on (i) the seven-year anniversary of the closing date of this offering, except with respect to shares of Class B common stock held by any holder that continues to beneficially own at least 50% of the number of shares of Class B common stock that such holder beneficially owned immediately prior to completion of this offering; and (ii) a date that is between 90 and 540 days, as determined by the board of directors, after the death or permanent incapacity of Mr. Silbermann. Includes 22,854,437 shares of Class A common stock issuable upon vesting of RSUs and 1,935,122 shares of Class A common stock issuable upon vesting of RSAs awarded under our 2019 Omnibus Incentive Plan as well as 635,893 shares of Class A common stock issuable upon exercise of outstanding options granted under our 2019 Omnibus Incentive Plan. Excludes RSAs and RSUs as they have no exercise price. Reflects shares available for future issuance under the 2019 Omnibus Incentive Plan (excluding shares underlying outstanding awards). 35 OTHER MATTERS Executive Officers The following table sets forth information for our executive officers as of March 30, 2022. Our executive officers are appointed by and serve at the discretion of the board, and each holds office until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. There are no family relationships among any of our directors or executive officers. Name Benjamin Silbermann* Christine Flores Naveen Gavini Todd Morgenfeld Age 39 47 34 50 Position Co-Founder, Chairman, President & Chief Executive Officer General Counsel & Corporate Secretary Senior Vice President, Head of Products Chief Financial Officer and Head of Business Operations * See ‘‘Our Board of Directors’’ for the background for Mr. Silbermann. Christine Flores has served as our General Counsel and Corporate Secretary since May 2017. Prior to joining Pinterest, Ms. Flores served at Google, a technology company, from 2007 to 2017, most recently as Vice President of Legal. Previously, she was an attorney at law firms, including Proskauer Rose LLP and Skadden, Arps, Slate, Meagher & Flom LLP, where she advised public and private companies on a wide range of transactional matters. Ms. Flores holds a Juris Doctor and Bachelor of Arts from the University of Southern California. Naveen Gavini has served as our Senior Vice President, Head of Products since April 2020. In his role, he oversees all design and product efforts for both consumer and advertiser products. Prior to this role, he led the design and engineering functions. Prior to joining Pinterest in 2012, he worked at Yahoo! Inc., a web services provider. He currently serves on the board of TextNow, Inc. He holds a Bachelor of Science degree in Computer Science and Engineering from Rutgers University. Todd Morgenfeld has served as our Chief Financial Officer since November 2016. In May 2020, he assumed the role of Head of Business Operations as well. Prior to joining Pinterest, he served as Vice President of Finance at Twitter, Inc., a social networking company, from 2015 to 2016 and Treasurer and Senior Vice President of Corporate Development and Corporate Financial Analytics at Hewlett-Packard Company, a multinational information technology company, from 2013 to 2015. He served as an investment partner at Silver Lake, a private equity firm, from 2004 to 2013. He currently serves on the board of Urban Outfitters, Inc. Mr. Morgenfeld holds a Master of Business Administration from Stanford Graduate School of Business and a Bachelor of Science from the United States Military Academy, where he graduated first in his class. 36 Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information regarding the beneficial ownership of our Class A common stock and Class B common stock as of March 31, 2022, by: (i) each director and nominee for director; (ii) each named executive officer; (iii) all current executive officers and directors as a group; and (iv) each person or group known by us to be the beneficial owner of more than 5% of our Class A common stock or Class B common stock. We have determined beneficial ownership in accordance with the rules and regulations of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote (or direct the voting) or to dispose (or direct the disposition) of such securities or has the right to acquire these powers within 60 days. Unless otherwise indicated, and subject to community property laws where applicable, based on the information available to us, the company believes that each of the stockholders named in the table has sole voting and investment power over the reported shares. Unless otherwise indicated, the address for each stockholder is c/o Pinterest at the company’s address set forth on the first page of this proxy statement. Applicable percentages are based on 573,584,856 shares of Class A common stock and 88,669,555 shares of Class B common stock outstanding as of March 31, 2022, adjusted as required by SEC rules. We have deemed shares of our Class B common stock subject to stock options that are currently exercisable or exercisable within 60 days of March 31, 2022 to be outstanding and to be beneficially owned by the person holding the stock option for the purpose of computing the percentage ownership of that person only. We have deemed shares of our Class A common stock and of our Class B common stock subject to RSUs that are expected to become vested within 60 days of March 31, 2022 to be outstanding and to be beneficially owned by the person holding the RSUs for the purpose of computing the percentage ownership of that person only. The Class B common stock is convertible at any time by the holder into shares of Class A common stock on a share-for-share basis, such that each holder of Class B common stock beneficially owns an equivalent number of shares of Class A common stock. Percentage of total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, voting together as a single class, with each share of our Class A common stock entitled to one vote per share and each share of our Class B common stock entitled to 20 votes per share. The holders of our Class A common stock and Class B common stock vote together as a single class on all matters submitted to a vote of our stockholders, except as may be otherwise required by law or our amended and restated certificate of incorporation. 37 The information provided in the table is based on our records, information filed with the SEC and information provided to us, except where otherwise noted. Name of Beneficial Owner Named Executive Officers and Directors Benjamin Silbermann (1) Evan Sharp (2) Christine Flores (3) Naveen Gavini (4) Todd Morgenfeld (5) Jeffrey Jordan (6) Lesley Kilgore (7) Jeremy Levine (8) Gokul Rajaram (9) Fredric Reynolds (10) Salaam Coleman Smith (11) Andrea Wishom (12) All directors and executive officers as a group (13) Other 5% Stockholders Paul Sciarra (14) The Vanguard Group (15) T.Rowe Price (16) Class A Common Stock Class B Common Stock Shares % of Class Shares — — — 115,817 — 271,307 40,767 1,177,511 34,572 67,092 6,242 7,805 1,721,113 — — — * * * * * * * — — * 26 49,170,184 32,359,618 * 8.57 5.64 43,656,070 4,631,073 55,972 — — — 6,838 — — 100,000 — — 48,449,953 38,442,589 — — % of Class 49.23 5.22 * — — — — — — * — — 54.64 43.35 — — % of Total Voting Power 37.20 3.95 * * * * * * * * — — 41.36 32.76 2.10 1.38 * (1) (2) (3) (4) Represents beneficial ownership or voting power of less than one percent Includes (i) 651,403 shares of Class B common stock held by Benjamin Silbermann; (ii) 38,916,888 shares of Class B common stock held by Benjamin W. Silbermann and Divya Silbermann, as trustees of the Benjamin and Divya Silbermann Family Trust (the ‘‘Trust’’); (iii) 3,971,112 shares of Class B common stock issuable upon exercise of outstanding stock options held by Mr. Silbermann; and (iv) 116,667 shares of Class B common stock issuable in connection with RSUs that will vest within 60 days of March 31, 2022. Mr. Silbermann and Ms. Silbermann have sole voting and dispositive power over the shares held by the Trust and may therefore be deemed to beneficially own such shares. Does not include 9,960,030 shares of Class B common stock held by an LLC that is owned by a trust, the beneficiaries of which include certain of Mr. Silbermann’s immediate family members. Mr. Silbermann does not have dispositive power or voting power over the shares held by the LLC and, as a result, Mr. Silbermann is deemed not to be a beneficial owner of the shares held by the LLC and such shares are not included in the table. In addition, Mr. Silbermann holds 933,334 unvested RSUs for which Mr. Silbermann does not have the right to acquire beneficial ownership of the underlying shares of Class B common stock within 60 days of March 31, 2022 and therefore are not included in the table. Includes (i) 332,156 shares of Class B common stock held by Evan Sharp; (ii) 2,526,244 shares of Class B common stock issuable upon exercise of outstanding stock options held by Evan Sharp; (iii) 1,002,371 shares of Class B common stock issuable upon exercise of outstanding stock options held by the Sharp Family Investments LLC Fund I; (iv) 509,900 shares of Class B common stock issuable upon exercise of outstanding stock options held by the Sharp Family Investments LLC Fund 2; (v) 143,735 shares of Class B common stock issuable upon exercise of outstanding stock options held by the Sharp Family Investments LLC Fund 3; and (vi) 116,667 shares of Class B common stock issuable in connection with RSUs that will vest within 60 days of March 31, 2021. In addition, Mr. Sharp holds 933,334 unvested RSUs for which Mr. Sharp does not have the right to acquire beneficial ownership of the underlying shares of Class B common stock within 60 days of March 31, 2022 and therefore are not included in the table. Includes (i) 55,972 shares of Class B common stock. Ms. Flores also holds (i) 174,999 unvested RSUs for which Ms. Flores does not have the right to acquire beneficial ownership of the underlying shares of Class B common stock within 60 days of March 31, 2022; and (ii) 294,872 unvested RSAs for which Ms. Flores does not have the right to acquire beneficial ownership of the underlying shares of Class A common stock within 60 days of March 31, 2022 and therefore are not included in the table. Includes 115,817 shares of Class A common stock held by Mr. Gavini. Mr. Gavini also holds (i) 33,332 unvested RSUs for which Mr. Gavini does not have the right to acquire beneficial ownership of the underlying shares of Class A common stock within 60 days of March 31, 2022; and (ii) 424,716 unvested RSAs for which Mr. Gavini does not have the right to acquire beneficial ownership of the underlying shares of Class A common stock within 60 days of March 31, 2022 and therefore are not included in the table. (5) Mr. Morgenfeld holds (i) 349,998 unvested RSUs for which Mr. Morgenfeld does not have the right to acquire beneficial ownership of the underlying shares of Class B common stock within 60 days of March 31, 2022; and (ii) 641,025 unvested RSAs for which Mr. Morgenfeld does not have the right to acquire beneficial ownership of the underlying shares of Class A common stock within 60 days of March 31, 2022 and therefore are not included in the table. (6) Includes (i) 23,111 shares of Class A common stock held by Mr. Jordan; (ii) 244,215 shares of Class A common stock held by Jordan Family Revocable Trust; and (iii) 3,981 shares of Class A common stock issuable in connection with RSUs that will vest within 60 days of March 31, 2022. 38 (7) (8) (9) (10) (11) (12) Includes (i) 3,981 shares of Class A common stock issuable in connection with RSUs that will vest within 60 days of March 31, 2022; (ii) 36,786 shares of Class A common stock held by the JLK Family Legacy Trust, of which Ms. Kilgore is a trustee; and (iii) 6,838 shares of Class B common stock. Includes (i) 1,173,530 shares of Class A common stock held by Mr. Levine; and (ii) 3,981 shares of Class A common stock issuable in connection with RSUs that will vest within 60 days of March 31, 2022. Represents (i) 26,634 shares of Class A common stock held by Mr. Rajaram; (ii) 3,957 shares of Class A common stock held by Gokul Rajaram & Tamara Lucero-Rajaram Trustees Rajaram Family Revocable Trust, of which Mr. Rajaram is a Trustee; and (iii) 3,981 shares of Class A common stock issuable in connection with RSUs that will vest within 60 days of March 31, 2022. Mr. Rajaram holds 6,598 unvested RSUs for which he does not have the right to acquire beneficial ownership of the underlying shares of Class A common stock within 60 days of March 31, 2022 and therefore are not included in the table. Includes (i) 63,111 shares of Class A common stock held by Mr. Reynolds; (ii) 100,000 shares of Class B common stock held by Mr. Reynolds; and (iii) 3,981 shares of Class A common stock issuable in connection with RSUs that will vest within 60 days of March 31, 2022. Includes (i) 2,261 of Class A common stock held by Ms. Coleman; and (ii) 3,981 shares of Class A common stock issuable in connection with RSUs that will vest within 60 days of March 31, 2022. Ms. Coleman also holds 4,524 unvested RSUs for which Ms. Coleman does not have the right to acquire beneficial ownership of the underlying shares of Class A common stock within 60 days of March 31, 2022 and therefore are not included in the table. Includes (i) 3,824 shares of Class A common stock held by Ms. Wishom; and (ii) 3,981 shares of Class A common stock issuable in connection with RSUs that will vest within 60 days of March 31, 2022. Ms. Wishom also holds 7,650 unvested RSUs for which Ms. Wishom does not have the right to acquire beneficial ownership of the underlying shares of Class A common stock within 60 days of March 31, 2022 and therefore are not included in the table. (13) Consists of (i) 1,693,246 shares of Class A common stock owned directly and indirectly by our directors and executive officers; (ii) 40,062,257 shares of Class B common stock owned directly and indirectly by our directors and executive officers; (iii) 8,153,362 shares of Class B common stock issuable to our executive officers and directors under outstanding stock options; (iv) 233,334 shares of Class B common stock issuable in connection with RSUs that will vest within 60 days of March 31, 2022; and (v) 27,867 shares of Class A common stock issuable in connection with RSUs that will vest within 60 days of March 31, 2022. Excludes 2,391,665 unvested RSUs currently held by our executive officers and directors for which such persons do not have the right to acquire beneficial ownership of the underlying shares of Class B common stock and 52,104 unvested RSUs and 1,360,613 RSAs held by our executive officers and directors for which such persons do not have the right to acquire beneficial ownership of the underlying shares of Class A common stock, in each case within 60 days of March 31, 2022. (14) Based on information provided to us by Paul Sciarra, includes (i) 24,121,984 shares of Class B common stock held by Paul Cahill Sciarra, as Trustee of the Sciarra Management Trust; (ii) 6,355,155 shares of Class B common stock held by PCS Legacy LLC, a limited liability company the sole member of which is PCS Legacy Trust; and (iii) 7,965,450 shares of Class B common stock and 26 shares of Class A common stock held by PCS Remainder LLC, a limited liability company the sole member of which is PCS Remainder Trust. Mr. Sciarra has voting, investment and dispositive power over the shares held in Sciarra Management Trust and therefore may be deemed to be the beneficial owner of such shares. The PCS Legacy Trust, as the sole member of the PCS Legacy LLC, owns the shares held by PCS Legacy LLC, and the PCS Remainder Trust, as the sole member of the PCS Remainder LLC, owns the shares held by PCS Remainder LLC. Mr. Sciarra, in his capacity as the protector of each of the PCS Legacy Trust and the PCS Remainder Trust, has the authority to remove and replace the trustee of these trusts and as such may be deemed to have voting, investment and dispositive power over the shares held by these trusts through the respective LLCs. The address for U.S. Trust Company of Delaware, as agent for Sciarra Management Trust is 2951 Centerville Road, Suite 200, Wilmington, DE 19808. The address for the PCS Legacy LLC and PCS Remainder LLC is the Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801. (15) Based on the Schedule 13G/A filed with the SEC by The Vanguard Group on February 9, 2022 reporting ownership of 49,170,184 shares of Class A common stock as of December 31, 2021 with shared voting power with respect to 540,109 shares, sole dispositive power with respect to 47,948,095 shares and shared dispositive power with respect to 1,222,089 shares. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. (16) Based on the Schedule 13G/A filed with the SEC by T.Rowe Price Associates, Inc. on February 14, 2022 reporting ownership of 32,359,618 shares of Class A common stock as of December 31, 2021, with sole voting power with respect to 11,572,063 shares and sole dispositive power with respect to 32,359,618 shares. The address of T.Rowe Price Associates, Inc.. is 100 E. Pratt Street, Baltimore, Maryland 21202. Related Party Transactions Policies and procedures. Pursuant to our written related party transaction policy, the audit committee has the primary responsibility for reviewing and approving or ratifying related party transactions. A related party includes our directors, executive officers, beneficial owners of more than 5% of our voting securities, or any member of the immediate family or person sharing the household with the foregoing persons. A related party transaction is a current or proposed transaction, arrangement or relationship in which our company was, is or will be a participant and the amount involved exceeds or is expected to exceed $120,000 in any fiscal year and in which any related party has, had or will have a direct or indirect material interest. The audit committee, while reviewing a related party transaction for approval or ratification, will consider various factors, including the benefit of the transaction to us, the terms of the transaction and whether it is at arm’s-length and in the ordinary course of our business, the direct or indirect nature of the related 39 person’s interest in the transaction, the size and expected term of the transaction, and other facts and circumstances that bear on the materiality of the related party transaction. If advance approval of a related party transaction is not feasible, the chair of the audit committee may approve the transaction and such transaction may be ratified by the audit committee in accordance with our written policy. Related party transactions. Other than as described below, since January 1, 2021, we have not entered into any transactions, nor are there any currently proposed transactions, between us and a related party where the amount involved exceeds, or would exceed, $120,000, and in which any related person had or will have a direct or indirect material interest. We believe the terms of the transactions described below were comparable to terms we could have obtained in arm’s-length dealings with unrelated third parties. • • Employment arrangement. Ari Simon, our Head of Social Impact, is also employed by an organization wholly owned by Benjamin Silbermann, our president and chief executive officer, and his wife. Ari was previously a fixed term employee of Pinterest and in 2021 was converted to a regular part-time employee of Pinterest. His compensation for 2021 was comprised of a base salary of $240,000, a RSU grant with an initial value of $400,000 vesting quarterly over four years and is entitled to benefits similar to full-time Pinterest employees. For 2022, his base salary has been increased to $244,800 and he received a merit grant with an initial value of $300,000 vesting quarterly over four years. Limitation of liability and indemnification for directors and officers. Our certificate of incorporation eliminates the potential personal monetary liability of our directors to us or our stockholders for breaches of their duties as directors except as otherwise required under Delaware law. In addition, our certificate of incorporation and bylaws as well as the indemnification agreements that we have entered into with our directors and officers provide for their indemnification to the fullest extent permitted by Delaware law, including payment of expenses in advance of resolution of any such matter. We also maintain standard policies of insurance under which, subject to the limitations of the policies, coverage is provided (i) to our directors and officers against loss arising from claims made by reason of breach of duty or other wrongful acts as a director or officer, including claims relating to public securities matters, and (ii) to us with respect to payments which we may make to such officers and directors pursuant to our indemnification obligations or otherwise as a matter of law. In addition, from time to time, we do business with other companies, including advertisers, affiliated with certain holders of our capital stock. We also believe that all such arrangements have been entered into in the ordinary course of business and have been conducted on an arm’s-length basis. Certain Legal Matters For a description of stockholder derivative lawsuits involving certain executives and members of the board, refer to Note 7. Commitments and Contingencies to our consolidated financial statements in our 2021 Annual Report on Form 10-K available at https://investor.pinterestinc.com/financial-results/sec-filings. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of such securities. To our knowledge, based solely on a review of such reports filed with the SEC and written representations that no other reports were required, during 2021, we believe that all required reports were timely filed, except that, due to administrative error the following forms were filed late: • • • one Form 3 to report Class A and Class B shares held by Naveen Gavini and one Form 4 to report a conversion of Class B to Class A shares for Naveen Gavini; one Form 4 to report a conversion of Class B to Class A shares for Leslie Kilgore; and one Form 4 to report three conversions of Class B to Class A shares for those shares pursuant to a Rule 10b5-1 trading plan for Evan Sharp. 40 Stockholder Proposals for the 2023 Annual Meeting Proposals to be included in our proxy statement. Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present proper proposals for inclusion in our proxy statement and for consideration at our 2023 annual meeting. To be eligible, your proposal must be received by our Corporate Secretary at the company’s address (see the first page of this proxy statement) no later than the close of business on December 14, 2022, and must otherwise comply with Rule 14a-8. While the board will consider stockholder proposals that we receive, we reserve the right to omit from our proxy statement stockholder proposals that do not satisfy applicable SEC rules. Other proposals and director nominations to be presented at the 2023 annual meeting. Under our bylaws, in order to nominate a director or bring any other business before the stockholders at the 2023 annual meeting that will not be included in our proxy statement pursuant to Rule 14a-8, you must comply with the procedures and timing specifically described in our bylaws. Assuming that the 2023 annual meeting occurs within 30 days before or after the anniversary of the 2022 annual meeting, stockholders desiring to nominate a director or bring any other business before the stockholders at the 2023 annual meeting must notify our Corporate Secretary in writing not earlier than January 26, 2023, and not later than February 25, 2023. Such notice must set forth certain information specified in our bylaws. In addition to complying with the advance notice provisions above, a stockholder who intends to solicit proxies pursuant to Rule 14a-19 in support of nominees submitted under these advance notice provisions for our 2023 annual meeting must notify our Corporate Secretary in writing not later than the close of business on March 27, 2023. All stockholder proposals should be in writing and be submitted to the Corporate Secretary at the company’s address on the first page of this proxy statement. We advise you to review our bylaws, which set forth the requirements for the nomination of director candidates and the presentation of proposals by stockholders. Our bylaws can be found on our website at https://investor.pinterestinc.com/governance/governance-documents, or you may obtain a copy free of charge by contacting the Corporate Secretary at the company’s address on the first page of this proxy statement. 41 VOTING AND ANNUAL MEETING INFORMATION Meeting Information Why have these proxy materials been made available to me? These materials are available in connection with the board’s solicitation of proxies to be voted at the annual meeting. The annual meeting is being held to elect three Class III directors to hold office until the 2025 annual meeting (Proposal 1), ratify the selection of Ernst & Young as our independent auditor for 2022 (Proposal 2) and approve, in an advisory non-binding vote, the compensation of our named executive officers (Proposal 3). All stockholders who held shares of our common stock as of the close of business on the record date, March 30, 2022, are entitled to attend the annual meeting and to vote on the items of business outlined above. Whether or not you choose to attend the annual meeting, we urge you to vote your shares online as soon as possible so that your shares are represented at the annual meeting. How can I attend the meeting? The annual meeting will be held exclusively online at www.virtualshareholdermeeting.com/PINS2022 on Thursday, May 26, 2022 at 8:00 a.m. Pacific Time. We invite all Pinterest stockholders as of the record date to attend the annual meeting. Through the virtual annual meeting format, you will be able to participate in the annual meeting online, vote your shares electronically and submit questions. We encourage you to access the annual meeting prior to the start time, and you should allow ample time to log in to the annual meeting webcast and test your computer audio system. Stockholders of record as of the record date are entitled to participate in the annual meeting. To log in to the annual meeting, stockholders of record should go to the meeting website, enter the 16-digit control number included on your notice of internet availability of proxy materials or proxy card, and follow the instructions on the website. If your shares are held in street name and your voting instruction form or notice of internet availability of proxy materials indicates that you may vote those shares through www.proxyvote.com, then you may access and participate in the annual meeting with the 16-digit access code indicated on that voting instruction form or notice of internet availability of proxy materials. Otherwise, stockholders who hold their shares in street name should contact their bank, broker or other nominee (preferably at least 5 days before the annual meeting) and obtain a ‘‘legal proxy’’ in order to be able to attend, and participate in the annual meeting. Why a virtual meeting? We have adopted a virtual format to provide a consistent experience to all stockholders regardless of location, expand stockholder access to the annual meeting, achieve cost savings for stockholders and Pinterest, and reduce the environmental impact of the annual meeting. Hosting a virtual annual meeting enables increased stockholder attendance and participation since stockholders can participate from any geographic location with internet connectivity. We have structured the virtual format so that it offers the same participation opportunities that would be provided at an in-person annual meeting. In particular: • • You can submit questions in advance of and during the annual meeting. Our question and answer session will include questions submitted both in advance of and live during the annual meeting. If you are a stockholder of record, or hold shares in street name and your voting instruction form or notice of internet availability of proxy materials indicated you may vote through www.proxyvote.com, you may submit a question in advance of the annual meeting at www.proxyvote.com or during the annual meeting at www.virtualshareholdermeeting.com/PINS2022, in each case by logging in with your 16-digit control number. We plan to answer as many questions during the annual meeting as time permits. Information regarding the types of questions permitted will be available in the meeting rules of conduct, which will be posted on the virtual meeting website during the meeting. Tech support will be available to facilitate your access to the annual meeting. We encourage you to access the annual meeting before it begins. Online check-in will start shortly 42 before the annual meeting on May 26, 2022. We will have technicians available to assist you. If you have difficulty accessing the annual meeting, please follow the instructions at the annual meeting website to connect with a technician via phone. Following the annual meeting, we will make available a replay of the entire annual meeting on our investor relations website (see the first page of this proxy statement). What constitutes a quorum? A quorum of stockholders is necessary to transact business at the annual meeting. A quorum exists if the holders of at least a majority of the voting power of the issued and outstanding shares entitled to vote are represented at the annual meeting, either by attending and voting at the annual meeting or by proxy. Abstentions and broker non-votes will be counted in determining if there is a quorum. If there is no quorum, either the chairperson of the annual meeting or the holders of a majority of the voting power of the shares represented at the annual meeting may adjourn the annual meeting to another date. Voting Information Who is eligible to vote? Only stockholders of record at the close of business on the record date are entitled to vote at the annual meeting. As of the record date, there were 573,584,856 shares of Class A common stock and 88,669,555 shares of Class B common stock outstanding and entitled to vote. How many votes per share do I have? Our Class A common stock has one vote per share and our Class B common stock has twenty votes per share. Our Class A and Class B common stock will vote together as a single class on all matters to be voted upon at the annual meeting. How can I vote? Your voting options depend on how you hold your shares. You may vote as follows if you are a stockholder of record as of the record date or if you hold your shares in street name and your voting instruction form or notice of internet availability of proxy materials indicates that you may vote these shares through www.proxyvote.com: • • At the annual meeting, by following the log in procedures described above and completing the online form during the annual meeting. Before the annual meeting, online, by going to www.proxyvote.com and following the prompts. Otherwise, stockholders who hold their shares in street name should follow the voting instructions received from their broker, bank or other agent. If you received a paper copy of the proxy materials, you may also vote by mail (by completing, signing and dating the enclosed proxy card or voting instruction card and returning it promptly in the envelope provided) or over the phone. You can vote over the phone or online until 11:59 p.m., Eastern Time on the day before the annual meeting. If you vote by mail, your proxy or voting instruction card, as applicable, must be received by the day before the annual meeting. You may still attend and vote at the annual meeting even if you have already voted by proxy. How can I change my vote? You can revoke your proxy at any time before the final vote at the annual meeting. You can also change your vote by attending and voting at the annual meeting. Please note that simply attending the annual meeting will not, by itself, revoke your proxy. In addition: • • If you are the beneficial owner, you can also change your vote or revoke your voting instruction by following the instructions provided by the broker, bank or other agent through which your shares are held. If you are the stockholder of record, you can also change your vote or revoke your proxy by submitting a subsequent proxy or by sending a timely written notice that you are revoking your proxy to the Corporate Secretary at the company’s address (see the first page of this proxy statement). Such notice will be considered timely if it is received by the day before the annual meeting. 43 Who will count the votes? Votes will be tabulated by Broadridge Financial Solutions, Inc. (‘‘Broadridge’’), and the board has appointed Broadridge to serve as our independent inspector of election. What if I am a record holder and I do not submit voting instructions? If you complete and submit your proxy, the persons named as proxies will vote your shares in accordance with your instructions. If you submit a proxy but do not complete the voting instructions, the persons named as proxies will vote your shares in accordance with the board’s recommendations below. If you do not submit a proxy or vote at the annual meeting, your shares will not be voted. What if I am a street-name holder and I do not submit voting instructions? You may instruct your broker, bank or other agent on how to vote your shares by following the instructions they provided with the proxy materials. If you do not do so, the firm has discretion to vote your shares only with respect to Proposal 2, which we expect be considered a ‘‘routine’’ matter under NYSE rules. Proposals 1 and 3 are not considered ‘‘routine’’ matters, and the firm that holds your shares will not have discretionary authority to vote your shares for these proposals if you do not provide voting instructions. This is called a ‘‘broker non-vote.’’ Therefore, you are encouraged to return your voting instructions so that your shares are voted at the annual meeting. What vote is necessary to approve each proposal and what are the board’s recommendations? The following table sets forth the voting requirements for each proposal being voted on at the annual meeting and the board’s recommendations. Proposal 1. Election of directors Board Recommendation For each nominee 2. Ratification of selection of Ernst & Young For 3. Advisory For non-binding vote on the compensation of our named executive officers Effect of Required Vote Withholding / Abstentions Broker Non- Votes Plurality of votes cast (nominees that receive the most FOR votes will be elected) No effect Majority of the voting power of the shares represented at the meeting and entitled to vote on the matter Majority of the voting power of the shares represented at the meeting and entitled to vote on the matter Same as a vote AGAINST Not counted as entitled to vote and so no effect Not applicable (brokers have voting discretion) Same as a vote AGAINST Not counted as entitled to vote and so no effect Each nominee has consented to be a candidate and to serve if elected. Although the board has no reason to believe that any nominee will be unavailable to serve as a director, if such an event should occur, the board may designate a substitute nominee or reduce the size of the board. If the board designates a substitute nominee, proxies will be voted for such substitute nominee(s). What if other business comes before the annual meeting? We do not expect any other business to properly come before the annual meeting; however, if any other business should properly come before the annual meeting, the persons named as proxies will vote your shares on such matters in accordance with their best judgment. How can I find out the voting results? We will announce the preliminary voting results at the annual meeting. Final voting results will be published on a Form 8-K that we expect to file within four business days after the annual meeting. Proxy Material Information Why did I receive a notice in the mail regarding the internet availability of proxy materials instead of a paper copy of the full set of proxy materials? In accordance with SEC rules, and in order to expedite our stockholders’ receipt of proxy materials, lower Pinterest’s costs and reduce the 44 environmental impact of the annual meeting, we are making our proxy materials available to stockholders primarily over the internet. As a result, we are mailing a notice of the internet availability of the proxy materials to our stockholders instead of a paper copy of the full set of proxy materials. As explained in the notice, you can view our proxy materials and vote online by visiting www.proxyvote.com and having available the 16-digit control number contained in your notice. If you received a notice, you will not receive a printed copy of the proxy materials unless you request one by following the instructions provided in the notice. Who pays the cost of the proxy solicitation? We will pay for the costs of soliciting proxies, including the preparation, assembly, printing and mailing of the proxy materials. In addition, our directors, officers and employees may also solicit proxies in person, by telephone, or by other means of communication, without additional compensation. We may also reimburse brokers, banks, fiduciaries, custodians and other institutions for their costs in forwarding the proxy materials to the street-name holders of our common stock. What if I receive multiple notices or proxy or voting instruction cards? If you received more than one notice of internet availability or proxy or voting instruction card, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on each of the notices, cards or forms to ensure that all of your shares are voted. How can I sign up to receive future proxy materials by e-mail? We encourage stockholders to take advantage of electronic delivery to help reduce the cost and environmental impact of the annual meeting. To sign up for electronic delivery, please visit www.proxyvote.com. Also, if you are a beneficial owner, you may sign up for electronic delivery by contacting your bank, broker or other agent through which you hold your shares. Once you sign up, you will not receive a printed copy of the proxy materials unless you request them. What is householding? SEC rules permit us, with your permission, to send a single set of proxy materials, including the notice of internet availability, proxy statement and annual report, to any household at which two or more stockholders reside if we believe they are members of the same family. This rule is called ‘‘householding’’ and its purpose is to help reduce printing and mailing costs of proxy materials. To date, we have not instituted this procedure, but may do so in the future. A number of brokerage firms have instituted householding. If you and members of your household have multiple accounts holding shares of our common stock, you may have received a householding notification from your broker. Please contact your broker directly if you have questions, require additional copies of the proxy materials or wish to revoke your decision to household. These options are available to you at any time. If you receive a single set of proxy materials as a result of householding by your broker and you would like to receive separate copies of the notice of internet availability, proxy statement or annual report, you may also submit a request to our Corporate Secretary by mail or phone at the company’s address or number (see the first page of this proxy statement), and we will promptly send you the requested materials. How can I get a paper copy of Pinterest’s annual report? A copy of our 2021 annual report on Form 10-K is available without charge upon written request to the Corporate Secretary at the company’s address (see the first page of this proxy statement). 45 [THIS PAGE INTENTIONALLY LEFT BLANK] UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 _________________ FORM 10-K _________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to Commission file number 001-38872 Pinterest, Inc. