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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________________
FORM 10-Q
_________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 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
pins-20210630_g1.jpg
Pinterest, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware26-3607129
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
 Identification No.)
505 Brannan Street
San Francisco, California
94107
(Address of Principal Executive Offices, including zip code)(Zip Code)
(415762-7100
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

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 filerAccelerated filer
Non-accelerated filerSmaller 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    No 
As of July 23, 2021, there were 555,177,057 shares of the Registrant’s Class A common stock, $.00001 par value per share, outstanding, and 89,451,769 shares of the Registrant’s Class B common stock outstanding.




PINTEREST, INC.
TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.

2


NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q 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;
the pace of recovery as the COVID-19 pandemic subsides;
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 and retain Pinners and 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 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;
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 Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q. 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 Quarterly 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 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, 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 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 global COVID-19 pandemic, 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 recent 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:
5


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;
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 may 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 our 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 - FINANCIAL INFORMATION
Item 1. Financial Statements
PINTEREST, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)

June 30,December 31,
20212020
ASSETS
Current assets:
Cash and cash equivalents $1,012,928 $669,230 
Marketable securities 1,130,398 1,091,076 
Accounts receivable, net of allowances of $6,065 and $8,811 as of June 30, 2021 and December 31, 2020, respectively
468,181 563,733 
Prepaid expenses and other current assets 52,204 33,502 
Total current assets 2,663,711 2,357,541 
Property and equipment, net 59,034 69,375 
Operating lease right-of-use assets136,900 155,916 
Goodwill and intangible assets, net13,842 13,562 
Other assets12,159 13,065 
Total assets $2,885,646 $2,609,459 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $48,038 $49,491 
Accrued expenses and other current liabilities 189,411 155,340 
Total current liabilities 237,449 204,831 
Operating lease liabilities121,632 139,321 
Other liabilities22,638 22,936 
Total liabilities 381,719 367,088 
Commitments and contingencies
Stockholders’ equity:
Class A common stock, $0.00001 par value, 6,666,667 shares authorized, 553,387 and 530,140 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively; Class B common stock, $0.00001 par value, 1,333,333 shares authorized, 89,401 and 96,232 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively
6 6 
Additional paid-in capital 4,790,079 4,574,934 
Accumulated other comprehensive income 1,148 2,480 
Accumulated deficit (2,287,306)(2,335,049)
Total stockholders’ equity 2,503,927 2,242,371 
Total liabilities and stockholders’ equity $2,885,646 $2,609,459 



The accompanying notes are an integral part of these condensed consolidated financial statements.

8


PINTEREST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Revenue$613,210 $272,485 $1,098,440 $544,425 
Costs and expenses:
Cost of revenue127,819 108,259 261,289 207,491 
Research and development181,731 136,593 353,459 282,297 
Sales and marketing164,340 86,483 294,662 203,510 
General and administrative68,122 45,680 140,740 101,747 
Total costs and expenses542,012 377,015 1,050,150 795,045 
Income (loss) from operations71,198 (104,530)48,290 (250,620)
Interest income1,125 4,218 2,617 11,369 
Interest expense and other income (expense), net337 (16)(1,226)(2,093)
Income (loss) before provision for income taxes72,660 (100,328)49,681 (241,344)
Provision for income taxes3,243 420