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) Delaware 26-3607129 505 Brannan Street San Francisco, California (Address of Principal Executive Offices, including zip code) 94107 (Zip Code) (415) 762-7100 Registrant’s Telephone Number, Including Area Code _______________________ Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Class A Common Stock, $0.00001 par value PINS New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Non-accelerated filer ☒ ☐ Accelerated filer Smaller reporting company Emerging growth company ☐ ☐ ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based on the closing price of a share of the registrant’s common stock on June 30, 2021 as reported by the New York Stock Exchange on such date was approximately $40.9 billion. As of January 28, 2022, there were 569,515,700 shares of the Registrant’s Class A common stock, $.00001 par value per share, outstanding, and 88,629,202 shares of the Registrant’s Class B common stock outstanding. Portions of the registrant’s definitive Proxy Statement for the 2022 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. Such Definitive Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the end of the registrant’s fiscal year ended December 31, 2021. Documents Incorporated by Reference PINTEREST, INC. TABLE OF CONTENTS Note About Forward-Looking Statements Limitations of Key Metrics and Other Data Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Properties Item 3. Legal Proceedings Item 4. Mine Safety Disclosures Part I Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Item 6. [Reserved] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosure About Market Risk Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Item 10. Directors, Executive Officers and Corporate Governance Item 11. Executive Compensation Part III Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accounting Fees and Services Part IV Item 15. Exhibits and Financial Statement Schedules Item 16. Form 10-K Summary Signatures Page 3 7 8 15 45 45 45 45 46 47 48 61 62 89 89 89 89 90 90 90 90 90 91 92 2 NOTE ABOUT FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risk and uncertainties. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and are often characterized by the use of words such as “believes,” “estimates,” “expects,” “projects,” “may,” “intends,” “plans”, “targets”, “forecasts” or “anticipates,” or by discussions of strategy, plans or intentions. Such forward-looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from historical results or any future results, performance or achievements expressed, suggested or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, statements about: • • • • • • • • • • • • • • • • • • • • • • • • • • • uncertainty regarding the duration and scope of the coronavirus, including its variants, referred to as the COVID-19 pandemic; actions governments and businesses take in response to the COVID-19 pandemic, including actions that could affect levels of user engagement or advertising activity; the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies and economic activity; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the impact of the COVID-19 pandemic on our planned investments, operations, expenses, revenue, cash flow, liquidity, users and engagement; the effect of general economic and political conditions; our financial performance, including revenue, cost and expenses and cash flows; our ability to attract, retain and recover Pinners and maintain and grow their level of engagement; our ability to provide content that is useful and relevant to Pinners’ personal taste and interests; our ability to develop successful new products or improve existing ones; our ability to maintain and enhance our brand and reputation; potential harm caused by compromises in security, including our cybersecurity protections and resources and costs required to prevent, detect and remediate potential security breaches; potential harm caused by changes in online application stores or internet search engines’ methodologies, particularly search engine optimization methodologies and policies; discontinuation, disruptions or outages in third-party single sign-on access; our ability to compete effectively in our industry; our ability to scale our business, including our monetization efforts; our ability to attract and retain advertisers and scale our revenue model; our ability to attract and retain creators that create relevant and engaging content; our ability to develop effective products and tools for advertisers, including measurement tools; our ability to expand and monetize our platform internationally; our ability to effectively manage the growth of our business; our lack of operating history and ability to sustain profitability; decisions that reduce short-term revenue or profitability or do not produce the long-term benefits we expect; fluctuations in our operating results; our ability to raise additional capital on favorable terms or at all; our ability to realize anticipated benefits from mergers and acquisitions, joint ventures, strategic partnerships and other investments; our ability to protect our intellectual property; 3 • • • • • • our ability to receive, process, store, use and share data, and compliance with laws and regulations related to data privacy and content; current or potential litigation and regulatory actions involving us; our ability to comply with modified or new laws and regulations applying to our business, and potential harm to our business as a result of those laws and regulations; real or perceived inaccuracies in metrics related to our business; disruption of, degradation in or interference with our use of Amazon Web Services and our infrastructure; and our ability to attract and retain personnel. These statements are based on our historical performance and on our current plans, estimates and projections in light of information currently available to us, and therefore you should not place undue reliance on them. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Forward-looking statements made in this Annual Report on Form 10-K speak only as of the date on which such statements are made, and we undertake no obligation to update them in light of new information or future events, except as required by law. You should carefully consider the above factors, as well as the factors discussed elsewhere in this Annual Report on Form 10-K. The factors identified above should not be construed as an exhaustive list of factors that could affect our future results and should be read in conjunction with the other cautionary statements that are included in this Annual Report. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. If any of these trends, risks or uncertainties actually occurs or continues, our business, revenue and financial results could be harmed, the trading price of our Class A common stock could decline and you could lose all or part of your investment. Unless expressly indicated or the context requires otherwise, the terms "Pinterest," "company," "we," "us," and "our" in this document refer to Pinterest, Inc., a Delaware corporation, and, where appropriate, its wholly owned subsidiaries. The term "Pinterest" may also refer to our products, regardless of the manner in which they are accessed. For references to accessing Pinterest on the "web" or via a "website," such terms refer to accessing Pinterest on personal computers. For references to accessing Pinterest on "mobile," such term refers to accessing Pinterest via a mobile application or via a mobile-optimized version of our website such as m.pinterest.com, whether on a mobile phone or tablet. Summary of Risk Factors The following summarizes the principal factors that make an investment in our company speculative or risky, all of which are more fully described in the Risk Factors section below. This summary should be read in conjunction with the Risk Factors section and should not be relied upon as an exhaustive summary of the material risks facing our business. The following factors could result in harm to our business, reputation, revenue, financial results, and prospects, among other impacts: Business Strategy and Growth. Our strategic decisions and efforts to expand the business, including: • • • • • • • • • • our ability to scale our business for future growth, as we are in the early stages of our monetization efforts; our ability to attract, grow, retain, recover, and engage our user base; providing content that is useful and relevant to Pinners’ personal taste and interests; decisions consistent with our mission and values that may reduce our short- or medium-term operating results; removing objectionable content or blocking objectionable practices by advertisers or third parties; our ability to compete effectively for users or advertisers and to develop effective products and tools for advertisers; our ability to attract and retain creators to create engaging content; our further expansion and monetization of our platform internationally; effective management of our business growth; and our acquisition of other businesses. 4 Operation of Our Business. The manner in which we operate our business, including: • • • • • • • • the disruption and harm from the COVID-19 pandemic outbreak, as well as potential challenges of post- pandemic recovery; our dependence on and ability to maintain and enhance a strong brand and reputation; actual or perceived compromises in our security; our dependence on advertising for substantially all of our revenue; the development of tools to accurately measure the effectiveness of advertisements on our platform and thereby attract and maintain advertisers; the inherent challenges of measurements related to Pinner metrics and other estimates; our ability to maintain and scale our technology infrastructure, including the speed and availability of our service; and the attraction, retention, and loss of our key personnel and other highly qualified personnel. Third-Party Reliance. Our use and dependence on third-party businesses and products, or the impacts of third-party business and products, including: • • • • • • our dependence on online application stores and internet search engines, including their methodologies, policies, and results, to direct traffic and refer new Pinners to our service; users’ ability to authenticate with our service through third-party login providers; our dependence on Amazon Web Services for the vast majority of our compute, storage, data transfer, and other services; effectively operating with mobile operating systems, web browsers, networks, regulations, and standards, which we do not control, and changes in our products or to those mobile operating systems, web browsers, networks, regulations or standards; and our reliance on software, technologies, and related services from other parties; and technologies that can block the display of our ads. Legal and Regulatory Matters. The legal and regulatory frameworks, actions, and requirements to which our business, products, services, and operations are subject, including: • • • • • • any liability as a result of content or information that is published or made available on our service; government action to restrict access to our service or certain of our products in their countries; the data, including personal information, we receive, process, store, use, and share, which subjects us to complex and evolving governmental regulation and other legal obligations related to data privacy, data protection and other matters; our involvement in any legal disputes or other disputes that are expensive to support and may be resolved adversely; an ability to protect our intellectual property and our use of “open source” software; and the interpretation and application of U.S. tax legislation or other changes in U.S. or non-U.S. taxation of our operations. Financial Statements and Performance. The preparation of our financial statements and our financial and operating performance, including: • • • • our limited operating history and previously incurred operating losses, anticipated increases to operating costs, and expenses and our ability to obtain or maintain profitability; fluctuations in our operating results from quarter to quarter; our ability to obtain additional financing, if needed and any default on our credit obligations; greater than anticipated tax liabilities; 5 • • limitations in our ability to use or benefit from our net operating loss carryforwards and certain other tax attributes; and the requirements of being a public company. Our Common Stock. The rights, restrictions, and structure of, and actions that we make take that impact, our common stock, including: • • • • • • • the dual class structure of our common stock; trading price volatility of our Class A common stock; future offerings of debt or equity securities by us or existing stockholders that could adversely impact the market price of our Class A common stock; additional stock issuances, including in connection with settlement of equity awards, and any resulting dilution; provisions under Delaware law and our governing documents that could make a merger, tender offer, or proxy contest difficult; our certificate of incorporation’s designation of a state or federal court located within Delaware as the exclusive forum for substantially all disputes between us and our stockholders; and our intention not to pay dividends for the foreseeable future. General. The risks common to our industry and public companies generally, including: • • • our development of or investment in successful new products or improvements to existing one; adverse global economic and financial conditions; and changes in accounting principles generally accepted in the United States. 6 LIMITATIONS OF KEY METRICS AND OTHER DATA The numbers for our key metrics, which include our monthly active users (MAUs) and average revenue per user (ARPU), are calculated using internal company data based on the activity of user accounts. We define a monthly active user 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. Unless otherwise indicated, we present MAUs based on the number of MAUs measured on the last day of the current period. 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 the average of the number of MAUs in that geography during the 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. We calculate ARPU by geography based on our estimate of the geography in which revenue- generating activities occur. We use these metrics to assess the growth and health of the overall business and believe that MAUs and ARPU best reflect our ability to attract, retain, engage and monetize our users, and thereby drive revenue. While these numbers are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring usage of our products across large online and mobile populations around the world. In addition, we are continually seeking to improve our estimates of our user base, and such estimates may change due to improvements or changes in technology or our methodology. 7 PART I Item 1. Business Overview Our mission is to bring everyone the inspiration to create a life they love. Pinterest is where over 400 million people around the world go to get inspiration to live their best lives. They come to discover and bring to life ideas for their daily activities like cooking dinner or deciding what to wear; for major commitments like remodeling a house or training for a marathon; for ongoing passions like gardening or fashion; and for milestone events like planning a wedding or a dream vacation. Our users (who we call Pinners) often don’t have the words to describe what they want, but they know it when they see it. Images and video can communicate concepts that are impossible to describe with words. On Pinterest, people discover inspiring and personalized visual content, which we call Pins. Pins are created when Pinners, creators and businesses make new content for or save existing web content to our platform. Pins are saved and organized into collections, which we call boards and sections. Browsing and saving visual ideas on our service helps Pinners imagine what their future could look like, which propels them from inspiration to action. Pinterest is the productivity tool for planning your dreams. Dreaming and productivity may seem like polar opposites, but on Pinterest, inspiration enables action and dreams become reality. Visualizing the future helps bring it to life. In this way, Pinterest is unique. Most consumer internet companies are either tools (search, ecommerce) or media (newsfeeds, video, social networks). Pinterest is not a pure media channel; it is a media-rich utility. Pinterest is also unique because we've designed it to be an inspiring platform, that we foster through our policies and product development -- for example, Pinterest has banned political and weight loss ads, developed inclusive beauty search functionality and launched compassionate search for Pinners seeking mental health support. This work is foundational to our mission because we believe people are less likely to imagine their future and bring it to life when they feel self-conscious, excluded, or unhappy. It also creates value for businesses and brands on the platform (including our advertising partners), who have the opportunity to showcase their products and services in an inspiring environment that we believe is conducive to building an emotional connection with consumers. Our Platform When people use Pinterest, they interact with several surfaces, each of which offer distinct functionalities and experiences. Pinners often move between these surfaces multiple times in a single session. Home Feed When people open the Pinterest mobile application or navigate to www.pinterest.com, they are by default in their Home Feed, where they can discover Pins relevant to their tastes and interests in a scrolling format. We have several types of Pins on our platform, including: • • • • Standard Pins: Static images that link to content from around the web highlighting products, recipes, style and home inspiration, DIY, and more. Video Pins: Short videos from businesses that link to content from around the web on topics like cooking, beauty and DIY projects. Product Pins: Product Pins feature items from our catalog inventory that can be purchased and include metadata on prices and stock availability as well as links to the product page of a retailer’s website. Idea Pins: Idea Pins are multi-pages of videos, images, text and lists that are natively created on Pinterest. This format enables creators to show how to bring ideas to life (e.g. how to cook a meal or design a room). Pinners can choose between two different Home Feed experiences: Browse or Watch. The “Browse” tab is Pinterest’s traditional inspiration feed (consisting of a two column grid featuring a variety of Standard, Video, Product and Idea Pins), while the “Watch” tab is an immersive feed of full-screen, auto-playing Idea Pins. 8 Both Browse and Watch are powered by machine learning recommendations that dynamically reflect the taste and interests of each Pinner. Pinners using these tabs will also see Pins from the people, topics and boards they choose to follow. Search and Shop On the Search surface, Pinners can find Pins, boards, creators and brands by typing a query in the search bar. Pinners can choose to view their search results on an Explore tab or a Shop tab. Explore results include relevant Pins personalized for the Pinner’s individual taste, while Shop results include relevant Product Pins that are shoppable and link to a retailer’s product page. Pinners who use search typically want to see many relevant possibilities that are personalized for their individual taste and interests rather than one perfect answer. The Explore and Shop tabs include search guides that help narrow results (e.g., a search for “summer outfits” yields search guides titled “beachy,” “monochromatic,” and “vintage”). Searches on Pinterest also happen when a Pinner taps on a Pin on any surface to learn more about an idea or image, and a feed of visually similar Pins is served beneath the tapped image. These related Pins help Pinners springboard off a point of inspiration to explore deeper into an interest or narrow in on the perfect product. Pinners also visually search within images by using our Lens tool to select specific objects inside an inspiring scene e.g., a lamp in a living room scene or a pair of shoes in a street fashion scene. This action automatically triggers a new search that yields related Pins that are visually similar to the specific object and that may be shoppable. This experience is powered by years of investments in computer vision (that can identify objects and attributes within scenes) as well as by our growing catalog of shoppable inventory. Create Users can publish content on Pinterest by making Idea Pins. Pinners can also respond to creator's content with a take - an Idea Pin generated in response to an original Idea Pin. Our publishing tools encourage the development of content that features long-lasting, actionable ideas rather than stories designed for ephemeral entertainment. Idea Pins give creators all the elements they need to tell their story, from in-app video recording to made-for-doing publishing features like instructions and ingredient templates. Idea Pins show up in many places on Pinterest - featured prominently in home feed, in the search, on creator profiles and more. Features like Try on and product tagging are also enabled in Idea Pins, making the content even more actionable and shoppable. Our Advertising Products Pinterest reaches over 400 million monthly active users, a significant majority of which are women. We believe the value of Pinterest’s audience to advertisers is driven not merely by the number of Pinners on our platform or their demographics, but also by when and why they use Pinterest. People use Pinterest in ways that, when taken together, can make it uniquely valuable to advertisers. First, Pinners often come to the platform with an intent to purchase goods or services. Getting inspiration for your home, your style or your travel typically means that you are actively looking for products and services to buy. Commercial content from brands, retailers and advertisers is central to Pinterest. This means that relevant ads don’t compete with native content on Pinterest; instead, they are content. Second, we believe that in-market consumers on Pinterest tend to be early in their journey toward a purchase and don’t yet know what they want to purchase. Accordingly, we believe that they are open to discovering new products and brands on Pinterest rather than merely navigating to brands they already know, as is common on traditional search engines and e-commerce platforms. We offer both brand and performance ads, with performance representing approximately two-thirds of our revenue for the year ended December 31, 2021. Brand revenue is billed when an advertiser optimizes an ad campaign around “brand” objectives like impressions or video views. Performance revenue is billed when an advertiser optimizes an ad campaign around “performance” objectives like clicks or conversion events. Because Pinners travel down the entire purchasing funnel on Pinterest, our ad product suite is used by different advertisers to meet different objectives, including awareness, consideration and sales. Many advertisers use multiple ad objectives simultaneously to achieve their goals on the platform. 9 Awareness Objective. Pinterest ads appear in the home feed and on search results pages. They echo the visual style of organic Pins and are fully integrated into the design. A Pinner sees ads as he scrolls through her home feed and search results, looking for inspiration and ideas. Consideration and Sales Objectives. When a Pinner clicks on an ad, he sees an intermediate screen that gives him a closer view of the ad creative as well as the option to save the ad to a board. He will also be able to swipe up or click to see the advertiser’s online presence, where he can pursue deeper consideration (by exploring available products and services or signing-up for memberships) and potentially transact. Ad Formats • • • • • • Standard ad: A static image used to showcase content in a simple vertical image format. Video ad: Used by advertisers to capture attention and tell a story with a visually engaging format. We currently offer three video ad formats: standard video, performance video and max width video. Shopping ad: Similar to a standard ad, used to reach people when they are deciding what to buy. Shopping ads are exclusive to advertisers who upload their product catalog to Pinterest. Carousel ad: Multiple static or video in one carousel, used by advertisers to showcase more than one image or video at a time. Collection ad: Used by advertisers to display products in action with a hybrid format that mixes lifestyle imagery and video with featured products. Idea ad: An Idea ad is an Idea Pin that has been created and promoted by a business. Idea ads can be used in conjunction with a paid partnership tag from a creator the brand has partnered with. These features are currently in beta. Our Advertising System Ad Auction All advertisers on Pinterest buy ads through an auction-based system. Our ad auction allows us to serve ads to Pinners at relevant moments while optimizing business outcomes for advertisers. Today, our advertisers can optimize their campaigns around four different types of user activity depending on their objectives: impressions ("CPM"), video views ("CPV"), clicks ("CPC"), and conversion events ("oCPM"), such as checkout or add-to-cart. Our auction system selects the best ad for each available ad impression, based on the likelihood of a desired action occurring and how much that action is worth to advertisers. The likelihood of the action occurring depends on a variety of factors, such as ad relevance and creative quality. Ad Relevance Because ads are content on Pinterest, ad relevance is powered by the same principles that drive organic recommendations. Advertisers can also target their ads to specific demographics (locations, languages, gender, age), device types, audiences (such as existing customers or Pinners who recently engaged with their content) and interests or keywords. Additionally, they can choose whether they want ads to show in Pinners’ search surfaces, home feed or both. We are building ad products that will allow advertisers to target ads based on a particular consumer’s known aesthetic preferences and style. Eventually we expect to be able to leverage this Pinterest taste graph to match ad creative to a Pinner’s individual taste and interests. Measurement Measuring the effectiveness of digital spend is a high priority for our advertisers. Our measurement solutions are aligned to help advertisers recognize the value of an investment on our platform across a variety of objectives. We enable our advertisers to meet their awareness, consideration and conversion objectives with a number of first-party 10 tools to measure campaign effectiveness. We also have leading third-party measurement partners to validate Pinterest’s performance and measure advertiser results. Sales and Marketing Our Go-to-Market Approach The Pinterest platform enables a diverse group of advertisers to achieve a wide range of objectives. We serve these advertisers in customized ways depending on their size, sophistication and objectives. We initially built our business with large consumer packaged goods ("CPG") and retail advertisers in the United States. While this group of advertisers continues to be a significant driver of our business, we are increasingly focused on building products and tools to serve mid-sized and small advertisers across a wide range of verticals. This means improving the efficiency of our ads marketplace, using more automation to optimize for advertiser value, and more effectively measuring the unique value of advertising on Pinterest. We are also focused on expanding our international advertiser base. Marketing To date, we have been able to grow our global user base with relatively low marketing costs given the strength of our global brand, the utility of our service and unpaid traffic from search engines. We are also continuing to explore paid marketing efforts, including brand marketing for awareness and comprehension, as well as marketing campaigns focused on user and advertiser acquisition. Our Technology Innovation We believe we have one of the largest image-rich data sets ever assembled. This lets us analyze trends, understand intent and predict consumer behavior. And, we are just scratching the surface of what is possible. Looking ahead, we are excited about new technical challenges, including fine-grained image recognition, object-to-object visual search and large-scale visual search infrastructure. Our Competition We primarily compete with consumer internet companies that are either tools (search, ecommerce) or media (newsfeeds, video, social networks). We compete with companies that are larger and more established such as Amazon, Facebook (including Instagram), Google (including YouTube), Snap, TikTok and Twitter. Many of these companies have significantly greater financial and human resources. We also face competition from smaller companies in one or more high-value verticals, including Allrecipes, Houzz and Tastemade, that offer users engaging content and commerce opportunities through similar technology or products to ours. We remain focused on emerging competition as well. We face competition across almost every aspect of our business, particularly users and engagement, creators, advertising and talent. Users and Engagement We compete to attract, engage and retain users and their time and attention. Because our products and those of our competitors are typically free, we compete based on our brand, product experience, quality, utility and ease of use of our products. For more information on users and engagement trends, see section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Creators We compete with other platforms to attract, retain and grow our base of creators. We are building tools to help creators publish the most visually inspiring, actionable content and developing reward programs to help them build an audience and a business on Pinterest. However, there are other internet companies that are larger or have been investing in the creator ecosystem through large reward programs, product innovation, and video infrastructure. Advertising We compete for advertising revenue across a variety of formats. We believe our ability to compete effectively depends on the effectiveness of our service in reaching users early in the decision-making process, amplifying advertisers’ messages and delivering compelling returns on investment. This is driven by a number of factors, including our reach, relevance and engagement, as well as our brand and advertising products, delivery and measurement capabilities and other offerings. For more information on trends relating to advertising revenue and growth, see section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 11 Talent We compete to attract and retain highly talented individuals, particularly people with expertise in computer vision, artificial intelligence and machine learning. We believe we compete for these potential employees by providing a work environment that offers the opportunity to work on challenging, cutting-edge and inspirational products. For more information, see “Talent Management and Development” below. Intellectual Property Our success is tied in part to our ability to protect our intellectual property and key technological innovations. We rely on a combination of federal, state and common-law rights in the United States and rights under the laws of other countries, as well as contractual restrictions, to protect our intellectual property and other proprietary rights. We rely on a combination of patents, copyrights, trademarks, trade secrets, domain names and other intellectual property rights to help protect our brand and proprietary technologies. In addition, we generally enter into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements with other third parties, in order to limit access to, and disclosure and use of, our confidential information and proprietary technology and to preserve our rights thereto. As of December 31, 2021, we had over 360 issued patents and pending patent applications in the United States and foreign countries relating to aspects of our actual or contemplated operations and technologies. We also had over 580 registered trademarks and trademark applications in the United States and foreign countries, including our “Pinterest” name and related logos. We are also dependent on third-party content, technology and intellectual property in connection with our business. We are presently involved in a number of intellectual property lawsuits, and expect to continue to face allegations from third parties, including our competitors and “non-practicing entities,” that we have infringed or otherwise violated their intellectual property rights. For additional information on risks relating to intellectual property, please see the sections titled “Risk Factors” and “— Legal Proceedings.” Government Regulation We are subject to many U.S. federal and state and foreign laws and regulations that involve matters central to our business, including laws and regulations that involve data privacy and data protection, intellectual property (including copyright and patent laws), content regulation, rights of publicity, advertising, marketing, health and safety, competition, protection of minors, consumer protection, taxation, anti-bribery, anti-money laundering and corruption, economic or other trade prohibitions or sanctions or securities law compliance. Our business may also be affected by the adoption of any new or existing laws or regulations or changes in laws or regulations that adversely affect the growth, popularity or use of the internet, or that significantly restrict or impose conditions on our ability to collect, store, augment, analyze, use and share data or increase consumer notice or consent requirements before a company can utilize cookies or other tracking technologies or that increase the liability of content platforms like us. Many relevant laws and regulations are still evolving and may be interpreted, applied, created or amended in a manner that could harm our business, and new laws and regulations may be enacted, including in connection with the restriction or prohibition of certain content or business activities. For example, EU member states are in the process of implementing the EU Copyright Directive, which may impose significant new burdens on content platforms like us. We rely on a variety of statutory and common-law frameworks and defenses relevant to the content available on our service, including the Digital Millennium Copyright Act (“DMCA”), the Communications Decency Act (“CDA”) and the fair-use doctrine in the United States, and the Electronic Commerce Directive in the European Union. In addition, various countries around the world have adopted and pending legislations, including the forthcoming Digital Services Act in the European Union, that may impose additional obligations or liability on us associated with content uploaded by users to our platform. We receive, process, store, use and share data, some of which contains personal information. We are therefore subject to U.S. federal, state, local and foreign laws and regulations regarding data privacy and the collection, storage, sharing, use, processing, disclosure and protection of personal information and other data from users, employees or business partners, including the General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”). These laws expand the rights of individuals to control how their personal data is processed, collected, used and shared, creates new regulatory and operational requirements for processing personal 12 data, increases requirements for security and confidentiality and provides for significant penalties for non-compliance. There are also a number of legislative proposals recently enacted or pending before the U.S. Congress, various state legislatures and foreign governments concerning content regulation and data protection that could affect us. These and other laws and regulations that may be enacted, or new interpretation of existing laws and regulations, may require us to modify our data processing practices and policies and to incur substantial costs in order to comply. Government authorities outside the United States may also seek to restrict access to or block our service, prohibit or block the hosting of certain content available through our service or impose other restrictions that may affect the accessibility or usability of our service in that country for a period of time or even indefinitely. For example, access to our service has been or is currently restricted in whole or in part in China, India, Kazakhstan and Turkey. In addition, some countries have enacted laws that allow websites to be blocked for hosting certain types of content or may require websites to remove certain restricted content. For additional information, see the sections titled “Risk Factors” and “—Legal Proceedings.” Seasonality We have historically experienced seasonality in user growth, engagement and monetization on our platform. Historically, we have had lower engagement in the second calendar quarter and industry advertising spend tends to be strongest in the fourth quarter. We did not experience typical seasonal trends in 2020 and 2021 due to the COVID-19 pandemic. We do not know when we will return to our typical seasonal trends in the future. Talent Management and Development In order to fulfill our mission of bringing everyone the inspiration to create a life they love, we strive to attract and retain top talent. To attract and retain great talent, we strive to create opportunities for our employees to grow and develop in their careers, supported by competitive compensation, benefits and health and wellness programs, and by programs that build connections between our employees and their communities. As of December 31, 2021, we had 3,225 full-time employees. Inclusion and Diversity We strive to create an inclusive and diverse workplace where employees are empowered to bring their whole, authentic selves to work every day. We seek for and respect diverse perspectives which can only help us create a more inclusive and diverse product. We seek inclusion and diversity at the highest level in our organization. Our board of directors includes directors from various backgrounds, industries, skills and experience. Our board of nine directors, which is comprised of seven independent directors, three women and is racially diverse. Our leadership team includes leaders with diverse skills, experience, racial backgrounds and genders. Annually, we’ve published a diversity report since 2015 which we make publicly available on our website. We believe it is important to hold ourselves accountable to creating a diverse workforce. Our diversity report currently includes our annual hiring goals and how we performed against the goals and our workforce demographic data. We have also created employee resource groups that are aligned around dimensions of diversity, such as gender, ethnicity, sexual orientation or other shared attributes, which we believe help build community and enable opportunities for development. In June 2020, subsequent to concerns raised by current and former employees, our board of directors established a Special Committee of the board of directors to independently review Pinterest’s workplace culture and develop recommendations to further support an inclusive, fair, and respectful workplace. In December 2020, we began implementing the recommendations of the Special Committee. Amongst other initiatives, we launched an ombuds program intended to give every employee the opportunity to engage confidentially with neutral, trained professionals for independent support resolving conflicts in the workplace. Employee health, safety and benefits The success of our business is fundamentally tied to the well-being of our people. We are committed to the health, safety and wellness of our employees. We provide our employees and their families with access to a variety of flexible and convenient health and wellness programs that support their physical and mental health by providing tools and 13 resources to help them improve or maintain their health. In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with government regulations. This includes currently having the vast majority of our employees work from home, while implementing additional safety measures for employees continuing critical on- site work. We provide robust compensation and benefits programs to help meet the needs of our employees. In addition to salaries, these programs (which vary by country/region) include equity awards, a 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts, flexible paid time off, family leave, family care resources, flexible work schedules, employee assistance programs and charitable donation matching, among many others. We continue to review and update our compensation and benefits. For example, we recently enhanced our family leave benefits for birthing and adoptive parents effective January 1, 2022 and increased our 401(k) matching limits. Learning and development We help our employees create a career that is inspiring, impactful and ultimately time well spent. We have programs for open and ongoing conversation towards career growth goals both long term and short term. We also have workshops dedicated to learning new skills and developing an employee’s career. We set aside a dedicated personal learning and development budget for every employee. Corporate Information We were incorporated in Delaware in October 2008 as Cold Brew Labs Inc. In April 2012, we changed our name to Pinterest, Inc. Our principal executive offices are located at 505 Brannan Street, San Francisco, California 94107, and our telephone number is (415) 762-7100. We completed our initial public offering in April 2019 and our Class A common stock is listed on the New York Stock Exchange under the symbol “PINS.” Unless the context requires otherwise, the words “Pinterest,” “we,” “Company,” “us” and “our” refer to Pinterest, Inc. and our wholly owned subsidiaries. Available Information is located at www.pinterest.com, and our Our website located at http:// investor.pinterestinc.com/. Copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available, free of charge, on our investor relations website as soon as reasonably practicable after we file such material electronically with or furnish it to the Securities and Exchange Commission, or the SEC. The SEC also maintains a website that contains our SEC filings. The address of the site is www.sec.gov. We use our http://investor.pinterestinc.com/ and www.pinterest.com websites as a means of disclosing material nonpublic information and for complying with our disclosure obligations under Regulation FD of the Exchange Act. investor relations website is The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 14 Item 1A. Risk Factors Investing in our Class A common stock involves a high degree of risk. In addition to the other information set forth in this Annual Report, you should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, before deciding to invest in our Class A common stock. The occurrence of any of the following risks could harm our business, reputation, revenue, financial results and prospects. In addition, risks and uncertainties that are not presently known to us or that we currently believe are immaterial could also harm our business, revenue, financial results and prospects. If any of these risks occur, the value of our Class A common stock could decline and you may lose all or part of your investment. Risks Related to our Business Strategy and Growth We are in the early stages of our monetization efforts and there is no assurance we will be able to scale our business for future growth. We are in the early stages of our monetization efforts and are still growing and scaling our revenue model. Our growth strategy depends on, among other things, attracting more advertisers (including expanding our sales efforts to reach advertisers in additional international markets), scaling our business with existing advertisers and expanding our advertising product offerings. There is no assurance that this revenue model will continue to be successful or that we will generate increasing revenue. We do not know if we can sustain the historical growth rate of our revenue. To sustain or increase our revenue, we must obtain new advertisers, encourage existing advertisers to maintain or increase their advertising spend on our platform, expand the number of markets where we offer advertising and increase the breadth and functionality of our advertising offerings, including new advertising formats and measurement tools. In order to obtain new advertisers and further our relationship with current advertisers, we must increase the size of our user base or the engagement of our users. There is no assurance that our user retention, growth or engagement strategy will be successful or that we will maintain or increase the number of users on our service. Further, if we are unable to scale or maintain our relationships with our large advertisers, our business, revenue and financial results could be harmed. To continue to maintain and grow our advertiser base and our revenue, we depend on our ability to effectively serve enough advertisements that meet the objectives of our advertisers while maintaining a high quality user experience. If we are unable to do this on our platform due to factors such as a decline in user growth or user engagement, or changes in product features or user behavior where users engage increasingly with product features where we may not be able to display as many advertisements, our business, revenue and financial results could be harmed. In addition, to scale the growth of our ad platform, we will have to successfully develop and target ad products based on Pinners’ personal taste and interests, which will require broad and diverse Pinner data. If we are unable to do this with the data, technology and resources available to us, we may need to consider alternatives, such as partnerships, to grow our business. If we choose not to pursue these partnerships, or if these partnerships are unsuccessful, our business may prove less scalable, and our business, revenue and financial results could be harmed. Our ecosystem of Pinners and advertisers depends on our ability to attract, retain and engage our user base. If we fail to add new Pinners or retain or recover Pinners, or if Pinners engage less with us, our business, revenue and financial results could be harmed. We must continue to attract, grow, retain and engage our users on our platform, who we call Pinners. Our active Pinners may not grow, and may continue to decline. If current and potential Pinners do not perceive their experience with our service to be useful, or the content that we serve to them to be relevant to their personal taste and interests, we may not be able to attract new Pinners, retain existing Pinners, recover past Pinners or maintain or increase the frequency and duration of Pinners' engagement. Pinner engagement may also fluctuate depending on factors beyond our control, such as changes to daily life resulting from the COVID-19 pandemic. Although we saw higher engagement from Pinners during the peak of the COVID-19 pandemic in 2020, we have experienced and may continue to experience lower levels of Pinner engagement since then. 15 We anticipate that our active user growth rate will decline over time if the size of our active user base increases or we achieve higher market penetration rates. As a result, our financial performance will increasingly depend on our ability to increase Pinner engagement and our monetization efforts. We also may not be able to penetrate certain demographics in a meaningful manner to grow the number of Pinners. For example, in the United States, historically a substantial majority of our Pinners have been women of ages 18-64. We may not be able to further increase the number of Pinners in this demographic and may need to increase the number of Pinners in other demographics, such as men and international users, in order to grow our users. Our ability to serve advertisements on our platform, and therefore the value proposition for our advertisers, depends on the size and engagement of our user base. Our growth efforts are not currently focused on increasing the number of daily active users, and we do not anticipate that most of our users will become daily active users. Therefore, even if we are able to increase demand for our advertising products, we may not be able to deliver those advertisements if we cannot also increase the size and engagement of our user base, which could harm our business, revenue and financial results. There are many other factors that could negatively affect user growth, retention and engagement, including if: • • • • • • • • • • • • • • • • our competitors mimic our products or product features, causing Pinners to utilize their products instead of, or more frequently than, our products; we do not provide a compelling Pinner experience because of the decisions we make regarding our products or the type and frequency of advertisements that we display; our content is not relevant to Pinners’ personal taste and interests; search queries by Pinners do not yield relevant results; third parties do not permit or continue to permit their content to be displayed on our platform; Pinners have difficulty installing, updating or otherwise accessing our service on mobile devices or web browsers; there are changes in the amount of time Pinners spend across all applications and platforms, including ours; Pinners use or spend more time on other platforms that they feel are more relevant or engaging; we are unable to attract creators to create engaging and relevant content on our platform; technical or other problems frustrate the Pinner experience, particularly if those problems prevent us from delivering our service in a fast and reliable manner; users are located in countries with low smartphone penetration or with lack of cellular based data network since our products typically require high bandwidth data capabilities; changes in regulations or our contractual arrangements that adversely impact our access to, and use of, zero- rating offers or other discounts or data usage for our service; we are unable to address Pinner and advertiser concerns regarding the content, privacy and security of our service; we are unable to combat spam, harassment, cyberbullying, discriminatory, political or other hostile, inappropriate, misleading, abusive or offensive content or usage on our products or services; Pinners adopt new technologies where our products or services may be displaced in favor of other products or services, or may not be featured or otherwise available; third-party initiatives that may enable greater use of our service, including low-cost or discounted data plans, are discontinued; • merchants on Pinterest do not provide Pinners with positive shopping experiences, for example, if products are not of the quality depicted on the platform or not readily available for purchase; or • the other risks and uncertainties described in this Annual Report on Form 10-K. If our existing Pinners do not continue to utilize our service or our user base does not grow or we need to educate Pinners how to utilize new products and product features that we introduce, such as live stream and video, we may be required to incur significantly higher marketing expenses than we currently anticipate. 16 Any decrease in user growth, retention or engagement could render our service less attractive to Pinners or advertisers, and could harm our business, revenue and financial results. If we are not able to continue to provide content that is useful and relevant to Pinners’ personal taste and interests or fail to remove objectionable content or block objectionable practices by advertisers or third parties, user growth, retention or engagement could decline, which could result in the loss of advertisers and revenue. Our success depends on our ability to provide Pinners with content, including advertisements, that is useful and relevant to their personal taste and interests, which in turn, depends on the content contributed by our users, creators and advertisers and the manner in which we present that content to Pinners. Pinners engage with content that is relevant to their country, language and gender preferences as well as their personal interests and intent. We may not correctly or timely identify and serve content that is useful and relevant to Pinners. In addition, new content and new or different forms of content we distribute may not have as much relevancy signal for optimal distribution of the pins as prior content and forms of content that have been saved repeatedly on our platform which may result in lower Pinner engagement with such content. For example, we are investing in publishing more native content and short form video content on our platform, including the distribution of Idea Pins. Pinner engagement may decline as we learn to distribute this native and short form video content efficiently and as Pinners learn new ways to use and navigate our platform. As a result, we may not be able to provide adequate, useful or relevant content to our users. Content that is not visually pleasing, is not intuitive or easy to use or is not in the desired language may not be engaging for Pinners, especially in non-U.S. markets. If Pinners do not believe that we offer content that is useful and relevant to their personal taste and interests, user growth, retention or engagement may decline, which could result in the loss of advertisers and revenue. Some of the actions that we may take to make our content more useful and relevant may reduce traffic that we drive from our platform to the websites of third parties, which may reduce their willingness to contribute or continue availability of their content on our service. We endeavor to keep divisive, disturbing or unsafe content off our service. We do this by deleting or hiding certain types of content, even if this content would be permitted on other platforms, which could result in a decrease in user growth, retention or engagement. We apply significant judgment in making these determinations and may be unsuccessful in our efforts to remove this content in a manner that is (or is perceived to be) consistently applied and on a timely basis or at all, which could also result in a decrease in user growth, retention or engagement. Further, if we fail to identify and keep off our service advertisers and merchants who offer poor quality goods or fail to deliver goods to their customers, we may lose Pinner confidence. In addition, controversies regarding content on other social media platforms, such as the boycott of Facebook and Twitter by some advertisers and the recent allegations of the impact of social media on the mental health of users, may impact user engagement and advertising spending on our platform, which could adversely affect our business and revenue. Any of these factors could result in decrease in user growth, retention or engagement. We regularly monitor how our advertising affects Pinners’ experiences in our effort to avoid delivering too many advertisements or irrelevant advertisements to Pinners. Therefore, we may decide to change the number of advertisements or eliminate certain types of advertisements to maintain Pinners’ satisfaction in the service. We may make changes to our platform based on feedback provided by Pinners or advertisers. These decisions may not produce the short-term or long-term benefits that we expect, in which case user growth, retention and engagement, our relationships with advertisers, and our business, revenue and financial results could be harmed. Current and future data privacy laws and regulations, including the General Data Protection Regulation (“GDPR”) and California Consumer Privacy Act of 2018 (the “CCPA”), the California Privacy Rights Act (the "CPRA"), or new interpretations of existing laws and regulations, may limit our ability to collect and use data, which may impact our ability to effectively deliver relevant content. These laws and regulations may also impact our ability to expand advertising on our platform, as they may impede our ability to deliver targeted advertising and accurately measure our ad performance. Additionally, even if not prohibited by data privacy laws and regulations, we may elect not to collect certain types of data if we believe doing so would be inconsistent with our Pinners’ expectations, if the source is unreliable or for any other reason. Similarly, the increase in media attention about online privacy and data protection may motivate Pinners to take certain actions to protect their privacy. Pinners may elect not to allow data sharing for a number of reasons, such as data privacy concerns. This could impact our ability to deliver relevant content aligned with Pinners’ personal taste and interests. Additionally, the impact of these developments may disproportionately affect our business in comparison to certain peers in the technology sector that, by virtue of the scope and breadth of their operations or user base, have greater access to user data. 17 Substantially all our revenue is generated from advertising, and a decline in user growth, retention or engagement as a result of our inability to provide relevant and useful content to Pinners, and therefore our inability to serve the volume of advertisements desired by our advertisers, may deter new advertisers from using our platform or cause current advertisers to reduce their spending with us or cease doing business with us altogether, which could harm our business, revenue and financial results. If we are unable to compete effectively for users, our business, revenue and financial results could be harmed. We face significant competition to attract, retain and engage users and for their time and attention. We primarily compete with consumer internet companies that are either tools (search, e-commerce, creator tools) or media (newsfeeds, video, social networks). We compete with large, established companies and companies that offer widely used products, such as Amazon, Facebook (including Instagram), Google (including YouTube), Snap, TikTok and Twitter, which provide their users with a variety of online products, services, content (including video), creator incentives and offerings, and advertising offerings, including web search engines, social networks and other means of discovering, using or acquiring goods and services. Many of these competitors have longer operating histories, significantly greater financial, technical, research, marketing and other resources and larger user bases than we do. Many of these competitors also have access to larger volumes of data and platforms that are used on a more frequent basis than ours, which may enable them to better understand their user base and develop and deliver more relevant content. Our competitors have previously and may continue to develop technology, products, services or interfaces that are similar to our existing and future products quickly and at scale, or that achieve greater market acceptance than our products, including by Pinners, advertisers, creators and other third parties. Some of our competitors also operate existing products that have significant market power in certain market sectors and could use that market power to advance their own products or services that compete with ours. For example, Amazon, Google, Snap, Facebook and Instagram have introduced shopping platforms, including similar offerings such as camera search functionality. In the area of live events, Amazon, Instagram, Facebook, YouTube, TikTok, and Snap are all expanding their video-based and live shopping experiences. In the area of content, TikTok has launched a series of features and integrations that add, for example, recipes to cooking videos or step-by-step instructions for DIY or How To videos. These competitors may engage in more extensive research and development efforts and undertake more extensive marketing campaigns, which may allow them to build larger, more engaged user bases than we have. Also, some of our existing or potential competitors operate products or services from which we currently derive substantial value, such as search engines and email, and those competitors could reduce or eliminate the value and information we receive. We also face competition from smaller companies in one or more high-value verticals, including Allrecipes, Houzz and Tastemade, that offer users engaging content and commerce opportunities through similar technology, products, features or services to ours. In addition, emerging startups may be able to innovate and provide technology, products, services or features similar to ours or before us. Our competitors may be able to respond more quickly than we can to new or emerging technologies and changes in user preferences. Barriers to entry in our industry are low, and our intellectual property rights may not be sufficient to prevent competitors from launching comparable products or services. In emerging international markets, where mobile devices often lack large storage capabilities, we may also compete with other applications for the limited space available on a user’s mobile device. We believe that our ability to compete for users depends upon many factors both within and beyond our control, including: • • • • the usefulness, novelty, performance and reliability of our service compared to those of our competitors; the timing and market acceptance of our products, including the developments and enhancements to those products, offered by us or our competitors; our brand strength relative to our competitors; and the other risks and uncertainties described in this Annual Report on Form 10-K. If we are unable to compete effectively for users, our business, revenue and financial results could be harmed. 18 We may make decisions consistent with our mission and values that may reduce our short- or medium-term operating results. Our mission—to bring everyone the inspiration to create a life they love—and company values are integral to everything we do. We frequently make decisions regarding our business and service in accordance with our mission and values that may reduce our short- or medium-term operating results if we believe those decisions will improve the experiences of Pinners, advertisers, creators, employees or our community, and therefore benefit our business. For example, we may choose to remove content that we have determined does not create an inspiring experience for Pinners or revise our policies in ways that decrease Pinner engagement. These decisions may not be consistent with the expectations of investors and any longer-term benefits may not materialize within the time frame we expect or at all, any of which could harm our business, revenue and financial results. If we are unable to attract and retain creators to create content on our platform, we may not be able to attract, retain or grow our users. We are focused on attracting and retaining creators to create useful and relevant content on our platform. We may not be able to effectively compete for creators who create content on our platform and on social media and other platforms or may get creators who create content that is not relevant, useful or inspiring to our users. If creators prefer to create content on competing platforms over ours, or prefer the incentives or financial rewards offered by competing platforms over ours, we may not develop or may lose potentially engaging and relevant content. If we are unable to attract and retain creators, we may not have sufficient useful and relevant content to distribute on our platform. Even if we attract and retain creators who create engaging content, we may not be able to distribute that content effectively due to lower relevancy and search signals. Further, we plan to make increased investments in attracting creators, including increasing workforce resources, which may reduce our short or medium term financial and operating results. If we are unable to compete effectively for advertisers, our business, revenue and financial results could be harmed. We face significant competition for advertising revenue across a variety of formats. To compete effectively, we must enable our advertisers to easily create content and buy, forecast, optimize and measure the performance of advertising on our platform. In order to grow our revenue and improve our operating results, we must increase our share of advertising spend relative to our competitors, many of which are larger companies that offer more traditional and widely accepted advertising products, as well as more robust tools to measure the effectiveness of advertising campaigns. Some of our larger competitors have substantially broader product or service offerings and leverage their relationships based on other products or services to gain additional share of advertising spend. They have large distributed sales forces and an increasing amount of control over mobile distribution channels. These competitors’ economies of scale allow them to have access to larger volumes of data and platforms that are used on a more frequent basis than ours, which may enable them to better understand their user base and develop and deliver more targeted advertising. They may not need to rely on third-party data, including data provided by advertisers, in order to effectively target the campaigns of advertisers, which could make their advertising products more attractive to advertisers than ours as third-party data becomes less available to us, whether because of regulatory changes, privacy concerns or other reasons. If we are unable to provide our advertisers with the ability to effectively target their advertising campaigns, or if our advertisers do not believe that our value proposition is as compelling as those of our competitors, we may not be able to attract new advertisers or retain existing ones, and our business, revenue and financial results could be harmed. We believe that our ability to compete for advertisers depends upon many factors both within and beyond our control, including: • • • • • sales, marketing, customer service and support efforts; first- and third-party data available to us relative to our competitors; ease of use, performance, price and reliability of solutions developed either by us or our competitors; the attractiveness and volume of our product and service offerings (including pricing and measurement tools) compared to those of our competitors; the strength of our advertiser relationships and offerings compared to those of our competitors; 19 • • • the ease with which our advertising products fit into existing advertiser budgets compared to those of our competitors; positions or actions taken by us, Pinners, advertisers or other third parties that may impact our brand and reputation or the desirability of advertising on online platforms in general; and the other risks and uncertainties described in this Annual Report on Form 10-K. If we are unable to compete effectively for advertisers, our business, revenue and financial results could be harmed. We may not be able to develop effective products and tools for advertisers. Growth in our advertising revenue depends on our ability to continue to develop and offer effective products and tools for advertisers. New ad formats that take up more space on our platform may result in fewer impressions, which could adversely affect our revenue. Alternatively, new ad formats, such as video ads, may be more engaging and users may spend less time browsing or searching on our platform, which could adversely affect our revenue. As the advertising market generates and develops new concepts and technology, we may incur additional costs to implement more effective products and tools. We may introduce changes to our existing ad products or develop and introduce new and unproven ad products with which we have little or no prior experience. Each of these could result in unintended outcomes or results that are not well received by advertisers. In addition, if new or enhanced ad products fail to attract or retain advertisers, we may fail to generate sufficient revenue. Further, continuing to develop and improve these products and tools may require significant time and resources and additional investment. If we cannot continue to develop and improve our advertising products and tools in a timely fashion, or if our advertising products and tools are not well received by advertisers, our advertising revenue could be adversely affected. We may not succeed in further expanding and monetizing our platform internationally and may be subject to increased international business and economic risks. We plan to continue expanding our business operations outside the United States and offering content and advertising to Pinners and advertisers in other languages and countries. We plan to continue to enter new international markets where we have limited or no experience in deploying our service or selling advertisements. In order to expand successfully, we need to offer content and products that are customized and relevant to local Pinners and advertisers, which requires significant investment of time and resources. We may launch our advertising platform in countries where we do not have sales staffing in place, where market perception of our service and ad platform may be low or where our audience size in a given market may be low relative to advertiser expectations, all or any of which could limit our ability to monetize those countries. As we expand into new international markets, we may not yet understand the full scope of Pinners’ personal taste and interests, demographics and culture in those markets, as well as advertiser expectations, target audiences and return on advertising spend. This may cause us to expand into markets before we are able to offer a service and advertising platform that has been sufficiently localized for those markets or where those markets lack the necessary demand and infrastructure for long-term adoption of our service. For example, we may experience challenges adapting our content and search tools to be localized for new markets, or establishing sufficient high quality advertising inventory to deliver relevant localized experiences in new markets. This may cause us to limit our expansion or decrease our operations in international markets, including discontinuing advertising in those markets or not monetizing those markets at all, which could harm our reputation and business, revenue and financial results. If the advertising market does not scale sufficiently or we are unsuccessful in deploying or managing our operations in these markets, our business, revenue and financial results could be harmed. We are subject to a variety of risks inherent in doing business internationally, and our exposure to these risks will increase as we continue to expand our operations, user base and advertiser base globally. These risks include: • • • • • • political, social and economic instability; selective or inconsistent government regulatory action or enforcement; fluctuations in currency exchange rates and restrictions on currency conversions; higher levels of credit risk and payment fraud; enhanced difficulties of integrating any foreign acquisitions; reduced protection for intellectual property rights in some countries; 20 • • • • • • • • • • difficulties in staffing and managing global operations and the increased travel, infrastructure and legal compliance costs associated with multiple international locations and subsidiaries; different regulations and practices with respect to employee/employer relationships, existence of workers’ councils and labor unions, and other challenges caused by distance, language and cultural differences, making it harder to do business in certain international jurisdictions; increasing labor costs due to high wage inflation in certain international jurisdictions; compliance with statutory requirements relating to our equity; regulations that might add difficulties in repatriating cash earned outside the United States and otherwise prevent us from freely moving cash; import and export controls and restrictions and changes in trade regulations, including sanctions; compliance with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar laws in other jurisdictions; compliance with laws governing supply chains and related business operations; compliance with GDPR and similar data privacy and data protection laws; compliance with laws that might restrict content or advertising, require us to provide user information, including confidential information, to local authorities or add significant requirements that make it difficult to operate in that jurisdiction; • macroeconomic conditions, such as the COVID-19 pandemic which had an impact on the pace of our global expansion; • • compliance with multiple tax jurisdictions and management of tax impact of global operations; and the other risks and uncertainties described in this Annual Report on Form 10-K. If we are unable to expand internationally and manage the complexity of global operations successfully, our business, revenue and financial results could be harmed. If we do not develop successful new products or improve existing ones, our business may suffer. We may also invest in new products that fail to attract or retain Pinners or generate revenue. Our ability to grow, retain and engage our user base and therefore increase our revenue depends on our ability to successfully enhance our existing products and create new products, both independently and in conjunction with platform developers or other third parties, and to do so quickly. We may introduce significant changes to our existing products or develop and introduce new and unproven products with which we have little or no prior development or operating experience. Our focus on innovation and experimentation could result in unintended outcomes or decisions that are poorly received by Pinners. If new or enhanced products fail to engage our Pinners, we may fail to generate sufficient revenue, operating margin or other value to justify our investments, any of which could harm our business, revenue and financial results. We also may develop new products that increase Pinner engagement and costs that are not intended to increase revenue. Further, our products often require Pinners to learn new behaviors that may not always be intuitive to them. To the extent that new Pinners are less willing to invest the time to learn to use our products, or if we are unable to make our products easier to learn to use, our user growth, retention or engagement could be affected, and our business, revenue and financial results could be harmed. We cannot assure you that we will effectively manage the growth of our business. Although we have experienced rapid growth and demand for our service in our initial years, we cannot assure you that our business will continue to grow at the same rate or at all. The growth and expansion of our business and product offerings and the increase in full-time employees place significant challenges on our management, operational and financial resources, including managing multiple relationships with Pinners, advertisers, technology licensors and other third parties. If we continue to grow our operations or the number of our third-party relationships, our technology 21 systems, procedures or internal controls may not be adequate. Further, we may not be able to continue to develop or maintain a long term growth strategy or execute the strategy effectively, which may harm our business, revenue and financial results. As our organization continues to grow in number of employees and offices and we are required to implement more complex organizational management structures, we also find it increasingly difficult to preserve our workplace culture, including our ability to quickly develop and launch new and innovative products and adequately oversee employees and business functions. This is particularly true in recent times where a majority of our employees have been working remotely due to the COVID-19 pandemic. Our inability to effectively manage the growth of our organization may harm our business, revenue and financial results. We may acquire other businesses, talent or technology, which could require significant management attention, disrupt our business, dilute stockholder value and harm our business, revenue and financial results. As part of our business strategy, we have made and intend to make acquisitions to add specialized employees and complementary companies, products or technologies. Our previous and future acquisitions may not achieve our goals, and we may not realize benefits from acquisitions we make in the future. Any acquisitions, including the integration process will require significant time and resources, and we may not be able to manage the process successfully. If we fail to successfully integrate acquisitions, or the personnel or technologies associated with those acquisitions, the business, revenue and financial results of the combined company could be harmed. Our acquisition strategy may change over time and future acquisitions we complete could be viewed negatively by Pinners, advertisers, investors or other parties with whom we do business. We may not successfully evaluate or utilize the acquired technology and accurately forecast the financial impact of an acquisition, including accounting charges. We may also incur unanticipated liabilities that we assume as a result of acquiring companies. We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could affect our financial condition or the value of our securities. We would expect to finance any future acquisitions through a combination of additional issuances of equity, corporate indebtedness, asset-backed acquisition financing or cash from operations. The sale of equity to finance any such acquisitions could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations. In the future, we may not be able to find other suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all. Our acquisition strategy could require significant management attention, disrupt our business and harm our business, revenue and financial results. Risks relating to our Business Operations The global COVID-19 pandemic has impacted and is expected to continue to impact our business and results of operations. The global COVID-19 pandemic and the various attempts to contain it have created significant volatility, uncertainty and economic disruption. It has adversely affected the broader economies, financial markets and overall demand for advertising. As a result of the COVID-19 pandemic, we temporarily closed all our offices (including our corporate headquarters) globally and implemented certain travel restrictions, both of which have disrupted and could continue to disrupt how we operate our business, including requiring us to manage a significant majority of our workforce remotely. Although we had begun the process of reopening certain of our offices in a phased manner, the continuing uncertainty around COVID-19 and its variants is causing us to re-examine and adjust our approach to office reopening. Our efforts to re- open our offices safely may not be successful, could expose our employees to health risks, and us to associated liability, and could involve additional financial burdens. Moreover, as a result of the COVID-19 pandemic, the ability and willingness of advertisers to spend on our services has fluctuated. Certain advertisers are impacted by pandemic driven factors, such as supply chain issues, rising commodity prices and inventory and labor shortages. This affects the ability and willingness of such impacted advertisers to spend on our platform. We cannot predict how evolving events related to the COVID-19 pandemic will continue to affect advertiser behavior in the future. The pandemic has, and could in the future, adversely affect our business, revenue growth and user retention and acquisition rates, financial performance and stock price. Further, during the peak of the COVID-19 pandemic and the related shelter-in-place order in 2020, we saw an increase in user growth and Pinner engagement. As the pandemic began to subside, we have experienced challenges 22 such as decline in MAUs, user engagement or change in user behavior in ways that are difficult to anticipate, forecast or measure, resulting in reduced or different usage of our platform. We may continue to face these challenges as the pandemic evolves. However, given the uncertainties relating to the COVID-19 pandemic and its new variants, we may not be able to accurately measure and forecast our key metrics, including MAUs. As a result, engagement as well as metrics such as revenues, operating margins and other financial and operating data, may not be indicative of results for future periods. We are currently unable to accurately predict the full impact that the COVID-19 pandemic will have on our financial results due to uncertainties regarding the duration and rate of the ongoing spread of the pandemic, including variants of the COVID-19 virus, including any resurgences, the extent and effectiveness of containment actions and other public health measures, the distribution and public acceptance of vaccines and treatments, and the impact of these and other factors on our employees, users, advertisers, partners and vendors. The pandemic as well as any subsequent recovery period, may also have the effect of heightening many of the other risks described in this “Risk Factor” section. Our business depends on a strong brand and reputation, and if we are unable to maintain and enhance our brand and reputation, our ability to expand our user and advertiser base will be impaired and our business, revenue and financial results could be harmed. We believe that our brand, identity and reputation has significantly contributed to the success of our business. We also believe that maintaining and enhancing the “Pinterest” brand and reputation is critical to retaining and growing our user, creator and advertiser base. Maintaining and enhancing our brand and reputation depends largely on our continued ability to provide high-quality, relevant, reliable, trustworthy and innovative products, which may require substantial investment and may not be successful. We may need to introduce new products or updates to existing products that require Pinners to agree to new terms of service that Pinners do not like, which may negatively affect our brand and reputation. Additionally, advertisements or actions of our advertisers may affect our brand and reputation if Pinners do not think the advertisements help them accomplish their objectives, or view the advertisements as intrusive, annoying or misleading or have poor experiences with our advertisers. In addition, our brand, identity and reputation may be adversely affected by perceptions of social media platforms in general, including perceptions resulting from factors unrelated to the company’s actions or the content or actions of Pinners, such as the boycott of Facebook and Twitter by some advertisers or allegations of the impact of social media on the mental health of users. Our brand and reputation may also be negatively affected by the content or actions of Pinners that are deemed to be hostile or inappropriate to other Pinners, by the actions of Pinners acting under false or inauthentic identities, by the use of our products or services to disseminate information that is deemed to be misleading, or by the use of our service for illicit, illegal or objectionable ends. We also may fail to respond expeditiously to the sharing of illegal, illicit or objectionable content on our service or objectionable practices by advertisers, or to otherwise address Pinner or advertiser concerns, which could erode confidence in our brand and damage our reputation. We expect that our ability to identify and respond to this content in a consistently applied manner and on a timely basis or at all may decrease as the number of Pinners grows, as the amount of content on the platform increases or as we expand our product and service offerings, such as video and live streaming content. Any governmental or regulatory inquiry, investigation or action, including based on the appearance of illegal, illicit or objectionable content on our platform, our business practices, or failure to comply with laws and regulations, could damage our brand and reputation, regardless of the outcome. We have experienced, and expect to continue to experience, media, legislative, governmental, regulatory, investor and other third-party scrutiny of our decisions. Any scrutiny, inquiry, investigation or action, including regarding our data privacy, copyright, content, employment or other practices, workplace culture, charitable giving, product changes, product quality, litigation or regulatory action or regarding the actions of our employees, Pinners or advertisers or other issues, may harm our brand and reputation. In addition, scrutiny of other companies in our industry, including their impact on user “screen time” or their content policies or data privacy practices, could also have a negative impact on our brand and reputation. These concerns, whether actual or unfounded, may also deter Pinners, creators or advertisers from using our service. Adverse publicity, whether or not accurate, relating to events or activities attributed to us, our employees, third-party vendors, Pinners, creators or our advertisers, or to social media platforms in general, may tarnish our reputation and reduce the value of our brand. If we fail to promote and maintain the “Pinterest” brand or preserve our reputation, or if we incur excessive expenses in this effort, our business, revenue and financial results could be harmed. 23 If our security is compromised, or Pinners or advertisers believe our security has been compromised, we could lose the trust of Pinners, creators and advertisers who may use our service less or may stop using our service altogether, which could harm our business, revenue and financial results. Our efforts to protect the information that Pinners, creators and advertisers have shared with us may be unsuccessful due to the actions of third parties, software bugs or other technical malfunctions, cyberattacks, employee error or malfeasance, hacking, viruses or other factors. In addition, third parties may attempt to induce our employees, Pinners, creators, advertisers or vendors to disclose information to gain access to our data, advertisers' data or Pinners’ data. Further, because the login credentials or passwords employed by Pinners to access our service may be similar to or the same as the ones that they use in connection with other platforms or websites, a breach in the security of those platforms or websites can allow third parties to gain unauthorized access to Pinners’ accounts on our service. If any of the events described above occur, our information or Pinners’, creators' or advertisers' information could be accessed or disclosed improperly. If a third-party gains unauthorized access to our service, they may, among other things, post malicious spam and other content on our platform using a Pinner’s, creator's or advertiser’s account, that could negatively affect our products and our business. Some third parties, including advertisers and vendors, may store information that we share with them on their networks. If these third parties fail to implement adequate data-security practices or fail to comply with our terms and policies, Pinners’ data may be improperly accessed, used or disclosed. Even if these third parties take all the necessary precautions, their networks may still suffer a breach, which could compromise Pinners' data. Any incidents where Pinners’, creators' advertisers' or our information is accessed without authorization or is improperly used, or incidents that violate our privacy policy, terms of service or other policies, or the perception that an incident has occurred, could damage our brand and reputation, adversely impact our competitive position and result in significant costs. We may need to notify government authorities or affected Pinners regarding security incidents, and government authorities or affected Pinners, creators or advertisers could initiate legal or regulatory action against us over those incidents, which could cause us to incur significant expense and liability or result in orders or consent decrees forcing us to modify our business practices. Maintaining the trust of Pinners, creators and advertisers is important to sustain user growth, retention and engagement, and we may incur significant costs in an effort to detect and prevent any security incidents. Concerns over our information security or data privacy practices, whether actual or unfounded, could subject us to negative publicity and damage our brand and reputation and deter Pinners, creators and advertisers from using our service. Any of these occurrences could harm our business, revenue and financial results. We generate substantially all of our revenue from advertising. The failure to attract new advertisers, the loss of advertisers or a reduction in how much they spend could harm our business, revenue and financial results. Substantially all of our revenue is generated from third-party advertising, a trend that we expect to continue. Most advertisers do not have long-term advertising commitments with us. Many of our advertisers only recently started working with us and spend a relatively small portion of their overall advertising budget with us. In order to increase the number of advertisers and increase the portion of the advertising budget that our existing advertisers spend with us, we must invest in new tools and expand our sales force, and there can be no assurance that those efforts will be successful. The insights on user behavior we provide to advertisers may not yield effective results for the advertisers and may reduce or stop their spend on our platform. In addition, advertisers may view some of our products or our platform as experimental and may devote only a small portion of their advertising spend to our platform unless we improve existing and develop new measurement tools that better demonstrate the effectiveness of our platform. In addition, many advertisers do not have advertising creative content in a format that would be successful on our platform and may be unable or unwilling to devote the technical or financial resources required to develop content for our platform. While we continue to develop and deploy tools to allow advertisers to create content for our platform, we may be unable to develop tools that effectively and efficiently meet the needs of advertisers. Advertisers will not do, or continue to do, business with us if they do not believe that our advertisements are effective in meeting their campaign goals, if we cannot measure the effectiveness of our advertising products or if they do not believe that their investment in advertising with us will generate a competitive return relative to other alternatives. A substantial portion of our revenue is derived from a small number of advertisers and is currently concentrated in certain verticals, particularly CPG and retail. We either contract directly with advertisers or with advertising agencies on behalf of advertisers. Many of these advertising agencies are owned by large media corporations that exercise varying degrees of control over the agencies. Our business, revenue and financial results could be harmed by the loss 24 of, or a deterioration in our relationship with, any of our largest advertisers or with any advertising agencies or the large media corporations that control them. Our advertising revenue could be harmed by many other factors, including: • • • • • • • • • • • • • • • • • • changes in the price of advertisements; our inability to create new products that sustain or increase the value of our advertisements; our inability to meet advertiser demand on our platform if we cannot increase the size and engagement of our user base; our inability to find the right balance between brand and performance advertising and provide the right products and platform to support the pricing and demand needed for each of the advertisers; changes in Pinner demographics that make us less attractive to advertisers; our inability to make our ads more relevant and effective; any decision to serve contextually relevant advertisements when the price of relevant advertisements may be lower than other advertisements that we could show Pinners that are less relevant; the availability, accuracy and utility of our analytics and measurement solutions that demonstrate the value of our advertisements, or our ability to further improve such tools; changes to our data privacy practices (including as a result of changes to laws or regulations or third-party policies) that affect the type or manner of advertising that we are able to provide; our inability to collect and share data which new or existing advertisers find useful; competitive developments or advertiser perception of the value of our products; product changes or advertising inventory management decisions we make that change the type, size or frequency of advertisements on our platform; Pinners that upload content or take other actions that are deemed to be hostile, inappropriate, illicit, objectionable, illegal or otherwise not consistent with our advertisers’ brands; the impact of invalid clicks or click fraud on our advertisements; the failure of our advertising auction mechanism to target and price ads effectively; difficulty and frustration from advertisers who may need to reformat or change their advertisements to comply with our guidelines or experience challenges uploading and conforming their advertisements with our system requirements; the macroeconomic conditions and the status of the advertising industry, such as the global outbreak of the COVID-19 pandemic, its uncertain duration and recovery, which could cause businesses to spend less on advertising and/or direct their advertising spend to larger companies that offer more traditional and widely accepted advertising products; and the other risks and uncertainties described in this Annual Report on Form 10-K. These and other factors could reduce the amount that advertisers spend on our platform, or cause advertisers to stop advertising with us altogether. Any of these events could harm our business, revenue and financial results. Our ability to attract and retain advertisers depends on our ability to collect and use data and develop tools to enable us to effectively deliver and accurately measure advertisements on our platform. Most advertisers rely on tools that measure the effectiveness of their ad campaigns in order to allocate their advertising spend among various formats and platforms. If we are unable to measure the effectiveness of advertising on our platform or we are unable to convince advertisers that our platform should be part of a larger advertising budget, our ability to increase the demand and pricing of our advertising products and maintain or scale our revenue 25 may be limited. Our tools may be less developed than those of other platforms with which we compete for advertising spend. Therefore, our ability to develop and offer tools that accurately measure the effectiveness of a campaign on our platform is critical to our ability to attract new advertisers and retain, and increase spend from, our existing advertisers. We are continually developing and improving these tools and such efforts have and are likely to continue to require significant time and resources and additional investment, and in some cases we have relied on and may in the future rely on third parties to provide data and technology needed to provide certain measurement data to our advertisers. If we cannot continue to develop and improve our advertising tools in a timely fashion, those tools are not reliable, or the measurement results are inconsistent with advertiser goals, our advertising revenue could be adversely affected. Many existing advertiser tools that measure the effectiveness of advertising do not account for the role of advertising early in a Pinner's decision-making process, which is when many Pinners come to our service. Instead, these tools measure the last ad or content that was exposed to the Pinner that gets credit for influencing any Pinner’s purchase or action. As a result, we may not be able to demonstrate and measure for our advertisers the value of engaging with a Pinner during the early intent phase. In addition, web and mobile browser developers, such as Apple, Microsoft or Google, have implemented and may continue to implement changes, including requiring additional user permissions, in their browser or device operating system that impair our ability to measure and improve the effectiveness of advertising on our platform. Such changes include, limiting the use of first-party and third-party cookies and related tracking technologies, such as mobile advertising identifiers, and other changes that limit our ability to collect information that allows us to attribute user actions on advertisers’ websites to the effectiveness of advertising campaigns run on our platform. For example, Apple launched its Intelligent Tracking Prevention (“ITP”) feature in its Safari browser. ITP blocks some or all third-party cookies by default on mobile and desktop and ITP has become increasingly restrictive over time. Apple's related Privacy-Preserving Ad Click attribution (PPAC), intended to preserve some of the functionality lost with ITP, would limit cross-site and cross-device attribution, prevent measurement outside a narrowly-defined attribution window, and prevent ad re-targeting and optimization. Similarly, Google announced that it plans to stop supporting third-party cookies in its Google Chrome browser. Further, Apple implemented certain changes, including introducing an AppTrackingTransparency framework that limits the ability of mobile applications to request an iOS device’s advertising identifier and affects our ability to track user actions off our platform and connect their interactions with on- platform advertising. In addition, third-parties, such as Apple, Microsoft or Google, have implemented and may continue to implement changes and restrictions in browser or device functionality including by limiting the use of cookies, or that limit our ability to communicate with or understand the identity of our Pinners. All these restrictions described above make it more difficult for us to provide the most relevant ads to our Pinners, measure the effectiveness of, and to re-target and optimize, advertising on our platform. This may result in advertisers spending less or not at all, on our platform and prefer larger platforms like Facebook and Google that have more capabilities to help advertisers measure their conversions. Developers may release additional technology that further inhibits our ability to collect data that allows us to measure the effectiveness of advertising on our platform. Any other restriction, whether by law, regulation, policy (including third-party policies) or otherwise, on our ability to collect and share data which our advertisers find useful, our ability to use or benefit from tracking and measurement technologies, including cookies, or that further reduce our ability to measure the effectiveness of advertising on our platform would impede our ability to attract, grow and retain advertisers. Advertisers and other third parties who provide data that helps us deliver personalized, relevant advertising may restrict or stop sharing this data. If they stop sharing this data with us, it may not be possible for us to collect this data within the product or from another source. We rely heavily on our ability to collect and share data and metrics for our advertisers to help new and existing advertisers understand the performance of advertising campaigns. If advertisers do not perceive our metrics to be accurate representations of our user base and user engagement, or if we discover inaccuracies in our metrics, they may be less willing to allocate their budgets or resources to our platform, which could harm our business, revenue and financial results. Pinner metrics and other estimates are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics could harm our business, revenue and financial results. 26 We regularly review metrics, including the number of our active users and other measures to evaluate growth trends, measure our performance and make strategic decisions. These metrics are calculated using internal company data and have not been validated by an independent third-party. While these numbers are based on what we currently believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring how our products are used across large populations globally. Our metrics calculations may be inaccurate, and we may not be able to identify those inaccuracies. In the past, we have relied on other metrics that measure different activities, such as saving a Pin, clicking, searching and other activities, as indicators of user growth and engagement. We have in the past implemented, and may from time to time in the future implement, new methodologies for calculating these metrics which may result in the metrics from prior periods changing, decreasing or not being comparable to prior periods. For example, in the second quarter of 2018, we implemented our current methodology for tracking active users. We have restated our active user data for periods from the fourth quarter of 2016 to the first quarter of 2018 based on the information that was available to us under the prior methodology in a way that we believe is comparable to the current methodology. However, we were not able to restate active users for periods prior to the fourth quarter of 2016 based on the data available to us from those periods. As a result, active user information for the first, second and third quarters of 2016 are based on the prior methodology, although we believe the differences are not material. Our prior methodology for measuring active users relied on different signals depending on the platform where the user activity was measured—iOS, Android, web and mobile web—and inferred user activity in a way that required removal of certain data that would not indicate active use, such as background system requests. Our metrics may also differ from estimates published by third parties or from similarly titled metrics of our competitors due to differences in methodology or data used. Our MAU metrics may also be impacted by our information quality efforts, which are our overall efforts to reduce malicious activity on our platform, including false, spam and malicious automation accounts in existence on our service. We regularly deactivate false, spam and malicious automation accounts that violate our terms of service, and exclude these users from the calculation of our MAU metrics; however, we will not succeed in identifying and removing all false, spam and malicious accounts from our service. We are continually seeking to improve our ability to estimate the total number of false, spam or malicious accounts and we intend to continue to make such improvements. In addition, users are not prohibited from having more than one account on our service, and we treat multiple accounts held by a single person as multiple users for purposes of calculating our active users. In addition, some of our Pinner demographic data may be incomplete or inaccurate. For example, because Pinners self-report their date of birth, our age-demographic data may differ from Pinners’ actual ages, or be unavailable. We receive age-demographic data for a portion of those Pinners from other third-party accounts that Pinners chose to authenticate with on our service, such as Facebook and Google, but there can be no assurance that those platforms will continue to give us permission to access that data or that the data we receive from those third parties is accurate. In addition, our data regarding the geographic location of Pinners and revenue by user geography is estimated based on a number of factors, which may not always accurately reflect the actual location and may be different depending on the metric we are calculating. If our metrics provide us with incorrect or incomplete information about Pinners and their behavior, we may make inaccurate conclusions about our business. Our business depends on our ability to maintain and scale our technology infrastructure, including speed and availability of our service. Our reputation and ability to attract, retain and serve Pinners, creators and advertisers is dependent upon the reliable performance of our service and our underlying technology infrastructure and content delivery processes. From time to time, we are subject to interruptions in or disruptions of our systems. If our platform is unavailable when Pinners, creators or advertisers attempt to access it, if it does not load as quickly as they expect or if their content is not saved, Pinners may not return to our platform as often in the future, or at all. Our advertisers must be able to easily buy, forecast, optimize and measure the performance of ads on a responsive and stable platform. Advertisers will not continue to do business with us if our technology infrastructure is not reliable. Our systems may not be adequately designed with the necessary reliability and redundancy to avoid performance delays or outages that could harm our business. Our systems may not be adequately designed to avoid performance delays or outages. For example, our engineering teams' broad access to our systems is designed for speed and release velocity, which increases the risk of disruptive intentional and unintentional (and potentially premature) updates and changes being made directly to our live platforms and services. As our user, creator and advertiser base and the volume and types of information shared on our service continue to grow, we will need an increasing amount of technology infrastructure, including network capacity and computing power, to continue to satisfy the needs of Pinners, creators and advertisers, which could increase our costs. It is possible that we may fail to effectively scale 27 and grow our technology infrastructure to accommodate these increased demands, which could harm our business, revenue and financial results. Further, in the event of a systems failure, employee error, failure or interruption of services by AWS, malicious intent by employees or third parties, we may lose all or substantial amounts of data and we may not be able to recover such data quickly or at all. Such loss of data could adversely affect our business and financial results. In addition, our systems and operations are vulnerable to damage, delays or interruptions from fire, flood, power loss, telecommunications failure, spikes in usage volume, pandemics such as the ongoing COVID-19 pandemic, terrorist attacks, acts of war, earthquakes, the effects of climate change and other events beyond our control. We are particularly vulnerable to these types of events because our cloud computing infrastructure is currently located in one geographic region. In addition, the substantial majority of our employees are located in California, which has historically experienced, and may continue to experience, climate-related events including drought and water scarcity, warmer temperatures, wildfires and air quality impacts and power shut-offs. If there is a catastrophic failure involving our systems or major disruptive event affecting our headquarters or the San Francisco area in general, we may be unable to operate our service. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for us to deliver our services and could cause us to incur substantial expense. Climate-related events, including the increasing frequency of extreme weather events and their impact, have the potential to disrupt our business and/or the business of our third-party suppliers and partners. A substantial portion of our technology infrastructure is provided by third parties. Any disruption or failure in the services we receive from these providers could harm our ability to handle existing or increased traffic or cause our platform to become unavailable, which could harm our business. We exercise little control over these providers and have limited line of sight into their governance, and any financial or other difficulties these providers face may harm our business. The occurrence of any of the foregoing risks could result in damage to our systems and hardware or could cause them to fail completely, and our insurance may not cover such risks or may be insufficient to compensate us for losses that may occur. These events may result in distraction of management, loss of revenue and costs from litigation and enforcement. In addition, they could also result in significant expense to repair or replace damaged facilities and remedy resultant data loss or corruption. A prolonged interruption in the availability or reduction in the speed or other functionality of our products could materially harm our reputation and business. The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could harm our business, revenue and financial results. We currently depend on the continued services and performance of our key personnel, including Benjamin Silbermann and others. Mr. Silbermann’s employment, and the employment of our other key personnel, is at will, which means they may resign or be terminated for any reason at any time. In addition, much of our key technology and systems are custom-made for our business by our personnel. The loss of key personnel, including key members of management as well as our key engineering, design, marketing, sales and product development personnel, could disrupt our operations and harm our business. In addition, it is important to our business to attract and retain highly talented personnel, particularly engineers with expertise in computer vision, artificial intelligence and machine learning. We have found and may continue to find our recruiting and retention efforts more challenging because the marketplace for talent is highly competitive. The incentives provided by our stock option grants, restricted stock grants and restricted stock unit grants, or by other compensation and benefits arrangements, may not be effective to attract and retain employees, especially as a result of continued fluctuations in our stock price. We may also be required to enhance wages, benefits and non-equity incentives. If we are unable to meet employees and potential employees' expectations, we may experience difficulties attracting and retaining personnel. Following an independent review of our workplace culture, a Special Committee of our Board has made a number of recommendations, which we are working to implement. Our ongoing efforts to address workplace culture (including to meet the goals we set in our Inclusion and Diversity Report that we publish annually), implement our Special Committee's recommendations and resolve certain related allegations or claims have resulted in, and will continue to result in, increased costs, as well as consuming management's time and attention. Further, if our efforts are unsuccessful, we may not be able to attract and retain talent, we may be subject to investigations, litigation and other proceedings and our brand and reputation and stock price may be harmed. Additionally, although we had begun re-opening some of our offices, we have temporarily closed all our offices worldwide in light of the new COVID-19 variants, and there is still uncertainty related to the timing and manner of our workforce returning to the office. Our future work strategy and our continued efforts related to employee onboarding, 28 training and development and retention may not be successful. Further, our future work strategy is continuing to evolve and may not meet the needs of our existing and potential future employees and they may prefer work models offered by other companies. If we do not succeed in attracting and retaining highly qualified personnel or the financial resources required to do so increase, we may not be able to meet our business objectives, and our business, revenue and financial results could be harmed. Risks arising from our reliance on third parties We depend in part on online application stores and internet search engines to direct traffic and refer new Pinners to our service. When these online application stores or search engines’ methodologies and policies are modified or enforced in ways we do not anticipate, or when our search results page rankings decline for other reasons, traffic to our service or user growth, retention and engagement has declined and could decline in the future, any of which could harm our business, revenue and financial results. We depend in part on internet search engines, such as Bing, Google, Yahoo! and Yandex, to direct a significant amount of traffic to our service. For example, when a Pinner types a query into a search engine, we may receive traffic and acquire new Pinners when those search results include Pins, boards, Pinners and other features of our service that cause the Pinner to click on the Pinterest result or create a Pinterest account. These actions grow our users due to signups of new Pinners and increase retention and engagement of existing Pinners. Our ability to maintain and increase the number of users directed to our service from search engines is not within our control. Search engines, such as Google, have and may continue to modify their search algorithms (including what content they index) and policies or enforce those policies in ways that are detrimental to us, that we are not able to predict or without prior notice. When that occurs, we have in the past and expect to experience in the future, declines or de-indexing in the organic search ranking of certain Pinterest search results, leading to a decrease in traffic to our service, new user signups and existing user retention and engagement. We have experienced declines in traffic and user growth as a result of these changes in the past, and anticipate fluctuations as a result of such actions in the future. For example, in throughout 2021 and most recently in November 2021, Google made certain changes to their search algorithms which also negatively impacted traffic and user sign-ups. Our ability to appeal these actions is limited, and we may not be able to revise our search engine optimization (“SEO”) strategies to recover the loss in traffic or users resulting from such actions. In addition, changes in policies or their enforcement may not apply in the same manner to our competitors, or our competitors’ SEO strategies to retain and attract users may be more successful than ours. In addition, some of these search engines are owned by companies that compete with various aspects of our business. When email platforms, such as Google, change their policies related to the placement of our emails in Pinners' inboxes, it can affect the open and click rate of our emails. Such changes have led to and may lead to a decrease in traffic to our service, new user signups and existing user retention and engagement. To offset some of the impact on our user growth, we may increase our investment in other growth strategies, such as paid marketing or other initiatives that drive user acquisition, which may cost more and be less effective. Any significant reduction in the number of Pinners directed to our website or mobile application from search engines or email could harm our business, revenue and financial results. In addition, we also rely on certain major online stores for distribution of our application. If these application store providers modify or implement new terms, we may be required to modify our product to maintain our ability to remain in that application store. Such requirements or our inability to meet such requirements could harm our business, revenue and financial results. We allow users to authenticate with our service through third-party login providers. If these third parties discontinue these tools or experience a breach or outage in their platform or web browser developers make changes that restrict the use of these tools, user retention, growth or engagement could decline, and our business, revenue and financial results could be harmed. A significant number of Pinners access their accounts on our service using a third-party login provider such as Facebook, Apple or Google. If security on those platforms is compromised, if Pinners are locked out from their accounts on those platforms or if those platforms experience an outage or otherwise institute policies that prevent Pinners from accessing their accounts on our service through those logins, Pinners may be unable to access our service. In addition, third-party log-in providers may institute policies that restrict us from communicating with Pinners. As a result of these actions, user growth, retention and engagement on our service has been and could be adversely affected in the future, even if for a temporary period. Additionally, if Facebook or Google discontinue their identity services or experience an outage, then we may lose and be unable to recover users previously using this function, 29 and our user growth or engagement could decline. Any of these events could harm our business, revenue and financial results. We depend on Amazon Web Services for the vast majority of our compute, storage, data transfer and other services. Any disruption of, degradation in or interference with our use of Amazon Web Services could negatively affect our operations and harm our business, revenue and financial results. Amazon Web Services (“AWS”) provides the cloud computing infrastructure we use to host our website, mobile application and many of the internal tools we use to operate our business. We have a long-term commitment with AWS. Under the agreement with AWS, in return for negotiated concessions, we currently are required to maintain a substantial majority of our monthly usage of certain compute, storage, data transfer and other services on AWS. This agreement is terminable only under certain conditions, including by either party following the other party’s material breach, which may be the result of circumstances that are beyond our control. A material breach of this agreement by us, or early termination of the agreement, could carry substantial penalties, including liquidated damages. If AWS increases pricing terms, terminates or seeks to terminate our contractual relationship, establishes more favorable relationships with our competitors, or changes or interprets its terms of service or policies in a manner that is unfavorable, those actions could harm our business, revenue and financial results. Any significant disruption of, limitation of our access to or other interference with our use of AWS would negatively impact our operations and our business could be harmed. In addition, any transition of the cloud services currently provided by AWS to another cloud services provider would be difficult to implement and would cause us to incur significant time and expense and could disrupt or degrade our ability to deliver our products and services. The level of service provided by AWS could affect the availability or speed of our services. If Pinners, creators or advertisers are not able to access our service or platform or encounter difficulties in doing so, we may lose Pinners, creators or advertisers and could harm our business and reputation. We utilize data center hosting facilities operated by AWS, located in various facilities. However, we have implemented a limited disaster recovery program which does not allow us to serve network traffic from back-up data center services. An unexpected disruption of services provided by these data centers could hamper our ability to handle existing or increased traffic, result in the loss of data or cause our platform to become unavailable, which may harm our reputation and business. We must effectively operate with mobile operating systems, web browsers, online application stores, networks, regulations and standards, which we do not control. Changes in our products or to those mobile operating systems, web browsers, networks, regulations or standards may harm Pinner retention, growth and engagement. Because our service is used on mobile devices and through web browsers, our application must remain interoperable with popular mobile operating systems and browsers, including Android, Chrome, iOS and Safari. We have no control over these operating systems and browsers. Any changes to these operating systems, browsers or the online stores distributing our application that impact the accessibility, speed or functionality of our service or give preferential treatment to competitive products, could harm usage of our service. Some of our competitors that control the operating systems, browsers and online stores that our application runs on, or is distributed through, could make interoperability of our service with those systems, browsers and stores more difficult. In addition, new products we introduce may take longer to function with these systems and browsers. If we are unable to deliver consistent, high-quality Pinner experiences across different devices with different operating systems, user growth, retention or engagement may decline, which could harm our business, revenue and financial results. The adoption of any laws or regulations that adversely affect the growth, popularity or use of the internet, including laws governing internet neutrality, could decrease the demand for our products and services and increase our cost of doing business. For example, in June 2018, the Federal Communications Commission repealed the 2015 “open internet rules,” which had prohibited broadband internet access service providers in the United States from impeding access to most content, or otherwise unfairly discriminating against content providers. The impact of this repeal on the way Pinners access the internet and the way we interact with internet service providers remain uncertain. Other countries also have rules requiring equal access to internet content. Regulatory changes could limit Pinners’ ability to access our service or make our service a less attractive alternative to our competitors’ platforms and cause our user growth, retention or engagement to decline, which could harm our business, revenue and financial results. 30 If it becomes more difficult for Pinners to access and use our service on their browsers or mobile devices, if Pinners choose not to access or use our service on their mobile devices, or if Pinners choose to use mobile products that limit access to our service, user growth, retention and engagement may decline, which could harm our business, revenue and financial results. We rely on software, technologies and related services from other parties, and problems in their use, access or performance could increase our costs and harm our business, revenue and financial results. We rely on software, technologies and related services from third parties to operate critical functions of our business. Third-party technologies or services that we utilize may become unavailable due to a variety of reasons, including outages, interruptions or failure to perform under our agreement. Unexpected delays in their availability or function can, in turn, affect the use or availability of our service. Further, third-party software and service providers may no longer provide such software and services on commercially reasonable terms or may fail to properly maintain or update their software. In such instances, we may be required to seek licenses to software or services from other parties or to redesign our products to function with new software or services. This could result in delays in the release of new products until equivalent technology can be identified, licensed or developed, and integrated into our platform and services. Furthermore, we might be forced to limit the features available in our current or future products. These occurrences, delays and limitations, if they occur, could harm our business, revenue and financial results. Technologies have been developed that can block the display of our ads, which could harm our business, revenue and financial results. Technologies have been developed, and will likely continue to be developed, that can block the display of our ads. We generate substantially all of our revenue from advertising, and ad blocking technologies may prevent the display of certain of our ads, which could harm our business, revenue and financial results. Existing ad blocking technologies that have not been effective on our service may become effective as we make certain product changes, and new ad blocking technologies may be developed. More users may choose to use products that block or obscure the display of our ads if we are unable to successfully balance the amount of organic content and paid advertisements, or if users’ attitudes toward advertisements become more negative. Further, regardless of their effectiveness, ad blockers may generate concern regarding the health of the digital advertising industry, which could reduce the value of digital advertising and harm our business, revenue and financial results. Risks relating to Legal and Regulatory Matters We may be liable as a result of content or information that is published or made available on our service. We are subject to many U.S. federal and state and foreign laws and regulations that involve matters central to our business, including laws and regulations that involve data privacy and protection, intellectual property (including copyright and patent laws), content regulation, rights of publicity, advertising, marketing, health and safety, competition, protection of minors, consumer protection, taxation, anti-bribery, anti-money laundering and corruption, economic or other trade prohibitions or sanctions or securities law compliance. We may be sued or face regulatory action for claims relating to content or information that is published or made available on our service. Our systems, tools and personnel that help us to proactively detect potentially policy-violating or otherwise inappropriate content cannot identify all such content on our service, and in many cases this content will appear on our service. This risk may increase as we develop and increase the use of certain products or product features, such as video and live streaming content, for which identifying such content is challenging. Additionally, some controversial content may not be banned on our service and, even if it is not featured in advertisements or recommendations to Pinners, may still appear in search results or be saved on boards. This risk is enhanced in certain jurisdictions outside of the United States where our protection from liability for content published on our platform by third parties may be unclear and where we may be less protected under local laws than we are in the United States. Further, if policy-violating content is found on our service, we may be in violation of the terms of certain of our key agreements, which may result in termination of the agreement and, in some cases, payment of damages. We could incur significant costs in investigating and defending such claims and, if we are found liable, damages. If any of these events occur, our business, revenue and financial results could be harmed. We rely on a variety of statutory and common-law frameworks and defenses relevant to the content available on our service, including but not limited to, the Digital Millennium Copyright Act ("DMCA"), the Communications Decency Act ("CDA") and the fair-use doctrine in the United States, and the Electronic Commerce Directive in the European Union. The DMCA limits, but does not necessarily eliminate, our potential liability for caching, hosting, listing or linking to third-party content that may include materials that infringe copyrights. The CDA further limits our potential liability for 31 content uploaded onto our service by third parties. Defenses such as the fair-use doctrine (and related doctrines in other countries) may be available to limit our potential liability for featuring third-party intellectual property content for purposes such as reporting, commentary and parody. In the European Union, the Electronic Commerce Directive offers certain limitations on our potential liability for featuring third-party content. However, each of these statutes and doctrines is subject to uncertain or evolving judicial interpretation and regulatory and legislative amendments, and we cannot guarantee that such frameworks and defenses will be available for our protection. Regulators in the United States and in other countries may introduce new regulatory regimes that increase potential liability for content available on our service, including liability for misleading or manipulative information, hate speech, privacy, copyrighted content and other types of online harm and current protections from liability for third-party content in the United States could decrease or change. For example, there have been various Congressional and regulatory efforts to restrict the scope of the protections available to online platforms under Section 230 of the CDA. Similarly, the EU Directive on Copyright in the Digital Single Market (DSM) has been implemented by a few EU member states that alter the liability scheme for online sharing-content platforms and impose additional requirements for the content uploaded by their users to protect copyright owners against unlicensed use of their work. If amendments to Section 230 of the CDA or other statutory or regulatory changes reduce liability protections for content published on our service, we may be required to make significant changes to our business model, including increasing our content moderation operations and building in additional product features or tools that may not be favorable to our business, add payment obligations or compliance costs. There are also a number of new laws and legislative proposals in the United States, at both the federal and state level, and in the European Union, U.K. and other countries, that further impose new obligations in areas affecting our business, such as liability for copyright infringement, distributing certain advertisements to minors, and other online harm. We could also face fines or orders restricting or blocking our service in particular countries as a result of content on our platform. For example, Germany, Russia, Austria and Turkey have implemented regulations that impose significant fines or provide for blocking services for failures to comply with certain content removal and disclosure obligations, and other countries may enact similar legislation, which would impose penalties for failure to remove certain content. Additionally, in April 2021, the European Union adopted new regulations that require certain online service providers to remove terrorist-related content within one hour of being flagged. These regulations will begin to apply in June 2022. There can be no assurance that the tools we use for certain removal obligations or any new custom tools we develop will be sufficient to maintain compliance with the new regulations. Any new legislation or changes to existing legislation may be difficult to comply with in a timely and comprehensive fashion and may expose our business, users, or employees to increased costs. These costs could be prohibitively expensive for a company of our size, which could prevent us from launching a product or require us to restrict access to a product in a particular market. This could disadvantage us relative to our competitors with more resources. If the rules, doctrines or currently available defenses change, if international jurisdictions refuse to apply similar protections that are currently available in the United States or the European Union or if a court were to disagree with our application of those rules to our service, we could be required to expend significant resources to try to comply with the new rules or incur liability and our business, revenue and financial results could be harmed. Action by governments to restrict access to our service or certain of our products in their countries could harm our business, revenue and financial results. Governmental authorities outside the United States have restricted, and may in the future seek to restrict access to our service if they consider us to be in violation of their laws or for other reasons. For example, access to our service has been or is currently restricted in whole or in part in China, India, Kazakhstan and Turkey. Other governments may seek to restrict access to or block our service, prohibit or block the hosting of certain content available through our service, or impose other restrictions that may affect the accessibility or usability of our service in that country for a period of time or even indefinitely. We may also decide to stop offering our service in a country as a result of these types of restrictions. For example, some countries have enacted laws that allow websites to be blocked for hosting certain types of content or may require websites to remove certain restricted content, to appoint local representatives in the country, or to store user data within that country. It can be challenging or impractical to manage the requirements of multiple jurisdictions governing the type and nature of the content available on our service. If prohibitions or restrictions are imposed on our service, or if our competitors are able to successfully penetrate new geographic markets or capture a greater share of existing geographic markets that we cannot access or where we face other restrictions, our user growth, retention and engagement may be adversely affected, and our business, revenue and financial results could be harmed. 32 We receive, process, store, use and share data, some of which contains personal information, which subjects us to complex and evolving governmental regulation and other legal obligations related to data privacy, data protection and other matters, which are subject to change and uncertain interpretation. We receive, process, store, use and share data, some of which contains personal information. There are numerous federal, state, local and foreign laws and regulations regarding matters central to our business, data privacy and the collection, storing, sharing, use, processing, disclosure and protection of personal information and other data from users, employees and business partners, the scope of which are regularly changing, subject to uncertain and differing interpretations and may be inconsistent among countries or conflict with other rules. The application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we operate, and as the focus on data privacy and data protection increases globally, we are, and will continue to be, subject to varied and evolving data privacy and data protection laws. We are subject to GDPR which expands the rights of individuals to control how their personal data is processed, includes restrictions on the use of personal data of children, creates new regulatory and operational requirements for processing personal data (in particular in case of a data breach), increases requirements for security and confidentiality, restricts transfers of data outside of the European Economic Area and provides for significant penalties for non-compliance, including fines of up to 4% of global annual turnover for the preceding financial year or €20 million (whichever is higher) for the most serious infringements. Additionally, we have historically relied upon multiple legally valid transfer mechanisms to transfer certain personal data outside of the European Economic Area, including the EU-U.S. Privacy Shield Framework and Standard Contractual Clauses (SCCs). The Court of Justice of the European Union ruled that the EU- U.S. Privacy Shield is an invalid transfer mechanism, but upheld the validity of the SCCs subject to future elaboration of additional safeguards by regulators such as specific “supplemental measures” that should be undertaken to protect EU data subjects. The validity of data transfer mechanisms and these additional safeguards remains subject to legal, regulatory, and political developments in both Europe and the U.S. The invalidation of the EU-U.S. Privacy Shield, the potential invalidation of other data transfer mechanisms, or the potential invalidation of additional safeguards could have a significant adverse impact on our ability to process and transfer the personal data of EEA users outside of the European Economic Area. The State of California enacted the CCPA which requires companies that process information on California residents to make new disclosures to consumers about their data collection, use and sharing practices, allows consumers to opt out of certain data sharing with third parties and provides a new cause of action for data breaches. The CCPA is largely untested, and it remains unclear how the CCPA will be interpreted. Additionally, a new privacy law, the CPRA, was approved by California voters in November 2020. The CPRA significantly modifies the CCPA, resulting in further uncertainty and requiring us to incur additional costs and expenses. Additionally, the Federal Trade Commission and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination and security of data. The burdens imposed by these and other laws and regulations that may be enacted, or new interpretations of existing laws and regulations, may require us to modify our data storage and data processing practices and policies and to incur substantial costs in order to comply and may disproportionately affect our business in comparison to our peers that have greater resources. These laws and regulations may also impact our ability to expand advertising on our platform internationally, as they may impede our ability to deliver targeted advertising and accurately measure our ad performance. Any failure or perceived failure by us to comply with our privacy policies, data privacy-related obligations to Pinners or other third parties, or our data privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other user data, or other failure to comply with these laws and regulations, or regulatory scrutiny, may result in governmental enforcement actions or litigation that could expose our business to substantial financial penalties, or other monetary or non-monetary relief, negative publicity, loss of confidence in our products, decline in Pinner or advertiser growth or damage to our brand and reputation. Companies in the technology industry have recently experienced increased regulatory scrutiny relating to data privacy and data protection, and we may become subject to enhanced scrutiny and enforcement actions from regulators to ensure compliance with data privacy and data protection laws and regulations. The GDPR, CCPA and other such laws and regulations impose new and burdensome obligations, and include substantial uncertainty as to their interpretation, and we may face challenges in addressing their requirements, which could result in fines or penalties, lead us to change our data privacy policies and practices and limit our ability to deliver personalized advertising. Public statements against us by consumer advocacy groups or others could also cause Pinners to lose trust in us, which could result in declines in user growth, retention or engagement and have an adverse effect on our brand, reputation and business. Additionally, if third parties that we work with, such as advertisers, service providers or developers, violate applicable laws or our policies, these violations may also put Pinners’ information at risk and could in turn have an adverse effect on our business, revenue and financial results. 33 Any significant change to applicable laws, regulations or industry practices, or to interpretations of existing laws and regulations, regarding the use or disclosure of Pinners’ data, or regarding the manner in which we obtain consent from Pinners for the use and disclosure of such data, could require us to modify our products to allow for limited data use, possibly in a material manner, and may limit our ability to develop new products that make use of the data that Pinners voluntarily share. There currently are a number of proposals pending before federal, state and foreign legislative and regulatory bodies. For example, Member States in the European Union are working to align on a draft of the “ePrivacy Regulation” that would govern data privacy and the protection of personal data in electronic communications, in particular for direct marketing purposes. In addition, some countries are considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our service, particularly as we expand our operations internationally. We could become involved in legal disputes that are expensive to support, and if resolved adversely, could harm our business, revenue and financial results. We are currently involved in, and may in the future be involved in, actual and threatened legal proceedings, claims, investigations and government inquiries arising in the ordinary course of our business, including intellectual property, data privacy and data protection, privacy and other torts, illegal or objectionable content, consumer protection, securities, stockholder derivative claims, employment, governance, workplace culture, contractual rights, civil rights infringement, false or misleading advertising, or other legal claims relating to content or information that is provided to us or published or made available on our service. Any proceedings, claims or inquiries involving us, whether successful or not, may be time consuming, result in costly litigation, unfavorable outcomes, high indemnification expenses, increased costs of business, may require us to change our business practices or products, require significant amount of management’s time, may harm our reputation or otherwise harm our business and future financial results. We are currently involved in and have been subject to actual and threatened litigation with respect to third-party patents, trademarks, copyrights and other intellectual property, and may continue to be subject to intellectual property litigation and threats thereof. Companies in the internet, technology and media industries own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. As we face increasing competition, grow our business and products, and become increasingly high profile, the possibility of receiving a larger number of intellectual property claims against us grows. In addition, various “non-practicing entities” that own patents and other intellectual property rights have asserted, and may in the future attempt to assert, intellectual property claims against us to extract value through licensing or other settlements. From time to time, we receive letters from patent holders alleging that some of our products infringe their patent rights and from trademark holders alleging infringement of their trademark rights. We also receive letters from holders of copyrighted content alleging infringement of their intellectual property rights, including DMCA take-down requests. Our technologies and content, including the content that Pinners pin to our service, may not be able to withstand such third-party claims. With respect to any intellectual property claims, we may have to seek a license to continue using technologies or engaging in practices found to be in violation of a third-party’s rights, which may not be available on reasonable terms and may significantly increase our operating expenses. A license to continue such technologies or practices may not be available to us at all and we may be required to discontinue use of such technologies or practices or to develop alternative non-infringing technologies or practices. The development of alternative non-infringing technologies or practices could require significant effort and expense or may not be achievable at all. Our business, revenue and financial results could be harmed as a result. If we are unable to protect our intellectual property, the value of our brand and other intangible assets may be diminished, and our business, revenue and financial results could be harmed. We rely, and expect to continue to rely, on a combination of confidentiality, invention assignment and license agreements with our employees, consultants and other third parties with whom we have relationships, as well as trademark, copyright, patent and trade secret protection laws, to protect our proprietary rights. We have filed various applications for certain aspects of our intellectual property in the United States and other countries, and we currently hold issued patents in multiple jurisdictions. Further, there can be no assurance that each of our patent applications will result in the issuance of a patent. In addition, any resulting issued patents may have claims narrower than those in 34 our patent applications. There can be no assurance that each of our trademark applications will result in the issuance of a trademark or that each resulting trademark registration will be able to be maintained. In the future we may acquire additional patents or patent portfolios, license patents from third parties or agree to license the use of our patents to third parties, which could require significant cash expenditures. Additionally, our current and future patents, trademarks and other intellectual property or other proprietary rights may be contested, circumvented or found unenforceable or invalid. Third parties may knowingly or unknowingly infringe or challenge our proprietary rights. Effective intellectual property protection may not be available in every country in which we operate or intend to operate our business. We may not be able to prevent infringement without incurring substantial time and expense, if at all. There can be no assurance that others will not offer technologies, products, services, features or concepts that are substantially similar to ours and compete with our business. Similarly, particularly as we expand the scope of our business and the countries in which we operate, we may not be able to prevent third parties from infringing, or challenging our use of, our intellectual property rights, including those used to build and distinguish the “Pinterest” brand. If the protection of our proprietary rights is inadequate to prevent unauthorized use or appropriation by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to more effectively mimic our technologies, products, services or features or methods of operations. Any of these events could harm our business, revenue and financial results. Our use of “open source” software could subject us to possible litigation or could prevent us from offering products that include open source software or require us to obtain licenses on unfavorable terms. A portion of the technologies we use incorporates “open source” software, and we may incorporate open source software in the future. Open source licenses may subject us to certain unfavorable conditions, including requirements that we offer our products that incorporate the open source software for no cost, that we make publicly available the source code for any modifications or derivative works we create based upon, incorporating or using the open source software, or that we license such modifications or derivative works under the terms of the particular open source license. We also license to others some of our software through open source projects which requires us to make the source code publicly available, and therefore can affect our ability to protect our intellectual property rights with respect to that software. If an author or other third-party that distributes open source software that we use or license were to allege that we had not complied with the conditions of the applicable license, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from offering our products that contained the open source software, required to release proprietary source code, required to obtain licenses from third parties or otherwise required to comply with the unfavorable conditions unless and until we can re- engineer the product so that it complies with the open source license or does not incorporate the open source software. Any of the foregoing could disrupt our ability to offer our products and harm our business, revenue and financial results. The interpretation and application of U.S. tax legislations or other changes in U.S. or non-U.S. taxation of our operations could harm our business, revenue and financial results. Tax reform has been a priority for governments worldwide and numerous proposals have been proposed or enacted. For example, the 2017 Tax Cuts and Jobs Act (the “Tax Act”) changed how the United States imposes income tax on multinational corporations in a number of ways. The issuance of additional regulatory or accounting guidance may affect our analysis of the impact of the law on us and may harm our operating results and financial condition. Additionally, further regulatory or legislative developments may also arise from the proposed U.S. tax reform under the Biden Administration, the Build Back Better Act, which has proposed a new corporate alternative minimum tax and increased taxation of international business operations. There is uncertainty regarding what changes will be enacted, if any, and the effect on our business and financial results. Additionally, in October 2020, the Organisation for Economic Co-operation and Development Inclusive Framework, as part of its Base Erosion and Profit Shifting Action Plan, released proposals that provide a long-term, multilateral framework on taxation of the digital economy. Recently, the Inclusive Framework jurisdictions announced they reached agreement on the proposals endorsed by the Group of Twenty inter-governmental political forum, including a global minimum tax to be implemented in 2023. Some jurisdictions have already enacted a tax on technology companies that generate revenues from the provision of digital services, including the United Kingdom, France, Spain 35 and Italy, to capture tax revenue more immediately. Although we do not know the exact impact, this legislation has and may continue to result in additional tax exposure. Further changes to the U.S. or non-U.S. taxation of our operations may increase our worldwide effective tax rate, result in additional taxes or other costs or have other material consequences, which could harm our business, revenue and financial results. Risks relating to our Financial Statements and Performance We have a limited operating history with the current scale of our business, and, as a result, our past results may not be indicative of future operating performance. We have a limited operating history with the current scale of our business, which makes it difficult to forecast our future results. You should not rely on our past results of operations as indicators of future performance. You should consider and evaluate our prospects in light of the risks and uncertainties frequently encountered by companies like ours. We have incurred operating losses in the past, anticipate increasing our costs and operating expenses, may incur operating losses in the future and may not maintain profitability. We have incurred significant net losses in the past and generated net income only recently. We generated net income of $316.4 million for the year ended December 31, 2021 and net losses of $128.3 million and $1,361.4 million for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2021, we had an accumulated deficit of $2,018.6 million. We have achieved profitability only recently and may not realize sufficient revenue to maintain profitability in future periods. We also anticipate that our operating expenses will increase substantially in the foreseeable future as we continue to expand our operations domestically and internationally, enhance our product offerings, broaden our Pinner and advertiser base, expand our marketing channels, hire additional employees and develop our technology. These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses. We may encounter unforeseen expenses, operating delays or other unknown factors that may result in losses in future periods. We have significant unrecognized share-based compensation expense, which we expect to recognize over the next several years. In addition, we have entered into certain non-cancelable commitments that limit our ability to reduce our cost and expenses in the future. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Notes to Financial Statements." Any failure to increase our revenue as we implement initiatives to grow our business could prevent us from achieving or maintaining profitability on either a quarterly or annual basis. Our operating results are likely to fluctuate from quarter to quarter, which makes them difficult to predict. Our quarterly operating results are tied to certain key business metrics that have fluctuated in the past and are likely to fluctuate in the future, which makes them difficult to predict. Our operating results depend on numerous factors, many of which are outside of our control, including: • • • • • • • • our ability to generate revenue from our service; our ability to improve or maintain gross margins; the number and relevancy of advertisements shown to Pinners; the relevancy of content shown to Pinners; the manner in which Pinners engage with different products, where certain products may cause us to generate less revenue downward pressure on the pricing of our advertisements; the timing, cost of and mix of new and existing marketing and promotional efforts as we grow and expand our operations to remain competitive; fluctuations (seasonal or otherwise) in spending by our advertisers and platform usage and engagement by users, each of which may change as our product offerings and business evolves; 36 • • • • • • • • • • • • fluctuations in spending by our advertisers and platform usage and engagement by users due to macroeconomic conditions, such as the COVID-19 pandemic; seasonal fluctuations in internet usage generally; the success of technologies designed to block the display of ads; development and introduction of new product offerings by us or our competitors; existing, new and evolving regulations, both in the U.S. and internationally; the ability of our third-party providers to scale effectively and provide the necessary technical infrastructure for our service on a timely basis; system failures, disruptions, breaches of security or data privacy or internet downtime, whether on our service or on those of third parties; the inaccessibility of our service due to third-party actions; changes in measurement of our metrics; costs associated with the technical infrastructure used to operate our business, including hosting services; fluctuations in the amount of share-based compensation expense; our ability to anticipate and adapt to the changing internet business or macroeconomic conditions; and the other risks and uncertainties described in this Annual Report on Form 10-K. If we are unable to obtain additional financing, if needed, or if we default on our credit obligations, our operations may be interrupted and our business, revenue and financial results could be harmed. We may require additional financing to maintain and grow our business. Our ability to obtain financing will depend on, among other things, our development efforts, business plans, operating performance, investor demand and the condition of the capital markets at the time we seek financing. We cannot assure you that additional financing will be available to us on favorable terms when required, or at all. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our common stock, and our existing stockholders may experience dilution. If our access to capital is restricted or our borrowing costs increase as a result of developments in financial markets, our operations and financial condition could be adversely impacted. Our revolving credit facility provides our lenders with a first-priority lien against substantially all of our domestic assets, as well as certain domestic intellectual property, and contains financial covenants and other restrictions on our actions that may limit our operational flexibility or otherwise adversely affect our results of operations. It contains a number of covenants that limit our ability and our subsidiaries’ ability to, among other things, incur additional indebtedness, pay dividends, make redemptions and repurchases of stock, make investments, loans and acquisitions, incur liens, engage in transactions with affiliates, merge or consolidate with other companies, sell material businesses or assets, or license or transfer certain of our intellectual property. We are also required to maintain certain financial covenants, including a consolidated total assets covenant and a liquidity covenant. Complying with these covenants may make it more difficult for us to successfully execute our business strategy and compete against companies who are not subject to such restrictions. If we fail to comply with the covenants under the revolving credit facility, lenders would have a right to, among other things, terminate the commitments to provide additional loans under the facility, enforce any liens on collateral securing the obligations under the facility, declare all outstanding loans and accrued interest and fees to be due and payable and require us to post cash collateral to be held as security for any reimbursement obligations in respect of any outstanding letters of credit issued under the facility. If any remedies under the facility were exercised, we may not have sufficient cash or be able to borrow sufficient funds to refinance the debt or sell sufficient assets to repay the debt, which could immediately materially and adversely affect our business, cash flows, operations and financial condition. Even if we were able to obtain new financing, it may not be on commercially reasonable terms or on terms that are acceptable to us. Additionally, our revolving credit facility utilizes LIBOR or various alternative methods set forth in our revolving credit facility to calculate the amount of accrued interest on any borrowings. In March 2017, regulators in certain jurisdictions 37 including the United Kingdom and the United States announced that they would phase out the use of LIBOR by the end of 2021. In March 2021, relevant regulators confirmed that the publication of the one-week and two-month U.S. dollar LIBOR would cease after December 31, 2021, and all remaining U.S. dollar LIBOR tenors would cease after June 30, 2023. If a published U.S. dollar LIBOR rate is unavailable, the interest rates on our debt indexed to LIBOR will be determined using one of the alternative methods, any of which could, if the revolver is drawn, result in interest obligations that are more than the current form, which could have a material adverse effect on our financing costs. We may have greater than anticipated tax liabilities, which could harm our business, revenue and financial results. We operate in a number of tax jurisdictions globally, including in the United States at the federal, state and local levels, and in many other countries, and plan to continue to expand the scale of our operations in the future. Thus, we are subject to review and potential audit by a number of U.S. federal, state, local and non-U.S. tax authorities. Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities. Further, tax authorities may disagree with tax positions we take and challenge our tax positions. Successful unilateral or multi-jurisdictional actions by various tax authorities, including in the context of our current or future corporate operating structure and third-party and intercompany arrangements (including transfer pricing and the manner in which we develop, value and use our intellectual property), may increase our worldwide effective tax rate, result in additional taxes or other costs or have other material consequences, which could harm our business and financial results. In December 2019, we completed an intra-entity asset transfer of certain of our intellectual property rights to our Irish subsidiary, which resulted in an increase in foreign deferred tax assets. We cannot be certain that this transfer will not lead to any unanticipated tax consequences which could harm our financial results. Although we do not currently incur significant tax costs due to our history of operating losses, our tax liabilities may increase if our profitability increases in the future. In addition, our effective tax rate may change from year to year based on changes in the mix of activities and income allocated or earned among various jurisdictions, tax laws and the applicable tax rates in these jurisdictions (including future tax laws that may become material), tax treaties between countries, our eligibility for benefits under those tax treaties and the valuation of deferred tax assets and liabilities. Such changes could result in an increase in the effective tax rate applicable to all or a portion of our income, which would negatively affect our financial results. Our ability to use or benefit from our net operating loss carryforwards and certain other tax attributes may be limited. As of December 31, 2021, we had federal, California and other state net operating loss carryforwards of $4,314.0 million, $500.8 million and $1,677.0 million, respectively. If not utilized, these will begin to expire in 2028, 2028 and 2026, respectively. Utilization of our net operating loss carryforwards and other tax attributes, such as research and development tax credits, may be subject to annual limitations, or could be subject to other limitations on utilization or benefit due to the ownership change limitations provided by Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and other similar provisions. Further, the Tax Act changed the federal rules governing net operating loss carryforwards. For net operating loss carryforwards arising in tax years beginning after December 31, 2017, the Tax Act limits a taxpayer’s ability to utilize such carryforwards to 80% of taxable income. In addition, net operating loss carryforwards arising in tax years ending after December 31, 2017 can be carried forward indefinitely, but carryback is generally prohibited. Net operating loss carryforwards generated before January 1, 2018 will not be subject to the Tax Act’s taxable income limitation and will continue to have a twenty-year carryforward period. Nevertheless, our net operating loss carryforwards and other tax assets could expire before utilization and could be subject to limitations, which could harm our business and financial results. Risks Related to Ownership of Our Class A Common Stock The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to the completion of our initial public offering ("IPO"), including our co-founders, executive officers, employees and directors, their affiliates, and all of our other pre-IPO stockholders (including those unaffiliated with any of our co-founders, executive officers, employees or directors). This will limit or preclude your ability to influence corporate matters. Our Class B common stock has twenty votes per share, and our Class A common stock has one vote per share. Because of the 20-to-1 voting ratio between our Class B and Class A common stock, the holders of our outstanding Class B hold approximately 75.7% of the voting power of our outstanding capital stock as of December 31, 2021. 38 Because the holders of our Class B common stock hold in the aggregate significantly more than a majority of the combined voting power of our capital stock, such holders (which include our pre-IPO stockholders who have not converted their Class B common stock to Class A common stock, including those holders unaffiliated with any of our executive officers, employees or directors) control all matters submitted to our stockholders for approval. The holders of Class B common stock will no longer hold in the aggregate over 50% of the voting power of our outstanding capital stock once the Class B common stock represents in the aggregate less than approximately 4.76% of our outstanding capital stock. As a result, for the foreseeable future, holders of our Class B common stock could have significant influence over the management and affairs of our company and over the outcome of all matters submitted to our stockholders for approval, including the election of directors and significant corporate transactions, such as a merger, consolidation or sale of substantially all of our assets, even though their stock holdings were to represent in the aggregate less than 50% of the outstanding shares of our capital stock. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our stockholders. These holders of our Class B common stock may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This control may adversely affect the trading price of our Class A common stock. Despite no longer being employed by us, Paul Sciarra, one of our co-founders, remains able to exercise significant voting power. If we terminate our other co-founders’ relationship, they would also continue to have the ability to exercise significant voting power to the extent they were to retain their Class B common stock while our other existing holders disposed of their Class B common stock. Transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, except certain transfers to entities, including certain charities and foundations, to the extent the transferor retains sole dispositive power and exclusive voting control with respect to the shares of Class B common stock, and certain other transfers described in our amended and restated certificate of incorporation. In addition, all shares of Class B common stock will automatically convert into shares of Class A common stock on (i) the seven-year anniversary of the closing date of our IPO, except with respect to shares of Class B common stock held by any holder that continues to beneficially own at least 50% of the number of shares of Class B common stock that such holder beneficially owned immediately prior to completion of our IPO, and (ii) a date that is between 90 to 540 days, as determined by the board of directors, after the death or permanent incapacity of Mr. Silbermann. Conversions of Class B common stock to Class A common stock have already had and will continue to have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term. Our dual class structure may depress the trading price of our Class A common stock. We cannot predict whether our dual class structure will result in a lower or more volatile market price of our Class A common stock or in adverse publicity or other adverse consequences. For example, certain index providers have restrictions on including companies with multiple-class share structures in certain of their indexes. In addition, several stockholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our common stock may cause stockholder advisory firms to publish negative commentary about our corporate governance practices, recommend that stockholders vote against certain company annual stockholder meeting proposals or otherwise seek to cause us to change our capital structure. Any such exclusion from indices or any actions or publications by stockholder advisory firms critical of our corporate governance practices or capital structure could adversely affect the value and trading market of our Class A common stock. An active trading market for our Class A common stock may not be sustained. Our Class A common is listed on the NYSE under the symbol “PINS.” However, we cannot assure you that an active trading market for our Class A common stock will be sustained. Accordingly, we cannot assure you of the likelihood that an active trading market for our Class A common stock will be maintained, the liquidity of any trading market, your ability to sell your shares of our Class A common stock when desired or the prices that you may obtain for your shares. The trading price of our Class A common stock has been and may continue to be volatile, and you could lose all or part of your investment. The trading price of our Class A common stock has been, and is likely to continue to be volatile and could be subject to fluctuations in response to various factors, some of which are beyond our control. These fluctuations could cause you to lose all or part of your investment in our Class A common stock since you might be unable to sell your shares 39 at or above the price you paid. Factors that could cause fluctuations in the trading price of our Class A common stock include the following: • • • • • • • • • • price and volume fluctuations in the overall stock market from time to time; volatility in the trading prices and trading volumes of technology stocks; changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; sales, or anticipated sales, of shares of our Class A common stock by us or our stockholders, including when stockholders sell shares of our Class A common stock into the market to cover taxes due upon the settlement of restricted stock units ("RSUs") or the exercise of stock options, or conversions, or anticipated conversions, of a substantial number of shares of our Class B common stock by our stockholders; actions by institutional stockholders; failure by industry or securities analysts to maintain coverage of us, downgrade of our Class A common stock by analysts or provision of a more favorable recommendation of our competitors; failure by analysts to regularly publish research reports or the publication of an unfavorable or inaccurate report about our business; changes by external analysts to their financial and operating estimates for our company or our performance relative to third parties' estimates or the expectations; forward-looking financial or operating information or financial projections we may provide to the public, any changes in that information or projections or our failure to meet projections; any indebtedness we may incur in the future; • whether investors or securities analysts view our stock structure unfavorably, particularly our dual class structure and the significant voting control of holders of our Class B common stock; • • • • • • • • • • • • announcements by us or our competitors of new products, features, services, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; announcements by us or estimates by third parties of actual or anticipated changes in the size of our user base or level of engagement, or those of our competitors; the public’s perception of the quality and accuracy of our key metrics on our user base and engagement; the public’s reaction to our press releases, other public announcements and filings with the SEC; rumors and market speculation involving us or other companies in our industry; actual or anticipated fluctuations in our user growth, retention, engagement, revenue or other operating results; actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; litigation involving us, our industry, or both, or investigations by regulators and other third parties into our operations or those of our competitors; developments or disputes concerning our intellectual property or other proprietary rights; developments or disputes concerning our culture or other diversity, equity and inclusion practices and initiatives; announced or completed acquisitions of businesses, products, services or technologies by us or our competitors; existing, new and evolving regulations, both in the U.S. and internationally; 40 • • • • changes in accounting standards, policies, guidelines, interpretations or principles; any significant changes in our management; stakeholder dissatisfaction if we are unable to meet stakeholders' expectations and requirements around environmentally friendly, ethical, socially conscious, and sustainable business practices or disclosures; if we are unable to address workplace culture related issues (including to meet the goals we set in our implement our Special Committee's Inclusion and Diversity Report recommendations relating to workplace culture); that we publish annually or • macroeconomic events that are beyond our control, such as the global outbreak of the COVID-19 pandemic; and • general economic conditions and slow or negative growth of our markets. In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies. Stock prices of many technology companies, including ours, have fluctuated in a manner that may be unrelated or disproportionate to the financial performance of such companies. Following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action and derivative litigation has often been instituted against these companies, including against us. Such litigation could result in substantial costs and a diversion of our management’s attention and resources. Further, when our revenue, users or operating results fall below the expectations of investors or securities analysts or below any guidance we may provide to the market, the price of our Class A common stock has declined and could likely decline in the future. Future offerings of debt or equity securities by us or existing stockholders may adversely affect the market price of our Class A common stock. In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional capital stock or offering debt or other securities, including commercial paper, medium-term notes, senior or subordinated notes, debt securities convertible into equity or shares of preferred stock. Future acquisitions could also require substantial additional capital in excess of cash from operations. Issuing additional shares of capital stock or other securities, including securities convertible into equity, may dilute the economic and voting rights of our existing stockholders, reduce the market price of our Class A common stock or both. Upon liquidation, holders of debt securities and preferred shares, if issued, and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our common stock. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred shares, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing or nature of our future offerings. In addition, the large number of shares of our common stock eligible for public sale or subject to rights requiring us to register them for public sale could depress the market price of our Class A common stock. The market price of our Class A common stock could decline as a result of sales of a large number of shares of our Class A common stock in the market, and the perception that these sales could occur may also depress the market price of our Class A common stock. As a result, holders of our Class A common stock bear the risk that our future offerings or future sales of shares may reduce the market price of our Class A common stock and dilute their stockholdings in our company. Additional stock issuances, including in connection with settlement of equity awards, could result in significant dilution to our stockholders. Future issuances of shares of our Class A common stock or the conversion of a substantial number of shares of our Class B common stock to Class A common stock, or the perception that these sales or conversions may occur, could depress the market price of our Class A common stock and result in significant dilution for holders of our Class A common stock. We currently have Class B common stock that may be issued upon exercise of outstanding stock options or upon settlement of outstanding restricted stock units, shares of Class A common stock that may be issued upon settlement of outstanding RSUs or outstanding restricted stock awards ("RSAs"). For more information, see “Notes to Financial Statements”. We have 5,917,451,052 shares of authorized but unissued Class A common stock 41 that are currently not reserved for issuance under our equity incentive plans or charitable giving program. We may issue all of these shares of Class A common stock without any action or approval by our stockholders, subject to certain exceptions. We also intend to continue to evaluate acquisition opportunities and may issue Class A common stock or other securities in connection with these acquisitions. Any common stock issued in connection with our equity incentive plans, acquisitions, the exercise of outstanding stock options, settlement of RSUs and RSAs or otherwise would dilute the percentage ownership held by our Class A common stockholders. Delaware law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the market price of our Class A common stock. Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law (the “DGCL”) may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. In addition, our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • • • • • • • • • • • • our dual class common stock structure, which provides our holders of Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding common stock; our board of directors is classified into three classes of directors with staggered three-year terms and directors are only able to be removed from office for cause; certain amendments to our amended and restated certificate of incorporation will require the approval of 662⁄3% of the then-outstanding voting power of our capital stock; approval of 662⁄3% of the then-outstanding voting power of our capital stock, voting as a single class, is required for stockholders to amend or adopt any provision of our bylaws; our stockholders can take action only at a meeting of stockholders and not by written consent; vacancies on our board of directors can be filled only by our board of directors and not by stockholders; no provision in our amended and restated certificate of incorporation or amended and restated bylaws provides for cumulative voting, which limits the ability of minority stockholders to elect director candidates; only our chairman of the board of directors, our chief executive officer, our president or another officer selected by a majority of the board of directors are authorized to call a special meeting of stockholders; certain litigation against us can only be brought in Delaware; nothing in our amended and restated certificate of incorporation precludes future issuances without stockholder approval of the authorized but unissued shares of our Class A common stock; our amended and restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued, without the approval of the holders of our capital stock; and advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders. These anti-takeover defenses could discourage, delay or prevent a transaction involving a change in control of our company. These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire, any of which, under certain circumstances, could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our Class A common stock. Our amended and restated certificate of incorporation designates a state or federal court located within the State of Delaware as the exclusive forum for substantially all disputes between us and our stockholders, 42 which could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers or employees. Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or other employees to us or our stockholders, (iii) any action arising pursuant to any provision of the DGCL, or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, any state or federal district court in the state of Delaware), in all cases subject to the court’s having jurisdiction over indispensable parties named as defendants. Nothing in our amended and restated certificate of incorporation precludes stockholders that assert claims under the Securities Act or Exchange Act from bringing such claims in federal court, subject to applicable law. Any person or entity purchasing or otherwise acquiring any interest in our securities shall be deemed to have notice of and consented to this provision. This exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing. If a court were to find the exclusive forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our results of operations. The requirements of being a public company have and may continue to strain our resources, divert management’s attention and may result in more litigation. As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE and other applicable securities rules and regulations. Complying with these rules and regulations has increased and will continue to increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly, and increase demand on our systems and resources. As a public company we are required to publicly disclose additional details about our business and financial condition information, which may result in threatened or actual litigation, including by competitors, regulators and other third parties. If those claims are successful, our business, revenue and financial results could be harmed. Even if the claims do not result in litigation or are resolved in our favor, the time and resources needed to resolve them could divert our management’s resources and harm our business, revenue and financial results. We do not intend to pay dividends for the foreseeable future. We have never declared or paid dividends on our capital stock. We currently intend to retain any future earnings, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, stockholders must rely on sales of their Class A common stock after price appreciation as the only way to realize any future gains on their investment. In addition, our revolving credit facility contains restrictions on our ability to pay dividends. General Risks Adverse global economic and financial conditions could harm our business and financial condition. Adverse macroeconomic developments could negatively impact our business and financial condition. Adverse global economic and financial events, such as inflation and the COVID-19 pandemic, have caused, and could, in the future continue to cause disruptions and volatility in global financial markets. Such conditions have resulted in or may result in, among other things, an adverse impact on the ability and willingness of companies to spend on advertising, volatility in our stock price and an adverse impact on the financial condition of the institutions with whom we hold deposits or the credit quality of the issuers of our cash equivalents and marketable securities. We cannot assure you that we will perform well in adverse macroeconomic conditions. Since the majority of our revenue is derived from advertisers within the U.S., economic conditions in the U.S. have a greater impact on us. 43 Our financial results may be adversely affected by changes in accounting principles generally accepted in the United States. Generally accepted accounting principles in the United States are subject to interpretation by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could harm our revenue and financial results and could affect the reporting of transactions completed before the announcement of a change. 44 Item 1B. Unresolved Staff Comments None. Item 2. Properties Facilities Our corporate headquarters is located in San Francisco, California. As of December 31, 2021, we maintained offices in various locations in the United States and internationally totaling approximately 677,000 square feet, including approximately 397,000 square feet for our corporate headquarters and in the surrounding areas. We believe that our facilities are sufficient for our existing needs. Item 3. Legal Proceedings We are currently involved in, and may in the future be involved in, actual and threatened legal proceedings, claims, investigations and government inquiries arising in the ordinary course of our business, including legal proceedings, claims, investigations and government inquiries involving intellectual property, data privacy and data protection, privacy and other torts, illegal or objectionable content, consumer protection, corporate governance, securities, employment, workplace culture, contractual rights, civil rights infringement, false or misleading advertising, or other legal claims relating to content or information that is provided to us or published or made available on our service. This risk is enhanced in certain jurisdictions outside of the United States where our protection from liability for content published on our platform by third parties may be unclear and where we may be less protected under local laws than we are in the United States. For information on certain litigation we are involved in, see "Legal Matters" in Note 7 of the accompanying notes to our consolidated financial statements, which is incorporated herein by reference. Although the results of the actual and threatened legal proceedings, claims, investigations and government inquiries in which we currently are involved cannot be predicted with certainty, we do not believe that there is a reasonable possibility that the final outcome of these matters will have a material adverse effect on our business or financial results. Regardless of the final outcome, however, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, harm to our reputation and brand, and other factors. Item 4 - Mine Safety Disclosures Not applicable. 45 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our Class A common stock, par value $0.00001 per share, is listed on the New York Stock Exchange, under the symbol “PINS” and began trading on April 18, 2019. Prior to that date, there was no public trading market for our Class A common stock. There is no public trading market for our Class B common stock, par value $0.00001 per share. Holders of Record As of January 28, 2022, there were 132 stockholders of record of our Class A common stock and 64 stockholders of record of our Class B common stock. The actual number of holders of our Class A and Class B common stock is greater than the number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers or other nominees. The number of holders of record presented here also does not include stockholders whose shares may be held in trust by other entities. Dividend Policy We have never declared or paid dividends on our capital stock and do not intend to pay any dividends in the foreseeable future. Any future determination to declare dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on then existing conditions, including our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant. In addition, the terms of our revolving credit facility place certain limitations on the amount of dividends we can pay, even if no amounts are currently outstanding. Unregistered Sales of Equity Securities None. Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended ("Exchange Act"), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Pinterest, Inc. under the Securities Act of 1933, as amended, or the Exchange Act. The following graph shows a comparison of the cumulative total return for our Class A common stock, the Standard & Poor's 500 Stock Index (S&P 500 Index) and the Dow Jones Internet Composite Index (DJINET Composite Index). An investment of $100 and reinvestment of all dividends is assumed to have been made in our Class A common stock and in each index on April 18, 2019, the date our Class A common stock began trading on the NYSE, and its relative performance is tracked through December 31, 2021. The graph uses the closing market price on April 18, 2019 of $24.40 per share as the initial value of our common stock. The stock price performance of the following graph is not necessarily indicative of future stock price performance. 46 Item 6. [Reserved] 47 ITEM 7. 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 consolidated financial statements and related notes and other financial information appearing elsewhere in this Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions, including risks and uncertainties regarding the duration, scope and impact of the COVID-19 pandemic. 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 Annual Report on Form 10-K. A discussion regarding our financial condition and results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020 is presented below. A discussion regarding our financial condition and results of operations for the year ended December 31, 2020 compared to the year ended December 31, 2019 is included under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020. Overview of 2021 Results Our key financial and operating results as of and for the year ended December 31, 2021 are as follows: • Revenue was $2,578.0 million, an increase of 52% compared to 2020. • Monthly active users ("MAUs") were 431 million, a decrease of 6% compared to December 31, 2020. • • • • • • • Share-based compensation expense was $415.4 million, an increase of $94.4 million compared to 2020. Total costs and expenses were $2,251.8 million. Income from operations was $326.2 million. Net income was $316.4 million. Adjusted EBITDA was $814.4 million. Cash, cash equivalents and marketable securities were $2,480.1 million. Headcount was 3,225. Update on the COVID-19 Pandemic The COVID-19 pandemic, which resulted in authorities implementing numerous preventative measures to contain or mitigate the outbreak of the virus, such as travel bans and restrictions, limitations on business activity, quarantines and shelter-in-place orders, continues to have an impact globally. These measures have caused, and are continuing to cause, business slowdowns or shutdowns in affected areas, both regionally and worldwide. These measures initially positively impacted Pinner engagement and user growth in both the U.S. and international geographies as people spent more time at home and sought online inspiration for some of our core use cases. Starting in mid-March 2021, the easing of the restrictions related to the COVID-19 pandemic began to slow our global MAU growth and lowered Pinner engagement as compared to 2020 as Pinners began spending less time at home. This behavior reversed some of the MAU gains we saw during 2020, and, as a result, we saw a decline in global MAUs in the fourth quarter as compared to the same period in 2020. Since the impact of the COVID-19 pandemic on our results of operations and overall financial performance remains unprecedented and unpredictable, our past results may not be indicative of our future performance. Given the uncertainty, we are unable to predict the extent and duration of the impact of the COVID-19 pandemic on advertiser demand, Pinner engagement, and our business, operations and financial results. See "Risk Factors" and "Note About Forward-Looking Statements” for additional details. 48 Trends in User Metrics Monthly Active Users. We define a monthly active user 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. 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: United States and International may not sum to Global due to rounding. A portion of our MAUs visit Pinterest on a weekly basis. We define a weekly active user (“WAU”) 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 seven-day period ending on the date of measurement. We actively monitor the relationship of WAUs to MAUs, which has stayed relatively consistent over time. As of December 31, 2021, the proportion of WAUs to MAUs was 58%. 49 Global265291300322335367416442459478454444431Q4'18Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20Q3'20Q4'20Q1'21Q2'21Q3'21Q4'21050100150200250300350400450500United States82858587889096989898918986Q4'18Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20Q3'20Q4'20Q1'21Q2'21Q3'21Q4'21050100150200250300350400International184206215235247277321343361380363356346Q4'18Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20Q3'20Q4'20Q1'21Q2'21Q3'21Q4'21050100150200250300350400As of December 31, 2021, we have experienced a decline in our global MAUs as compared to December 31, 2020 due to the easing of the restrictions related to the COVID-19 pandemic and lower search traffic driven by changes in search engine algorithms. As a result, we are unable to predict the extent to which we will be able to attract new Pinners, retain existing Pinners, recover past Pinners or maintain or increase the frequency and duration of Pinners' engagement as uncertainties around restrictions resulting from the COVID-19 pandemic continue. 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 the United States is higher primarily due to our decision to focus our earliest monetization efforts there and also due to the relative size and maturity of the U.S. digital advertising market. Quarterly Revenue (in millions) 50 Global$273$202$261$280$400$272$272$443$706$485$613$633$847Q4'18Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20Q3'20Q4'20Q1'21Q2'21Q3'21Q4'21$0$100$200$300$400$500$600$700$800$900Note: Revenue by geography in the charts above is geographically apportioned based on our estimate of the geographic location of our users when they perform a revenue-generating activity. This allocation differs from our disclosure of revenue disaggregated by geography in the notes to our consolidated financial statements where revenue is geographically apportioned based on our customers’ billing addresses. United States and International may not sum to Global and quarterly amounts may not sum to annual due to rounding. Average Revenue per User (“ARPU”). 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 international basis because we currently monetize users in different geographies at different average rates. U.S. ARPU is higher primarily due to our decision to focus our earliest monetization efforts there and also due to the relative size and maturity of the U.S. digital advertising market. Quarterly Average Revenue per User 51 United States$257$187$238$251$350$237$232$374$582$390$480$498$648Q4'18Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20Q3'20Q4'20Q1'21Q2'21Q3'21Q4'21$0$100$200$300$400$500$600$700International$17$15$24$28$50$35$41$69$123$95$133$135$199Q4'18Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20Q3'20Q4'20Q1'21Q2'21Q3'21Q4'21$0$100$200$300$400$500$600$700Global$1.06$0.73$0.88$0.90$1.22$0.77$0.70$1.03$1.57$1.04$1.32$1.41$1.93Q4'18Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20Q3'20Q4'20Q1'21Q2'21Q3'21Q4'21$0.00$0.50$1.00$1.50$2.00For the year ended December 31, 2021, global ARPU was $5.79, which represents an increase of 36% compared to the year ended December 31, 2020. For the year ended December 31, 2021, U.S. ARPU was $21.98 and international ARPU was $1.59, which represent increases of 43% and 80%, respectively, compared to the year ended December 31, 2020. We use MAUs and ARPU to assess the growth and health of our overall business and believe that these metrics best reflect our ability to attract, retain, engage and monetize our users, and thereby drive revenue. 52 United States$3.16$2.25$2.80$2.93$4.00$2.66$2.50$3.85$5.94$3.99$5.08$5.55$7.43Q4'18Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20Q3'20Q4'20Q1'21Q2'21Q3'21Q4'21$0.00$1.00$2.00$3.00$4.00$5.00$6.00$7.00$8.00International$0.09$0.08$0.11$0.13$0.21$0.13$0.14$0.21$0.35$0.26$0.36$0.38$0.57Q4'18Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20Q3'20Q4'20Q1'21Q2'21Q3'21Q4'21$0.00$1.00$2.00$3.00$4.00$5.00$6.00$7.00$8.00Non-GAAP Financial Measure To supplement our consolidated financial statements presented in accordance with GAAP, we consider Adjusted EBITDA, a financial measure which is not based on any standardized methodology prescribed by GAAP. We define Adjusted EBITDA as net income (loss) adjusted to exclude depreciation and amortization expense, share- based compensation expense, interest income, interest expense and other income (expense), net, provision for income taxes, non-cash charitable contributions and, for the third quarter of 2020, a one-time payment for the termination of a future lease contract. We use Adjusted EBITDA to evaluate our operating results and for financial and operational decision- making purposes. 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 also believe Adjusted EBITDA provides useful information about our operating results, enhances the overall understanding of our past performance and future prospects, and allows financial and operational decision-making. We are presenting Adjusted EBITDA to assist investors in seeing our operating results through the eyes of management, and because we believe that this measure provides an additional tool for investors to use in comparing our core business operating results over multiple periods with other companies in our industry. However, our definition of Adjusted EBITDA may not be the same as similarly titled measures used by other companies. transparency with respect to key metrics we use for greater for Adjusted EBITDA 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 Adjusted EBITDA rather than net income (loss), the nearest GAAP equivalent. 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, which has been, and will continue to be for the foreseeable future, a significant recurring expense and an important part of our compensation strategy. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net income (loss) and our other financial results presented in accordance with GAAP. 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): Net income (loss) Depreciation and amortization Share-based compensation Interest income Interest expense and other (income) expense, net Provision for income taxes Non-cash charitable contributions Termination of future lease contract Adjusted EBITDA (1) Year Ended December 31, 2020 2019 2021 $ 316,438 $ (128,323) $ (1,361,371) 27,500 415,382 36,988 321,020 27,791 1,377,781 (4,204) (16,119) (30,164) 9,420 4,533 45,300 — 635 1,303 — 89,500 2,137 532 — — $ 814,369 $ 305,004 $ 16,706 (1) Non-cash charitable contributions of $2.7 million were not excluded from Adjusted EBITDA for the year ended December 31, 2020 as these were not material. 53 Components of Results of Operations Revenue. We generate revenue by delivering ads on our website and mobile application. 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, views an ad contracted on a cost per thousand impressions ("CPM") basis or views a video ad contracted on a cost per view ("CPV") basis. 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, 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, professional services 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 and allocated facilities and other supporting overhead costs. Other Income (Expense), Net. Other income (expense), net consists primarily of foreign currency exchange gains and losses and interest earned on our cash equivalents and marketable securities. Provision for Income Taxes. Provision for income taxes consists primarily of income taxes in foreign jurisdictions and U.S. federal and state income taxes adjusted for discrete items. Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) adjusted to exclude depreciation and amortization expense, share-based compensation expense, interest income, interest expense and other income (expense), net, provision for income taxes, non-cash charitable contributions and, for the third quarter of 2020, a one- time payment for the termination of a future lease contract. 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. 54 Results of Operations The following tables set forth our consolidated statements of operations data (in thousands): Revenue Costs and expenses (1): Cost of revenue Research and development Sales and marketing General and administrative Total costs and expenses Income (loss) from operations Interest income Interest expense and other income (expense), net Income (loss) before provision for income taxes Provision for income taxes Net income (loss) Adjusted EBITDA (2) (1) Includes share-based compensation expense as follows (in thousands): Cost of revenue Research and development Sales and marketing General and administrative Year Ended December 31, 2021 2020 2019 $ 2,578,027 $ 1,692,658 $ 1,142,761 529,320 780,264 641,279 300,977 449,358 606,194 442,807 336,803 358,903 1,207,059 611,590 354,075 2,251,840 1,835,162 2,531,627 326,187 4,204 (142,504) (1,388,866) 16,119 (9,420) (635) 30,164 (2,137) 320,971 4,533 (127,020) (1,360,839) 1,303 532 316,438 $ (128,323) $ (1,361,371) 814,369 $ 305,004 $ 16,706 $ $ Year Ended December 31, 2021 2020 2019 $ 7,438 $ 7,865 $ 309,715 52,691 45,538 218,718 35,645 58,792 31,758 867,191 239,315 239,517 Total share-based compensation $ 415,382 $ 321,020 $ 1,377,781 (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. 55 The following table sets forth our consolidated statements of operations data (as a percentage of revenue): Revenue Costs and expenses: Cost of revenue Research and development Sales and marketing General and administrative Total costs and expenses Income (loss) from operations Interest income Interest expense and other income (expense), net Income (loss) before provision for income taxes Provision for income taxes Net income (loss) Years Ended December 31, 2021 and 2020 Revenue Revenue Year Ended December 31, 2021 2020 2019 100 % 100 % 100 % 21 30 25 12 87 13 — — 12 — 27 36 26 20 108 (8) 1 — (8) — 12 % (8) % 31 106 54 31 222 (122) 3 — (119) — (119) % Year Ended December 31, 2021 2020 % change (in thousands) $ 2,578,027 $ 1,692,658 52 % Revenue for the year ended December 31, 2021 increased by $885.4 million compared to the year ended December 31, 2020. Revenue growth was driven by a 36% increase in ARPU supported by a 12% increase in average MAUs for the year ended December 31, 2021 as compared to the year ended December 31, 2020. These resulted in a 13% increase in the number of advertisements served and a 35% increase in the price of advertisements. For the year ended December 31, 2021 compared to the year ended December 31, 2020, revenue based on our estimate of the geographic location of our users increased by 42% in the United States to $2,015.9 million driven by a 43% increase in U.S. ARPU offset by a 1% decrease in average U.S. MAUs. International revenue increased by 110% to $562.1 million driven by an 80% increase in international ARPU supported by a 16% increase in average international MAUs. Cost of Revenue Cost of revenue Percentage of revenue Year Ended December 31, 2021 2020 % change (in thousands) $ 529,320 $ 449,358 18 % 21 % 27 % Cost of revenue for the year ended December 31, 2021 increased by $80.0 million compared to the year ended December 31, 2020. The increase was primarily due to higher absolute hosting costs due to user growth. 56 Research and Development Research and development Percentage of revenue Year Ended December 31, 2021 2020 % change (in thousands) $ 780,264 $ 606,194 29 % 30 % 36 % Research and development for the year ended December 31, 2021 increased by $174.1 million compared to the year ended December 31, 2020. The increase was primarily due to a $91.0 million increase in share-based compensation expense, including $48.6 million relating to our Co-founder and Chief Design and Creative Officer's transition into a consulting role, a 14% increase in average headcount, which drove higher personnel expenses, as well as higher consulting expenses. Sales and Marketing Sales and marketing Percentage of revenue Year Ended December 31, 2021 2020 % change (in thousands) $ 641,279 $ 442,807 45 % 25 % 26 % Sales and marketing for the year ended December 31, 2021 increased by $198.5 million compared to the year ended December 31, 2020. The increase was primarily due to a $85.9 million increase in marketing expenses, a 26% increase in average headcount, which drove higher personnel expenses, higher consulting expenses and a $17.0 million increase in share-based compensation expense. General and Administrative General and administrative Percentage of revenue Year Ended December 31, 2021 2020 % change (in thousands) $ 300,977 $ 336,803 (11) % 12 % 20 % General and administrative for the year ended December 31, 2021 decreased by $35.8 million compared to the year ended December 31, 2020. The decrease was primarily due to a one-time payment of $89.5 million for the termination of a future lease contract in August 2020 and a $13.3 million decrease in share-based compensation, offset by a $42.6 million increase in non-cash charitable contributions and a 30% increase in average headcount, which drove higher personnel expenses. Other Income (Expense, Net) Interest income Interest expense and other income (expense) Other income (expense), net Year Ended December 31, 2021 2020 % change (in thousands) 4,204 $ (9,420) 16,119 (635) (5,216) $ 15,484 $ $ (74) % 1,383 % (134) % Other income (expense), net for the year ended December 31, 2021 decreased by $20.7 million compared to the year ended December 31, 2020. The decrease was primarily due to lower returns on our marketable securities as a result of lower interest rates and foreign currency exchange losses. 57 Provision for Income Taxes Provision for income taxes Year Ended December 31, 2021 2020 % change (in thousands) 4,533 $ $ 1,303 248 % Provision for income taxes was primarily due to income generated in our foreign jurisdictions and U.S. states for each of the periods presented. Net Income (Loss) and Adjusted EBITDA Net income (loss) Adjusted EBITDA Year Ended December 31, 2021 2020 % change (in thousands) $ $ 316,438 $ (128,323) 814,369 $ 305,004 347 % 167 % Net income (loss) for the year ended December 31, 2021 was $316.4 million, as compared to $(128.3) million for the year ended December 31, 2020. Adjusted EBITDA was $814.4 million for the year ended December 31, 2021, as compared to $305.0 million for the year ended December 31, 2020, 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. 58 Liquidity and Capital Resources We have historically financed our operations primarily through sales of our stock and 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 of December 31, 2021, we had $2,480.1 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 December 31, 2021, $95.9 million of our cash and cash equivalents was held by our foreign subsidiaries. In November 2018, we entered into a five-year $500.0 million revolving credit facility with an accordion option which, if exercised, would allow us to increase the aggregate commitments by the greater of $100.0 million and 10% of our consolidated total assets, provided we are able to secure additional lender commitments and satisfy certain other conditions. Interest on any borrowings under the revolving credit facility accrues at either LIBOR plus 1.50% or at an alternative base rate plus 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 revolving credit facility. The 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 1.50% per annum on the average aggregate daily maximum amount available to be drawn under any outstanding letters of credit. The 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 revolving credit facility also contains two financial maintenance covenants: a consolidated total assets covenant and a minimum liquidity balance of $350.0 million, which includes any available borrowing capacity. The obligations under the revolving credit facility are secured by liens on substantially all of our domestic assets, including certain domestic intellectual property assets. We are in compliance with all covenants and there were no amounts outstanding under this facility as of December 31, 2021. 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. Our material cash requirements include our $2,949.1 million commitment with Amazon Web Services, for which we are not subject to annual purchase commitments, and our $323.6 million of operating lease obligations, of which $57.9 million is due within the next 12 months. For the years ended December 31, 2021, 2020 and 2019, our net cash flows were as follows (in thousands): Net cash provided by (used in): Operating activities Investing activities Financing activities Operating Activities Year Ended December 31, 2021 2020 2019 $ $ $ 752,907 $ 28,826 $ 657 (25,858) $ (47,623) $ (586,501) 22,162 $ 19,638 $ 1,128,198 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, non-cash charitable contributions and changes in our operating assets and liabilities. Net cash provided by operating activities increased by $724.1 million for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily due to an increase in our net income (loss) after adjusting for non-cash reconciling items and an increase in collections of accounts receivable. 59 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, sales and maturities of which we use to fund our ongoing working capital requirements. Net cash used in investing activities decreased by $21.8 million for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily due to decreased purchases of marketable securities, offset by a decrease in proceeds from maturities of marketable securities. Financing Activities Cash flows from financing activities consist of net proceeds from our IPO, tax withholdings on release of RSUs and proceeds from the exercise of stock options. Net cash provided by financing activities increased by $2.5 million for the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to the absence of tax remittances on release of RSUs offset by a decrease in proceeds from the exercise of stock options. Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with GAAP. Preparing our 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 consolidated financial statements for further information on our other significant accounting policies. Revenue Recognition We generate revenue by delivering ads on our website and mobile application. 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, views an ad contracted on a CPM basis or views a video ad contracted on a CPV basis. We typically bill customers on a CPC, CPM or CPV basis, and our payment terms vary by customer type and location. The term between billing and payment due dates is not significant. We occasionally offer customers free ad inventory, and revenue is recognized only after satisfying our contractual performance obligations. When contracts with our customers contain multiple performance obligations, we allocate the overall transaction price, which is the amount of consideration to which we expect to be entitled in exchange for promised goods or services, to each of the distinct performance obligations based on their relative standalone selling prices. We generally determine standalone selling prices based on the effective price charged per contracted click, impression or view, and we do not disclose the value of unsatisfied performance obligations because the original expected duration of our contracts is generally less than one year. Leases and Operating Lease Incremental Borrowing Rate We lease office space under operating leases with expiration dates through 2033. We determine whether an arrangement constitutes a lease at inception and record lease liabilities and right-of-use assets on our consolidated balance sheets at lease commencement. We measure lease liabilities based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or our incremental borrowing rate, which is the estimated rate we would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. We estimate our incremental borrowing rate based on an analysis of publicly traded debt securities of companies with credit and financial profiles similar to our own. We measure right-of-use assets based on the corresponding lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs we incur and (iii) tenant incentives under the lease. We begin recognizing rent expense when the lessor makes the underlying asset available to us, we do not assume renewals or early terminations unless we are reasonably certain to exercise these options at commencement, and we do not allocate consideration between lease and non-lease components. 60 Item 7a. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks, including changes in foreign currency exchange and interest rates, in the ordinary course of our business. Foreign Currency Exchange Risk Our reporting currency is the U.S. dollar, and the functional currency of our subsidiaries is either their local currency or the U.S. dollar, depending on the circumstances. While the majority of our revenue and operating expenses are denominated in U.S. dollars, we have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar. We have experienced and will continue to experience fluctuations in our net income (loss) as a result of transaction gains or losses related to revaluing certain current asset and current liability balances denominated in currencies other than the functional currency of the subsidiaries in which they are recorded. To date, these fluctuations have not been material. We have not engaged in hedging activities relating to our foreign currency exchange risk, although we may do so in the future. We do not believe a 10% increase or decrease in the relative value of the U.S. dollar would have materially affected our consolidated financial statements as of and for the years ended December 31, 2021, 2020 and 2019. Interest Rate Risk As of December 31, 2021, we held cash, cash equivalents and marketable securities of $2,480.1 million. Our cash equivalents and marketable securities primarily consist of short-duration fixed income securities, including government and investment-grade corporate debt securities and money market funds, and our investment policy is meant to preserve capital and maintain liquidity. Changes in interest rates affect the interest income we earn on our cash, cash equivalents and marketable securities and the fair value of our cash equivalents and marketable securities. A hypothetical 100 basis point increase in interest rates would have decreased the market value of our cash equivalents and marketable securities by $8.1 million and $7.6 million as of December 31, 2021 and 2020, respectively. 61 Item 8. Financial Statements and Supplementary Data PINTEREST, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42) Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements 63 66 67 68 69 70 71 62 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Pinterest, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Pinterest, Inc. (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), redeemable convertible preferred stock and stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 3, 2022, expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 63 Description of the Matter Revenue Recognition As described in Note 1 to the consolidated financial statements, the Company generates substantially all of its revenues by delivering ads on the Pinterest website and mobile application. Revenue is recognized after transferring control of the promised goods or services to customers, which occurs when a user clicks on an ad contracted on a cost per click basis, views an ad contracted on a cost per thousand impressions basis or views a video ad contracted on a cost per view basis. The Company’s revenue recognition process utilizes complex proprietary systems and tools for the initiation, processing, delivery and recording of advertising transactions which includes a high volume of transactions. This process is dependent on the effective design and operation of multiple systems, processes, data sources and controls which require significant audit effort. Also, the identification and evaluation of non-standard terms and conditions requires incremental judgements to determine the distinct performance obligations and potential impact to the timing of revenue recognition. How We Addressed the Matter in Our Audit With the support of our information technology professionals, we identified and tested the relevant systems and tools used for the determination of initiation, processing, delivery of advertisements and recording of revenue, which included processes and controls related to access to the relevant systems and data, changes to the relevant systems and interfaces, and configuration of the relevant systems. We further obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls over the identification and evaluation of non-standard terms and conditions and the resulting impact on timing and amount of revenue recognition. To test the Company’s recognition of revenue, our audit procedures included, among others, testing the completeness and accuracy of the underlying data within the Company’s revenue systems, and comparing revenue recognized to accounts receivables and cash receipts. Additionally, we examined standard customer terms and conditions and we selected a sample of non-standard contractual arrangements that all material distinct performance obligations were identified and to test the timing and amount of revenue recognition. test to /s/ Ernst & Young LLP We have served as the Company’s auditor since 2013. San Francisco, California February 3, 2022 64 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Pinterest, Inc. Opinion on Internal Control Over Financial Reporting We have audited Pinterest, Inc.’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework (the COSO criteria). In our opinion, Pinterest, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated February 3, 2022 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP San Francisco, California February 3, 2022 65 PINTEREST, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except par value) ASSETS Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net of allowances of $8,282 and $8,811 as of December 31, 2021 and 2020, respectively Prepaid expenses and other current assets Total current assets Property and equipment, net Operating lease right-of-use assets Goodwill and intangible assets, net Other assets Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable Accrued expenses and other current liabilities Total current liabilities Operating lease liabilities Other liabilities Total liabilities Commitments and contingencies Stockholders’ equity: Class A common stock, $0.00001 par value, 6,666,667 shares authorized, 568,228 and 530,140 shares issued and outstanding as of December 31, 2021 and 2020, respectively; Class B common stock, $0.00001 par value, 1,333,333 shares authorized, 88,644 and 96,232 shares issued and outstanding as of December 31, 2021 and 2020, respectively Additional paid-in capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity Total liabilities and stockholders’ equity December 31, 2021 2020 $ 1,419,630 $ 669,230 1,060,488 1,091,076 653,355 48,090 563,733 33,502 3,181,563 2,357,541 53,401 227,912 61,115 13,247 69,375 155,916 13,562 13,065 $ 3,537,238 $ 2,609,459 $ 17,675 $ 242,131 259,806 209,181 29,508 498,495 49,491 155,340 204,831 139,321 22,936 367,088 7 6 5,059,528 4,574,934 (2,181) 2,480 (2,018,611) (2,335,049) 3,038,743 2,242,371 $ 3,537,238 $ 2,609,459 The accompanying notes are an integral part of these consolidated financial statements. 66 PINTEREST, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Revenue Costs and expenses: Cost of revenue Research and development Sales and marketing General and administrative Total costs and expenses Income (loss) from operations Interest income Interest expense and other income (expense), net Income (loss) before provision for income taxes Provision for income taxes Net income (loss) Net income (loss) per share attributable to common stockholders: Basic Diluted Weighted-average shares used in computing net income (loss) per share attributable to common stockholders: Basic Diluted Year Ended December 31, 2021 2020 2019 $ 2,578,027 $ 1,692,658 $ 1,142,761 529,320 780,264 641,279 300,977 449,358 606,194 442,807 336,803 358,903 1,207,059 611,590 354,075 2,251,840 1,835,162 2,531,627 326,187 4,204 (142,504) (1,388,866) 16,119 (9,420) (635) 30,164 (2,137) 320,971 4,533 (127,020) (1,360,839) 1,303 532 316,438 $ (128,323) $ (1,361,371) 0.49 $ 0.46 $ (0.22) $ (0.22) $ (3.24) (3.24) $ $ $ 640,030 691,651 596,264 596,264 420,473 420,473 The accompanying notes are an integral part of these consolidated financial statements. 67 PINTEREST, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Net income (loss) Other comprehensive income (loss), net of taxes: Year Ended December 31, 2021 2020 2019 $ 316,438 $ (128,323) $ (1,361,371) Change in unrealized gain (loss) on available-for-sale marketable securities Change in foreign currency translation adjustment (4,252) (409) 1,670 163 2,057 11 Comprehensive income (loss) $ 311,777 $ (126,490) $ (1,359,303) The accompanying notes are an integral part of these consolidated financial statements. 68 l ’ s r e d o h k c o t S d e t a l u m u c c A r e h t O y t i u q E ) t i c i f e D ( d e t a l u m u c c A t i c i f e D e v i s n e h e r p m o C ) s s o L ( e m o c n I l a n o i t i d d A n I - d i a P l a t i p a C ) 3 6 5 , 4 9 5 ( $ ) 5 5 3 , 5 4 8 ( $ ) 1 2 4 , 1 ( $ 2 1 2 , 2 5 2 $ t n u o m A s e r a h S t n u o m A s e r a h S k c o t S n o m m o C e l b a m e e d e R d e r r e f e r P e l b i t r e v n o C k c o t S ) s t n u o m a e r a h s r e p t p e c x e , s d n a s u o h t n i ( $ 8 9 2 , 7 2 1 9 9 3 , 5 6 4 , 1 $ 3 7 3 , 8 0 3 . C N I , T S E R E T N P I I I ) T C F E D ( I Y T U Q E ’ I S R E D L O H K C O T S D N A K C O T S D E R R E F E R P E L B T R E V N O C E L B A M E E D E R F O S T N E M E T A T S D E T A D L O S N O C I ) 5 1 0 , 5 7 4 ( — — 1 1 — 4 8 0 , 8 2 — — — — k c o t s d e t c i r t s e r f l o e s a e e r n o s g n d o h h l i t i w x a t r o f d e s a h c r u p e r s e r a h S s t i n u k c o t s d e t c i r t s e r f o e s a e e R l 8 1 0 2 , 1 3 r e b m e c e D f o s a e c n a a B l i f o n o s r e v n o C s t i n u 2 2 6 , 8 0 3 ) 9 9 3 , 5 6 4 , 1 ( ) 3 7 3 , 8 0 3 ( g n i r e f f o c i l b u p l a i t i n i h t i w n o i t c e n n o c n i k c o t s n o m m o c o t s t n a r r a w k c o t s d e r r e f e r p e b i t r e v n o c l l e b a m e e d e r d n a k c o t s d e r r e e r p e b f l l i t r e v n o c e b a m e e d e r 1 ) 5 1 0 , 5 7 4 ( 7 7 0 , 0 7 4 , 1 8 6 0 , 2 3 8 3 , 3 6 5 , 1 4 4 3 , 1 4 1 8 7 , 7 7 3 , 1 — — — — — — — — — — — — — 8 6 0 , 2 ) 1 7 3 , 1 6 3 , 1 ( ) 1 7 3 , 1 6 3 , 1 ( — — — 4 7 0 , 0 7 4 , 1 4 4 3 , 1 4 2 8 3 , 3 6 5 , 1 1 8 7 , 7 7 3 , 1 3 1 — — — — — — — 0 5 2 , 6 8 0 5 6 , 9 1 5 0 7 , 3 2 0 , 2 $ ) 6 2 7 , 6 0 2 , 2 ( $ 7 4 6 $ 8 7 7 , 9 2 2 , 4 $ 6 $ 4 0 9 , 9 6 5 — ) 4 9 8 , 6 5 ( — 2 8 2 , 8 7 8 4 7 , 2 3 3 8 , 1 0 2 0 , 1 2 3 — — — — — — — ) 3 2 3 , 8 2 1 ( ) 3 2 3 , 8 2 1 ( — — — — — — — 3 3 8 , 1 — ) 4 9 8 , 6 5 ( — 2 8 2 , 8 7 8 4 7 , 2 0 2 0 , 1 2 3 — — 1 — 2 1 9 , 3 2 0 0 3 , 5 4 2 8 3 , 5 1 4 ) 1 6 6 , 4 ( 8 3 4 , 6 1 3 — — — — — — — — — — — ) 1 6 6 , 4 ( 8 3 4 , 6 1 3 — — — 2 1 9 , 3 2 0 0 3 , 5 4 2 8 3 , 5 1 4 — — 1 7 3 , 2 4 2 , 2 $ ) 9 4 0 , 5 3 3 , 2 ( $ 0 8 4 , 2 $ 4 3 9 , 4 7 5 , 4 $ — — — — — — — — 6 1 — — — — — — 0 9 8 , 9 1 — 9 4 1 , 4 3 0 5 1 9 7 2 , 2 — — — $ 2 7 3 , 6 2 6 4 2 7 , 1 2 6 0 8 , 7 0 5 7 0 2 2 — — — 3 4 7 , 8 3 0 , 3 $ ) 1 1 6 , 8 1 0 , 2 ( $ ) 1 8 1 , 2 ( $ 8 2 5 , 9 5 0 , 5 $ 7 $ 2 7 8 , 6 5 6 — — — — — — — — — — — — — — — — — — — — — — — $ $ $ — — — — — — — — — — — — — — — — — — — — — — — f o t e n g n i r e f f o c i l b u p l a i t i n i h t i w n o i t c e n n o c n i k c o t s n o m m o c f o e c n a u s s I s t s o c g n i r e f f i o d n a s n o s s m m o c d n a i s t n u o c s d i ' s r e t i r w r e d n u t e n , s n o i t p o k c o t s f i o e s c r e x e n o p u h s a c r o f k c o t s n o m m o c f o e c n a u s s I n o i t a s n e p m o c d e s a b - e r a h S k c o t s d e t c i r t s e r f l o e s a e e r n o s g n d o h h l i t e n , s n o i t p o k c o t s f i o e s c r e x e n o p u h s a c r o f k c o t s n o m m o c f o e c n a u s s I t i w x a t r o f d e s a h c r u p e r s e r a h S s t i n u 69 s n o i t u b i r t n o c e b a l t i r a h c o t t d e a e r l k c o t s n o m m o c f o e c n a u s s I t e n , s d r a w a k c o t s d e t c i r t s e r f o e c n a u s s I e m o c n i i e v s n e h e r p m o c r e h t O s s o l t e N s t i n u k c o t s d e t c i r t s e r f o e s a e e R l 9 1 0 2 , 1 3 r e b m e c e D f o s a e c n a a B l t e n , s n o i t p o k c o t s f i o e s c r e x e n o p u h s a c r o f k c o t s n o m m o c f o e c n a u s s I s n o i t u b i r t n o c e b a l t i r a h c o t t d e a e r l k c o t s n o m m o c f o e c n a u s s I t e n , s d r a w a k c o t s d e t c i r t s e r f o e c n a u s s I e m o c n i i e v s n e h e r p m o c r e h t O s s o l t e N s t i n u k c o t s d e t c i r t s e r f o e s a e e R l 0 2 0 2 , 1 3 r e b m e c e D f o s a e c n a a B l n o i t a s n e p m o c d e s a b - e r a h S 1 2 0 2 , 1 3 r e b m e c e D f o s a e c n a a B l s s o l i e v s n e h e r p m o c r e h t O e m o c n i t e N n o i t a s n e p m o c d e s a b - e r a h S . s t n e m e t a t s l i a c n a n i f d e t a d i l o s n o c e s e h t f o t r a p l a r g e t n i n a e r a s e t o n i g n y n a p m o c c a e h T PINTEREST, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Operating activities Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization Share-based compensation Non-cash charitable contributions Other Changes in assets and liabilities: Accounts receivable Prepaid expenses and other assets Operating lease right-of-use assets Accounts payable Accrued expenses and other liabilities Operating lease liabilities Net cash provided by operating activities Investing activities Purchases of property and equipment and intangible assets Purchases of marketable securities Sales of marketable securities Maturities of marketable securities Acquisition of business, net of cash acquired Other investing activities Net cash used in investing activities Financing activities Proceeds from initial public offering, net of underwriters' discounts and commissions Proceeds from exercise of stock options, net Shares repurchased for tax withholdings on release of restricted stock units Payment of deferred offering costs and other financing activities Net cash provided by financing activities Effect of exchange rate changes on cash, cash equivalents and restricted cash Net increase in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash, beginning of period Cash, cash equivalents and restricted cash, end of period Supplemental cash flow information Accrued property and equipment Year Ended December 31, 2021 2020 2019 $ 316,438 $ (128,323) $ (1,361,371) 27,500 415,382 45,300 9,607 (88,862) (14,727) 43,995 (33,451) 82,435 36,988 321,020 2,748 8,332 27,791 1,377,781 — (3,990) (253,173) (94,224) 4,128 41,898 15,721 23,647 7,161 32,378 11,636 31,890 (50,710) (44,160) (28,395) 752,907 28,826 657 (9,031) (17,401) (33,783) (1,104,087) (1,216,260) (1,075,875) 274,654 849,520 (36,914) — 265,422 920,300 — 316 162,198 360,959 — — (25,858) (47,623) (586,501) — 1,573,200 — 23,912 — (1,750) 22,162 (1,058) 748,153 678,911 78,282 (56,894) (1,750) 19,638 327 1,168 677,743 $ $ 1,427,064 $ 678,911 $ 2,875 $ 820 $ 41,344 (475,015) (11,331) 1,128,198 99 542,453 135,290 677,743 4,772 76,387 Operating lease right-of-use assets obtained in exchange for operating lease liabilities $ 118,977 $ 15,089 $ Reconciliation of cash, cash equivalents and restricted cash to consolidated balance sheets Cash and cash equivalents Restricted cash included in prepaid expenses and other current assets Restricted cash included in other assets Total cash, cash equivalents and restricted cash $ 1,419,630 $ 669,230 $ 649,666 1,137 6,297 571 9,110 2,738 25,339 $ 1,427,064 $ 678,911 $ 677,743 The accompanying notes are an integral part of these consolidated financial statements. 70 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Description of Business and Summary of Significant Accounting Policies Description of Business Pinterest was incorporated in Delaware in 2008 and is headquartered in San Francisco, California. Pinterest is a visual discovery engine that people around the globe use to find the inspiration to create a life they love. We generate revenue by delivering ads on our website and mobile application. Basis of Presentation and Consolidation We prepared the accompanying consolidated financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). The consolidated financial statements include the accounts of Pinterest, Inc. and its wholly owned subsidiaries. We have eliminated all intercompany balances and transactions. Reclassifications We have reclassified certain amounts in prior periods to conform with current presentation. Use of Estimates Preparing our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect amounts reported in the consolidated financial statements and accompanying notes. We base these estimates and judgments on historical experience and various other assumptions that we consider reasonable. GAAP requires us to make estimates and assumptions in several areas, including the fair values of financial instruments, assets acquired and liabilities assumed through business combinations, common stock prior to our IPO, share-based awards, and contingencies as well as the collectability of our accounts receivable, the useful lives of our intangible assets and property and equipment, the incremental borrowing rate we use to determine our operating lease liabilities, and revenue recognition, among others. Actual results could differ materially from these estimates and judgments. Segments We operate as a single operating segment. Our chief operating decision maker is our Chief Executive Officer ("CEO"), who reviews financial information presented on a consolidated basis, accompanied by disaggregated information about our revenue, for purposes of making operating decisions, assessing financial performance and allocating resources. Revenue Recognition We generate revenue by delivering ads on our website and mobile application. 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, views an ad contracted on a cost per thousand impressions (“CPM”) basis or views a video ad contracted on a cost per view ("CPV") basis. We typically bill customers on a CPC, CPM or CPV basis, and our payment terms vary by customer type and location. The term between billing and payment due dates is not significant. We occasionally offer customers free ad inventory, and revenue is recognized only after satisfying our contractual performance obligations. When contracts with our customers contain multiple performance obligations, we allocate the overall transaction price, which is the amount of consideration to which we expect to be entitled in exchange for promised goods or services, to each of the distinct performance obligations based on their relative standalone selling prices. We generally determine standalone selling prices based on the effective price charged per contracted click, impression or view, and we do not disclose the value of unsatisfied performance obligations because the original expected duration of our contracts is generally less than one year. We record sales commissions in sales and marketing as incurred because we would amortize these over a period of less than one year. Deferred revenue was not material as of December 31, 2021 and 2020. 71 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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, and allocated facilities and other supporting overhead costs. Share-Based Compensation Restricted stock units ("RSUs") granted under our 2009 Stock Plan (the "2009 Plan") are subject to both a service condition, which is typically satisfied over four years, and a performance condition, which was deemed satisfied upon the pricing of our initial public offering ("IPO"). We did not record any share-based compensation expense for our RSUs prior to our IPO because the performance condition had not yet been satisfied. Upon pricing our IPO, we recorded cumulative share-based compensation expense using the accelerated attribution method for those RSUs granted under our 2009 Plan for which the service condition had been satisfied at that date. We will record the remaining unrecognized share-based compensation expense over the remainder of the requisite service period. RSUs and restricted stock awards ("RSAs") granted under our 2019 Omnibus Incentive Plan (the "2019 Plan") are subject only to a service condition, which is typically satisfied over four years. We record share-based compensation expense for these RSUs and RSAs on a straight-line basis over the requisite service period. We measure RSUs and RSAs based on the fair market value of our common stock on the grant date, and we account for forfeitures as they occur. 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 deferred tax assets to the amounts we believe it is more likely than not we will be able to realize. 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 Global Intangible Low-Taxed Income ("GILTI") as a current period expense when incurred. Advertising Expenses We record advertising expenses as incurred and include these in sales and marketing in the consolidated statements of operations. Advertising expenses were $94.7 million, $30.3 million and $55.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. Marketable Securities We invest in highly liquid corporate debt securities, U.S. treasury securities, asset-backed securities, U.S. government agency securities, municipal securities, non-U.S. government and supranational bonds and certificates of deposit. We classify marketable investments with stated maturities of ninety days or less from the date of purchase as cash equivalents and those with stated maturities greater than ninety days from the date of purchase as marketable securities. We classify our marketable securities as available-for-sale investments in our current assets because they are available for use to support current operations. We carry our marketable investments at fair value and record unrealized gains or losses, net of taxes, in accumulated other comprehensive income (loss) in stockholders’ equity (deficit). We determine realized gains and losses on the sale of marketable investments using a specific identification method and record these and any expected credit losses in interest expense and other income (expense), net. 72 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Restricted Cash Our restricted cash primarily consists of certificates of deposit underlying secured letters of credit issued in connection with our operating leases. Restrictions typically lapse at the end of the lease term, and we classify restricted cash as current or non-current based on the remaining term of the restriction. Fair Value Measurements We account for certain assets and liabilities at fair value, which is the amount we believe market participants would receive to sell an asset or pay to transfer a liability in an orderly transaction. We categorize these assets and liabilities into the three levels below based on the degree to which the inputs we use to measure their fair values are observable in active markets. We use the most observable inputs available to us when measuring fair value. • • • Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets Level 2: Observable inputs such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets, or inputs that are derived principally from or corroborated by observable market data or other means Level 3: Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities Accounts Receivable, Net of Allowances We record accounts receivable at the original invoiced amount. We maintain an allowance for credit losses for any receivables we may be unable to collect. We estimate uncollectible receivables based on our receivables’ age, our customers’ credit quality and current economic conditions, among other factors that may affect our customers’ ability to pay. We also maintain an allowance for sales credits, which we determine based on historical credits issued to customers. We include the allowances for credit losses and sales credits in accounts receivable, net in the consolidated balance sheets. Property and Equipment We carry property and equipment at cost less accumulated depreciation and calculate depreciation using the straight- line method over our assets’ estimated useful lives, which are generally: Property and Equipment Computer and network equipment Furniture and fixtures Leasehold improvements Useful Life 3 years 4 years Lesser of estimated useful life or remaining lease term Leases and Operating Lease Incremental Borrowing Rate We lease office space under operating leases with expiration dates through 2033. We determine whether an arrangement constitutes a lease at inception and record lease liabilities and right-of-use assets on our consolidated balance sheets at lease commencement. We measure lease liabilities based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or our incremental borrowing rate, which is the estimated rate we would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. We estimate our incremental borrowing rate based on an analysis of publicly traded debt securities of companies with credit and financial profiles similar to our own. We measure right-of-use assets based on the corresponding lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs we incur and (iii) tenant incentives under the lease. We begin recognizing rent expense when the lessor makes the underlying asset available to us, we do not assume renewals or early terminations unless we are reasonably certain to exercise these options at commencement, and we do not allocate consideration between lease and non-lease components. For short-term leases, we record rent expense in our consolidated statements of operations on a straight-line basis over the lease term and record variable lease payments as incurred. 73 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Business Combinations We include the results of operations of businesses that we acquire in our consolidated financial statements beginning on their respective acquisition dates. We allocate the fair value of the purchase consideration to the assets acquired and liabilities assumed based on their estimated fair values. When the fair value of the purchase consideration exceeds the fair values of the identifiable assets and liabilities acquired, we record the excess as goodwill. Our estimates of fair value are based on assumptions we believe to be reasonable but which are inherently uncertain and unpredictable, and as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets and liabilities acquired with the corresponding offset to goodwill. Any adjustments after the measurement period are reflected in our consolidated statements of operations. Long-Lived Assets, Including Goodwill and Intangible Assets We record definite-lived intangible assets at fair value less accumulated amortization. We calculate amortization using the straight-line method over the assets’ estimated useful lives of up to ten years. We review our property and equipment and intangible assets for impairment whenever events or circumstances indicate that an asset’s carrying value may not be recoverable. We measure recoverability by comparing an asset’s carrying value to the future undiscounted cash flows that we expect it to generate. If this test indicates that the asset’s carrying value is not recoverable, we record an impairment charge to reduce the asset’s carrying value to its fair value. We did not record material property and equipment or intangible asset impairments during the periods presented. We review goodwill for impairment at least annually or more frequently if current circumstances or events indicate that the fair value of our single reporting unit may be less than its carrying value. We did not record any goodwill impairment during the periods presented. Website Development Costs We capitalize costs to develop our website and mobile application when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the software will be used as intended. Due to the iterative process by which we perform upgrades and the relatively short duration of our development projects, development costs meeting our capitalization criteria were not material during the periods presented. Loss Contingencies We are involved in various lawsuits, claims and proceedings that arise in the ordinary course of business. We record a liability for these when we believe it is probable that we have incurred a loss and can reasonably estimate the loss. We regularly evaluate current information to determine whether we should adjust a recorded liability or record a new one. Foreign Currency The functional currency of our international subsidiaries is generally their local currency. We translate these subsidiaries’ financial statements into U.S. dollars using month-end exchange rates for assets and liabilities and average exchange rates for revenue and costs and expenses. We record translation gains and losses in accumulated other comprehensive income (loss) in stockholders’ equity (deficit). We record foreign exchange gains and losses in interest expense and other income (expense), net. Our net foreign exchange gains and losses were not material for the periods presented. Concentration of Business Risk We have an agreement with Amazon Web Services (“AWS”) to provide the cloud computing infrastructure we use to host our website, mobile application and many of the internal tools we use to operate our business. We are currently required to maintain a substantial majority of our monthly usage of certain compute, storage, data transfer and other services on AWS. Any transition of the cloud services currently provided by AWS to another cloud services provider would be difficult to implement and would cause us to incur significant time and expense. 74 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Concentration of Credit Risk Financial instruments that may potentially expose us to concentrations of credit risk primarily consist of cash, cash equivalents, marketable securities and restricted cash. Our investment policy is meant to preserve capital and maintain liquidity. The policy limits our marketable investments to investment-grade securities and limits our credit exposure by limiting our concentration in any one corporate issuer or sector and by establishing a minimum credit rating for marketable investments we purchase. Although we deposit cash and marketable investments with multiple financial institutions, our deposits may exceed insurable limits. No customer accounted for more than 10% of our revenue for the years ended December 31, 2021 and December 31, 2020. One customer accounted for 10% of our revenue for the year ended December 31, 2019. Our accounts receivable are generally unsecured. We monitor our customers’ credit quality on an ongoing basis and maintain reserves for estimated credit losses. Bad debt expense was not material for the years ended December 31, 2021, 2020 and 2019. Recently Adopted Accounting Pronouncements In October 2021, the Financial Accounting Standards Board issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. We elected to early adopt ASU 2021-08 prospectively as of October 1, 2021, and the effects of adoption on our consolidated financial statements were not material. 75 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. Cash, Cash Equivalents and Marketable Securities Cash, cash equivalents and marketable securities consist of the following (in thousands): Cash and cash equivalents: Cash Money market funds Commercial paper Corporate bonds Total cash and cash equivalents Marketable securities: Corporate bonds Commercial paper U.S. treasury securities Certificates of deposit Municipal securities Non-U.S. government and supranational bonds U.S. agency bonds December 31, 2021 Amortized Cost Unrealized Gains Unrealized Losses Fair Value $ 589,156 $ — $ — $ 589,156 711,188 114,972 4,310 1,419,626 450,746 247,623 189,325 82,504 49,470 41,812 1,000 — 4 — 4 — — — — 711,188 114,976 4,310 1,419,630 181 (1,510) 15 19 19 11 3 — (78) (334) (37) (150) (131) — 449,417 247,560 189,010 82,486 49,331 41,684 1,000 Total marketable securities 1,062,480 248 (2,240) 1,060,488 Total $ 2,482,106 $ 252 $ (2,240) $ 2,480,118 Cash and cash equivalents: Cash Money market funds Commercial paper U.S. treasury securities Certificates of deposit Total cash and cash equivalents Marketable securities: Corporate bonds U.S. treasury securities Commercial paper Certificates of deposit Municipal securities U.S. agency bonds Non-U.S. government and supranational bonds Asset-backed securities December 31, 2020 Amortized Cost Unrealized Gains Unrealized Losses Fair Value $ 352,061 $ — $ — $ 352,061 225,643 48,530 39,997 2,996 669,227 452,723 202,795 234,170 134,828 17,604 16,012 15,938 14,752 — 2 1 — 3 1,782 260 86 57 22 6 13 61 — — — — — (18) (1) (3) (3) (7) — (1) — 225,643 48,532 39,998 2,996 669,230 454,487 203,054 234,253 134,882 17,619 16,018 15,950 14,813 Total marketable securities 1,088,822 2,287 (33) 1,091,076 Total $ 1,758,049 $ 2,290 $ (33) $ 1,760,306 Our allowance for credit losses for our marketable securities was not material as of December 31, 2021 and 2020. 76 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The fair value of our marketable securities by contractual maturity is as follows (in thousands): Due in one year or less Due after one to five years Total December 31, 2021 $ $ 716,132 344,356 1,060,488 Net realized gains and losses from sales of available-for-sale securities were not material for any period presented. 3. Fair Value of Financial Instruments The fair values of the financial instruments we measure at fair value on a recurring basis are as follows (in thousands): Cash equivalents: Money market funds Commercial paper Corporate bonds Marketable securities: Corporate bonds Commercial paper U.S. treasury securities Certificates of deposit Municipal securities Non-U.S. government and supranational bonds U.S. agency bonds Prepaid expenses and other current assets: Certificates of deposit Restricted cash: December 31, 2021 Level 1 Level 2 Level 3 Total $ 711,188 $ — $ — $ 711,188 — — — — 189,010 — — — — — 114,976 4,310 449,417 247,560 — 82,486 49,331 41,684 1,000 1,137 — — — — — — — — — — 114,976 4,310 449,417 247,560 189,010 82,486 49,331 41,684 1,000 1,137 Certificates of deposit $ — $ 6,297 $ — $ 6,297 77 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Cash equivalents: Money market funds Commercial paper U.S. treasury securities Certificates of deposit Marketable securities: Corporate bonds Commercial paper U.S. treasury securities Certificates of deposit Municipal securities U.S. agency bonds Non-U.S. government and supranational bonds Asset-backed securities Prepaid expenses and other current assets: Certificates of deposit Restricted cash: December 31, 2020 Level 1 Level 2 Level 3 Total $ 225,643 $ — $ — $ 225,643 — 39,998 — — — 203,054 — — — — — — 48,532 — 2,996 454,487 234,253 — 134,882 17,619 16,018 15,950 14,813 571 — — — — — — — — — — — — 48,532 39,998 2,996 454,487 234,253 203,054 134,882 17,619 16,018 15,950 14,813 571 Certificates of deposit $ — $ 9,110 $ — $ 9,110 We classify our marketable securities within Level 1 or Level 2 because we determine their fair values using quoted market prices or alternative pricing sources and models utilizing market observable inputs. 4. Other Balance Sheet Components Property and Equipment, Net Property and equipment, net consists of the following (in thousands): Leasehold improvements Furniture and fixtures Computer and network equipment Total property and equipment Less: accumulated depreciation Construction in progress Property and equipment, net December 31, 2021 2020 $ 101,214 $ 101,242 25,956 32,020 159,190 (108,159) 2,370 $ 53,401 $ 24,516 27,230 152,988 (83,770) 157 69,375 Depreciation expense was $26.2 million, $36.0 million and $26.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. 78 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consists of the following (in thousands): Accrued hosting expenses Accrued compensation Operating lease liabilities Other accrued expenses December 31, 2021 2020 $ 84,105 $ 37,154 41,693 79,179 39,233 33,215 43,633 39,259 Accrued expenses and other current liabilities $ 242,131 $ 155,340 5. Acquisition On December 3, 2021, we acquired all outstanding shares of BLBW Limited ("Vochi"), a video creation and editing app that offers tools for creators. The acquisition of Vochi is expected to bring more video creation tools and quality content to our Pinners and help us further our vision to create a place where Pinners can go from inspiration to realization. The total purchase consideration was $45.9 million in cash, including an indemnification holdback of $8.6 million. Of the total purchase consideration, $14.8 million was attributed to developed technology and other related intangible assets, which will be amortized over their useful lives of 5 years, and the remaining $33.3 million was attributed to goodwill. Goodwill represents the synergies we expect to realize from the acquisition and the assembled workforce. Goodwill is not deductible for tax purposes. We included the results of Vochi's operations in our consolidated financial statements beginning on the acquisition date. The acquisition did not have a material impact on our consolidated financial statements so we have not presented historical and pro forma disclosures. 6. Goodwill and Intangible Assets, Net Changes in goodwill for the periods presented are as follows (in thousands): Balance as of December 31, 2020 Acquisitions Balance as of December 31, 2021 $ $ 6,905 33,303 40,208 79 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Intangible assets, net consists of the following (in thousands): Acquired patents Acquired technology and other intangibles Total intangible assets, net Acquired patents Acquired technology and other intangibles Total intangible assets, net December 31, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount $ $ 9,037 $ 19,970 29,007 $ (3,389) $ (4,711) (8,100) $ 5,648 15,259 20,907 December 31, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount $ $ 9,037 $ 4,385 13,422 $ (2,380) $ (4,385) (6,765) $ 6,657 — 6,657 Weighted- Average Useful Life (1) 9.1 years 4.2 years Weighted- Average Useful Life (1) 9.1 years 1.5 years (1) Based on the weighted-average useful life established as of acquisition date. Amortization expense was $1.3 million, $1.0 million and $1.5 million for the years ended December 31, 2021, 2020 and 2019, respectively. Estimated future amortization expense as of December 31, 2021, is as follows (in thousands): 2022 2023 2024 2025 2026 Thereafter Total Intangible Asset Amortization $ 4,126 4,126 4,126 4,116 3,424 989 $ 20,907 7. Commitments and Contingencies As of December 31, 2021, our non-cancelable contractual commitments are as follows (in thousands): 2022 2023 2024 2025 2026 Thereafter Total Purchase Commitments Purchase Commitments Operating Leases Total Commitments $ — $ 57,877 $ — — — — 56,601 34,520 29,736 30,382 57,877 56,601 34,520 29,736 30,382 2,949,100 114,511 3,063,611 $ 2,949,100 $ 323,626 $ 3,272,727 In April 2021, we entered into a new private pricing addendum with AWS, which governs our use of cloud computing infrastructure provided by AWS. Under the new pricing addendum, we are required to purchase at least $3,250.0 million of cloud services from AWS through April 2029. 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 December 31, 2021, our remaining contractual commitment is $2,949.1 million. We expect to meet our remaining commitment. 80 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Legal Matters We are involved in various lawsuits, claims and proceedings that arise in the ordinary course of business, including those described below. While the results of legal matters are inherently uncertain, we do not believe there is a reasonable possibility that the ultimate resolution of these matters, either individually or in aggregate, will have a material adverse effect on our business, financial position, results of operations or cash flows. On November 23, 2020, Pinterest and our Chief Executive Officer and Chief Financial Officer were named as defendants in a putative securities class action filed in the U.S. District Court for the Northern District of California. The lawsuit alleged claims under Sections 10(b) and 20(a) of the Exchange Act and alleged that defendants made material false and misleading public statements about our revenue and user growth in 2019. The complaint sought damages, litigation costs, and interest. On September 23, 2021, the court granted Pinterest’s motion to dismiss plaintiff’s complaint with leave to amend and plaintiff notified the court on October 12, 2021 that they do not intend to file an amended complaint. The court entered judgment on behalf of Pinterest and other defendants on October 12, 2021 and this matter is no longer pending. In November and December 2020, certain of our executives and members of our board of directors were named as defendants in shareholder derivative lawsuits filed in the U.S. District Court for the Northern District of California. Pinterest was also named as a nominal defendant. The lawsuits purport to assert claims for breach of fiduciary duty in connection with allegations of gender and racial discrimination at Pinterest. In addition, the lawsuits purport to assert claims for waste, abuse of control, aiding and abetting breaches of fiduciary duties, unjust enrichment, and violations of Section 14(a) of the Exchange Act. The complaints seek declaratory and injunctive relief, corporate governance changes, monetary damages, interest, disgorgement, and fees and costs. On April 22, 2021, the defendants moved to dismiss this complaint. On July 14, 2021, another shareholder derivative complaint with similar allegations was filed in the same court and was subsequently related to the earlier action. The cases were referred to a magistrate judge for mediation, and the proceedings were stayed during the pendency of that mediation. On November 24, 2021, the parties entered into a stipulation of settlement and plaintiffs filed a motion for preliminary settlement approval. We continue to evaluate these claims but do not believe this litigation will have a material impact on our financial position or results of operations. In March 2021, certain of our executives and members of our board of directors were named as defendants in a shareholder derivative lawsuit filed in the Delaware Chancery Court. Pinterest was also named as a nominal defendant. The complaint alleges that executives and members of the board breached their fiduciary duties to the company in connection with allegations of gender and racial discrimination at Pinterest. On May 10, 2021, the court stayed this lawsuit in light of the related pending case in the Northern District of California. The complaint seeks damages, litigation costs, and interest. We continue to evaluate these claims but do not believe this litigation will have a material impact on our financial position or results of operations. Revolving Credit Facility In November 2018, we entered into a five-year $500.0 million revolving credit facility with an accordion option which, if exercised, would allow us to increase the aggregate commitments by the greater of $100.0 million and 10% of our consolidated total assets, provided we are able to secure additional lender commitments and satisfy certain other conditions. Interest on any borrowings under the revolving credit facility accrues at either LIBOR plus 1.50% or at an alternative base rate plus 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 revolving credit facility. The 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 1.50% per annum on the average aggregate daily maximum amount available to be drawn under any outstanding letters of credit. The 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 revolving credit facility also contains two financial maintenance covenants: a consolidated total assets covenant and a minimum liquidity balance of $350.0 million, which includes any available borrowing capacity. The obligations under the revolving credit facility are secured by liens on substantially all of our domestic assets, including certain domestic intellectual property assets. 81 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Our total borrowing capacity under the revolving credit facility is $500.0 million as of December 31, 2021. We have not issued any letters of credit against the revolving credit facility and are in compliance with all covenants under the revolving credit facility as of December 31, 2021. 8. Leases We have entered into various non-cancelable office space operating leases with original lease periods expiring between 2022 and 2033. These do not contain material variable rent payments, residual value guarantees, covenants or other restrictions. Operating lease costs for the years ended December 31, 2021, 2020 and 2019, are as follows (in thousands): Lease cost: Operating lease cost Short-term lease cost Total Year Ended December 31, 2021 2020 2019 $ $ 53,691 $ 51,285 $ 1,434 3,933 55,125 $ 55,218 $ 40,257 3,456 43,713 The weighted-average remaining term of our operating leases was 7.5 years and 8.1 years, and the weighted- average discount rate used to measure the present value of our operating lease liabilities was 4.2% and 4.8% as of December 31, 2021 and 2020, respectively. Maturities of our operating lease liabilities, which do not include short-term leases, as of December 31, 2021, are as follows (in thousands): 2022 2023 2024 2025 2026 Thereafter Total lease payments Less imputed interest Total operating lease liabilities Operating Leases 57,393 56,601 34,520 29,736 30,382 114,511 323,143 (72,269) 250,874 $ $ Cash payments included in the measurement of our operating lease liabilities were $59.0 million, $54.3 million and $38.4 million for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, we have $20.8 million of undiscounted future payments under operating leases that have not yet commenced, which are excluded from the table above. 9. Share-Based Compensation Equity Incentive Plan In June 2009, our board of directors adopted and approved our 2009 Plan, which provides for the issuance of stock options, RSAs and RSUs to qualified employees, directors and consultants. Stock options granted under our 2009 Plan have a maximum life of 10 years and an exercise price not less than 100% of the fair market value of our common stock on the date of grant. RSUs granted under our 2009 Plan have a maximum life of seven years. No shares of our common stock were reserved for future issuance under our 2009 Plan as of December 31, 2021. Our 2019 Plan became effective upon closing of our IPO and succeeds our 2009 Plan. Our 2019 Plan provides for the issuance of stock options, RSAs, RSUs and other equity- or cash-based awards to qualified employees, directors and consultants. Stock options granted under our 2019 Plan have a maximum life of 10 years and an exercise price not 82 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS less than 100% of the fair market value of our common stock on the date of grant. 126,949,622 shares of our Class A common stock were reserved for future issuance under our 2019 Plan as of December 31, 2021. The number of shares of our Class A common stock available for issuance under the 2019 Plan will be increased by the number of shares of our Class B common stock subject to awards outstanding under our 2009 Plan that would, but for the terms of the 2019 Plan, have returned to the share reserves of the 2009 Plan pursuant to the terms of such awards, including as the result of forfeiture, repurchase, expiration or retention by us in order to satisfy an award’s exercise price or tax withholding obligations. In addition, the number of shares of our Class A common stock reserved for issuance under our 2019 Plan will automatically increase on the first day of each fiscal year through and including January 1, 2029, in an amount equal to 5% of the total number of shares of our Class A common stock and our Class B common stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by our board of directors. Stock Option Activity Stock option activity during the year ended December 31, 2021, was as follows (in thousands, except per share amounts): Stock Options Outstanding Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (1) Outstanding as of December 31, 2020 Exercised Outstanding as of December 31, 2021 Exercisable as of December 31, 2021 23,947 $ (7,806) 16,141 $ 15,576 $ 3.15 3.06 3.19 2.50 2.9 $ 1,502,604 1.9 $ 1.7 $ 535,118 527,204 (1) We calculate intrinsic value based on the difference between the exercise price of in-the-money-stock options and the fair value of our common stock as of the respective balance sheet date. The total grant-date fair value of stock options vested during the years ended December 31, 2021, 2020 and 2019, was $3.2 million, $3.3 million and $2.2 million, respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2021, 2020 and 2019, was $511.4 million, $1,023.9 million and $425.1 million, respectively. No stock options were granted during the years ended December 31, 2021 and December 31, 2019. The total grant- date fair value of stock options granted during the year ended December 31, 2020 was not material. Restricted Stock Unit and Restricted Stock Award Activity RSU and RSA activity during the year ended December 31, 2021, was as follows (in thousands, except per share amounts): Outstanding as of December 31, 2020 Granted(1) Released Forfeited(1) Outstanding as of December 31, 2021 (1) Includes the effects of awards modified during the year ended December 31, 2021. 83 Restricted Stock Units and Restricted Stock Awards Outstanding Shares Weighted Average Grant Date Fair Value 54,079 $ 9,931 (21,991) (5,761) 36,258 $ 20.45 67.27 23.28 25.02 30.84 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Share-Based Compensation Share-based compensation expense during the years ended December 31, 2021, 2020 and 2019, was as follows (in thousands): Cost of revenue Research and development Sales and marketing General and administrative Year Ended December 31, 2021 2020 2019 $ 7,438 $ 7,865 $ 309,715 52,691 45,538 218,718 35,645 58,792 31,758 867,191 239,315 239,517 Total share-based compensation $ 415,382 $ 321,020 $ 1,377,781 As of December 31, 2021, we had $851.2 million of unrecognized share-based compensation expense, which we expect to recognize over a weighted-average period of 2.7 years. On October 15, 2021, our Co-founder and Chief Design and Creative Officer transitioned into a consulting role pursuant to a consulting agreement dated October 13, 2021. He will also continue to serve on our Board of Directors, and his existing RSU award will continue vesting after the transition to the consulting role. For accounting purposes, we treated this as a modification of his RSU award and recorded a one-time charge of $48.6 million, including incremental compensation cost of $40.8 million, in share-based compensation expense for the year ended December 31, 2021. 10. Net Income (Loss) Per Share Attributable to Common Stockholders We present net income (loss) per share attributable to common stockholders using the two-class method required for multiple classes of common stock. Holders of our Class A and Class B common stock have identical rights except with respect to voting, conversion and transfer rights and therefore share equally in our net income or losses. Prior to our IPO, we considered all series of our redeemable convertible preferred stock participating securities. We have not allocated net loss attributable to common stockholders to our redeemable convertible preferred stock because the holders of our redeemable convertible preferred stock are not contractually obligated to share in our losses. We calculate basic net income (loss) per share attributable to common stockholders by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share gives effect to all potential shares of common stock, including common stock issuable upon conversion of our redeemable convertible preferred stock and redeemable convertible preferred stock warrants, stock options, RSAs and RSUs to the extent these are dilutive. The calculation of diluted net income (loss) of Class A common stock assumes the conversion of our Class B common stock to Class A common stock, while the diluted net income (loss) of Class B common stock does not assume the conversion of those shares to Class A common stock. 84 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We calculated basic and diluted net income (loss) per share attributable to common stockholders as follows (in thousands, except per share amounts): Year Ended December 31, 2021 2020 2019 Class A Class B Class A Class B Class A Class B Basic net income (loss) per share attributable to common stockholders: Numerator: Net income (loss) attributable to common stockholders Denominator: Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, basic Basic net income (loss) per share attributable to common stockholders Diluted net income (loss) per share attributable to common stockholders: Numerator: Net income (loss) attributable to common stockholders Reallocation of net income as a result of conversion of Class B to Class A common stock Reallocation of net income to Class B common stock Diluted net income (loss) attributable to common stockholders Denominator: Weighted-average shares used in computing net income (loss) per share Conversion of Class B to Class A common stock Weighted average effect of dilutive potential common stock Weighted-average shares used in computing net income (loss) per share attributable to common stockholders, diluted $ 274,699 $ 41,739 $ (96,499) $ (31,824) $ (459,412) $ (901,959) 555,608 84,422 448,392 147,872 141,894 278,579 $ 0.49 $ 0.49 $ (0.22) $ (0.22) $ (3.24) $ (3.24) $ 274,699 $ 41,739 $ (96,499) $ (31,824) $ (459,412) $ (901,959) 41,739 — — (3,115) — — — — — — — — $ 316,438 $ 38,624 $ (96,499) $ (31,824) $ (459,412) $ (901,959) 555,608 84,422 448,392 147,872 141,894 278,579 84,422 51,621 — — — — — — — — — — 691,651 84,422 448,392 147,872 141,894 278,579 Diluted net income (loss) per share attributable to common stockholders $ 0.46 $ 0.46 $ (0.22) $ (0.22) $ (3.24) $ (3.24) Basic net loss per share is the same as diluted net loss per share for the periods we reported net losses. We excluded the following weighted-average potential shares of common stock from our calculation of diluted net income (loss) per share attributable to common stockholders because these would be anti-dilutive (in thousands): Redeemable convertible preferred stock Outstanding stock options Unvested restricted stock units and restricted stock awards Redeemable convertible preferred stock warrants Total Year Ended December 31, 2021 2020 2019 — — 3,271 — 3,271 — 40,067 63,603 — 95,469 72,999 69,800 77 103,670 238,345 85 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 11. Income Taxes The components of income (loss) before provision for income taxes are as follows (in thousands): United States Foreign Income (loss) before provision for income taxes Year Ended December 31, 2021 2020 2019 $ $ 331,447 $ 49,973 $ (1,266,677) (10,476) (176,993) (94,162) 320,971 $ (127,020) $ (1,360,839) Provision for income taxes consists of the following (in thousands): Year Ended December 31, 2021 2020 2019 Current: Federal State Foreign Total current tax expense Deferred: Federal State Foreign Total deferred tax expense (benefit) $ — $ — $ 2,303 2,957 5,260 6 6 (739) (727) 79 691 770 654 5 (126) 533 Provision for income taxes $ 4,533 $ 1,303 $ — — 1,677 1,677 (555) (76) (514) (1,145) 532 The difference between income taxes computed at the statutory federal income tax rate and the provision for income taxes is attributable to the following (in thousands): Tax at U.S. statutory rate State income taxes, net of benefit Foreign losses not benefited Permanent book/tax differences Legal settlement Share-based compensation Change in valuation allowance Tax credits Other Provision for income taxes Year Ended December 31, 2021 2020 2019 $ 67,404 $ (26,674) $ (285,776) 2,307 4,448 954 — 84 37,716 1,051 2,290 (269,009) (303,245) 278,761 352,410 (79,787) (63,205) $ (545) 4,533 $ 876 1,303 $ (77) 20,932 2,453 — (84,366) 422,315 (74,399) (550) 532 The primary difference between our effective tax rate and the federal statutory rate is the full valuation allowance we have established on our federal, state and foreign net operating losses and credits. 86 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Significant components of our deferred tax assets and liabilities are as follows (in thousands): Deferred tax assets: Net operating loss carryforwards Research tax credits Reserves, accruals, and other Lease obligation Share-based compensation Total deferred tax assets Less: valuation allowance Deferred tax assets, net of valuation allowance Deferred tax liabilities: Depreciation and amortization Prepaid expenses Total deferred tax liabilities Deferred tax assets (liabilities) December 31, 2021 2020 $ 1,036,254 $ 401,219 29,641 58,860 63,798 784,721 269,658 18,106 44,446 96,932 1,589,772 1,213,863 (1,539,889) (1,176,910) 49,883 36,953 (47,952) (2,036) (49,988) $ (105) $ (34,576) (1,523) (36,099) 854 Due to our history of losses we believe it is more likely than not that our U.S. and Irish deferred tax assets will not be realized as of December 31, 2021. Accordingly, we have established a full valuation allowance on our U.S. and Irish deferred tax assets. Our valuation allowance increased by $363.0 million and $439.9 million during the years ended December 31, 2021 and 2020, respectively, primarily due to U.S. federal and state tax losses and credits incurred during the period. As of December 31, 2021, we had federal, California and other state net operating loss carryforwards of $4,314.0 million, $500.8 million and $1,677.0 million, respectively. If not utilized, these will begin to expire in 2028, 2028 and 2026, respectively. Utilization of our net operating loss carryforwards may be subject to annual limitations due to the ownership change limitations provided by Section 382 of the Internal Revenue Code and similar state provisions. Our net operating loss carryforwards could expire before utilization if subject to annual limitations. As of December 31, 2021, we had $51.9 million and $2.0 million of Irish and Other Foreign net operating loss carryforwards, respectively that can be carried forward indefinitely. As of December 31, 2021, we had federal and California research and development credit carryforwards of $355.6 million and $275.4 million, respectively. If not utilized, our federal carryforwards will begin to expire in 2030. Our California carryforwards do not expire. Changes in gross unrecognized tax benefits were as follows (in thousands): Balance as of December 31, 2019 Increases for tax positions of prior years Decreases for tax positions of prior years Increases for tax positions of current year Balance as of December 31, 2020 Increases for tax positions of prior years Increases for tax positions of current year Balance as of December 31, 2021 Gross Unrecognized Tax Benefits $ $ $ 129,185 886 (37,250) 47,339 140,160 2,906 61,993 205,059 Recognizing the $205.1 million of gross unrecognized tax benefits we had as of December 31, 2021 would affect our effective tax rate by $2.6 million. The remaining $202.5 million of gross unrecognized tax benefits would be offset by 87 PINTEREST, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS the reversal of related deferred tax assets, which are subject to a full valuation allowance. We do not expect our gross unrecognized tax benefits to change significantly within the next 12 months. We recognize interest and penalties related to uncertain tax positions in provision for income taxes. Accrued interest and penalties are not material as of December 31, 2021 and 2020. We are subject to taxation in the U.S. and various other state and foreign jurisdictions. As we have net operating loss carryforwards for U.S. federal and state jurisdictions, the statute of limitations is open for all tax years. For material foreign jurisdictions, the tax years open to examination include the years 2016 and forward. We are currently under examination of our U.S. consolidated federal income tax return by the Internal Revenue Service for calendar years 2018 and 2019. We believe that we have adequately reserved for any adjustments to the provision for income taxes or other tax items that may ultimately result from these examinations. We have not recognized deferred taxes for the difference between the financial reporting basis and the tax basis of our investment in our foreign subsidiaries because we have the ability and intent to maintain our investments for the foreseeable future. If we were to remit earnings as of December 31, 2021, the residual taxes would not be material. 12. Geographical Information Revenue disaggregated by geography based on our customers’ billing addresses is as follows (in thousands): United States International(1) Total revenue Year Ended December 31, 2021 2020 2019 $ $ 2,003,642 $ 1,404,282 $ 1,010,186 574,385 288,376 132,575 2,578,027 $ 1,692,658 $ 1,142,761 (1) No individual country other than the United States exceeded 10% of our total revenue for any period presented. Property and equipment, net and operating lease right-of-use assets by geography is as follows (in thousands): United States International(1) Total property and equipment, net and operating lease right-of-use assets December 31, 2021 2020 $ $ 247,975 $ 33,338 281,313 $ 213,831 11,460 225,291 (1) No individual country other than the United States exceeded 10% of our total property and equipment, net and operating lease right-of-use assets for any period presented. 88 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our chief executive officer ("CEO") and chief financial officer ("CFO"), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act"), as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our CEO and CFO have concluded that as of December 31, 2021, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission ("SEC"), and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Management's Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on the assessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2021 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. Our independent registered public accounting firm, Ernst & Young LLP, has issued an audit report with respect to our internal control over financial reporting, which appears in Part II, Item 8 of this Annual Report on Form 10-K. Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting (as defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) during the period covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Further, while the majority of our employees are working remotely, we have not experienced any material impact in our internal control over financial reporting as a result of the COVID-19 pandemic. We continue to monitor for and assess any effects the COVID-19 pandemic may have on the design or operating effectiveness of our internal control over financial reporting. Limitations on Effectiveness of Controls and Procedures In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. 89 PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item is incorporated by reference to the sections titled “Proposal 1 - Election of Directors” and “Other Matters” that will be included in our Definitive Proxy Statement for the 2022 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission (SEC) within 120 days of December 31, 2021 (the "2022 Proxy Statement). Item 11. Executive Compensation The information required by this item is incorporated by reference to the section titled “Proposal 3 – Advisory Non- Binding Vote on our Named Executive Officers' Compensation” that will be included in our 2022 Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item is incorporated by reference to the section titled “Other Matters” that will be included in our 2022 Proxy Statement. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item is incorporated by reference to the sections titled “Proposal 1 – Election of Directors” and “Other Matters” that will be included in our 2022 Proxy Statement. Item 14. Principal Accountant Fees and Services The information required by this item is incorporated by reference to the sections titled “Proposal 2 – Ratification of Selection of Independent Auditor” that will be included in our 2022 Proxy Statement. 90 PART IV Item 15. Exhibits and Financial Statement Schedules The following documents are filed as part of this Annual Report on Form 10-K: 1. Consolidated Financial Statements The consolidated financial statements are filed as part of this Annual Report on Form 10-K under “Item 8. Financial Statements and Supplementary Data.” 2. Financial Statement Schedules The financial statement schedules are omitted because they are either not applicable or the information required is presented in the financial statements and notes thereto under “Item 8. Financial Statements and Supplementary Data.” 3. Exhibits The exhibits listed in the following Exhibit Index are filed, furnished, or incorporated by reference as part of this Annual Report on Form 10-K. Exhibit Number Exhibit Description Amended and Restated Certificate of Incorporation of the Company. Amended and Restated Bylaws of the Company. Certificate of Change of Registered Agent Amended and Restated Investor Rights Agreement among the Company and certain holders of its capital stock, dated as of June 2, 2017. Incorporated by Reference Form File No. Exhibit Filing Date 8-K 8-K 8-K 001-38872 001-38872 001-38872 3.2 3.2 3.1 April 23, 2019 December 15, 2021 December 15, 2021 S-1 333-230458 4.2 March 22, 2019 Description of our Common Stock. 10-K 001-38872 4.2 February 7, 2020 Form of Indenture. Form of Indemnification Agreement between the Company and each of its directors and executive officers. Form of Executive Severance & Change in Control Agreement (CEO). Form of Amended and Restated Executive Severance & Change in Control Agreement (Non-CEO). Revolving Credit Agreement, by and among the Company, the Guarantors and JP Morgan Chase Bank, N.A., as administrative agent, dated as of November 15, 2018. Employment Agreement by and between Cold Brew Labs Inc. and Benjamin Silbermann, dated as of July 14, 2009. Confidential Information and Invention Assignment Agreement by and between Cold Brew Labs Inc. and Benjamin Silbermann, dated as of October 28, 2008. Offer Letter and Confidential Agreement and Invention Assignment Agreement by and between the Company and Todd Morgenfeld, dated as of September 19, 2016. S-1/A 333-230458 10.1 April 8, 2019 S-1/A 333-230458 10.14 April 8, 2019 S-1 333-230458 10.2 March 22, 2019 S-1/A 333-230458 10.3 March 29, 2019 S-1/A 333-230458 10.4 March 29, 2019 S-1/A 333-230458 10.5 March 29, 2019 10.8+ Pinterest, Inc. 2009 Stock Plan, as amended. S-1 333-230458 10.7 March 22, 2019 10.9+ Pinterest, Inc. 2009 Stock Plan Notice of Stock Option Grant and Stock Option Agreement by and between the Company and Benjamin Silbermann, dated as of April 25, 2013. S-1 333-230458 10.8 March 22, 2019 91 3.1 3.2 3.3 4.1 4.2 4.3 10.1 10.2+ 10.3+ 10.4 10.5+ 10.6+ 10.7+ 10.10+ Form of Pinterest, Inc. 2009 Stock Plan Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement S-1 333-230458 10.9 March 22, 2019 Acceleration Addendum to Pinterest, Inc. 2009 Stock Plan Restricted Stock Unit Grant Notice and Agreement by and between the Company and Todd Morgenfeld, dated as of December 20, 2017. S-1 333-230458 10.10 March 22, 2019 Pinterest, Inc. 2019 Omnibus Incentive Plan. S-1/A 333-230458 10.11 March 29, 2019 S-1/A 333-230458 10.12 April 8, 2019 10-K 001-38872 10.14 February 7, 2020 10-K 10-Q 001-38872 10.15 February 7, 2020 001-38872 10.1 April 28, 2021 S-8 333-230999 4.3 April 23, 2019 10-Q 001-38872 10.2 April 28, 2021 10-Q 001-38872 10.3 April 28, 2021 10-Q 001-38872 10.2 November 4, 2021 10.11+ 10.12+ 10.13+ 10.14+ 10.15+ Form of Pinterest, Inc. 2019 Omnibus Incentive Plan Restricted Stock Unit Grant Notice and Agreement. Form of Pinterest, Inc. 2019 Omnibus Incentive Plan Restricted Stock Grant Notice and Agreement. Form of Pinterest, Inc. 2019 Omnibus Incentive Plan Stock Option Grant Notice and Agreement. 10.16+ Non-Employee Director Compensation Policy. 10.17+ 10.18+ 10.19+ 10.20+ 21.1 23.1 24.1 31.1 31.2 32.1 Pinterest, Inc. 2009 Stock Plan Notice of Stock Option Grant and Stock Option Agreement. Employment Agreement between Pinterest, Inc. and Christine Flores dated as of February 27, 2017 Employment Agreement between Cold Brew Labs Inc. and Evan Sharp dated as of May 13, 2011 Consulting Agreement dated October 13th, 2021 and effective October 15, 2021, Evan Sharp List of Subsidiaries of Pinterest, Inc. Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. Power of Attorney. Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (a) and 15d-14(a), Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) 101.INS 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL 101.DEF Inline XBRL Taxonomy Extension Calculation Linkbase Document Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) + Indicates a management contract or compensatory plan Item 16. Form 10-K Summary None. 92 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES Date: February 3, 2022 PINTEREST, INC. By: /s/ Todd Morgenfeld Todd Morgenfeld Chief Financial Officer and Head of Business Operations (Principal Financial Officer and Principal Accounting Officer) 93 POWER OF ATTORNEY The undersigned directors and officers of Pinterest, Inc. hereby constitute and appoint Benjamin Silbermann, Todd Morgenfeld and Christine Flores, and each of them, any of whom may act without joinder of the other, the individual’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the person and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and all other documents in connection therewith with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. Name Title Date /s/ Benjamin Silbermann Benjamin Silbermann Chairman, Co-Founder, President and Chief Executive Officer (Principal Executive Officer) February 3, 2022 /s/ Jeffrey Jordan Jeffrey Jordan Director /s/ Leslie J. Kilgore Director Leslie J. Kilgore /s/ Jeremy S. Levine Director Jeremy S. Levine /s/ Evan Sharp Evan Sharp Director /s/ Fredric G. Reynolds Director Fredric G. Reynolds /s/ Gokul Rajaram Director Gokul Rajaram /s/ Andrea Wishom Director Andrea Wishom /s/ Salaam Coleman Smith Director Salaam Coleman Smith February 3, 2022 February 3, 2022 February 3, 2022 February 3, 2022 February 3, 2022 February 3, 2022 February 3, 2022 February 3, 2022 /s/ Todd Morgenfeld Chief Financial Officer and Head of Business Operations February 3, 2022 Todd Morgenfeld (Principal Financial Officer and Principal Accounting Officer) 94 BR72352L-0322-COMBO

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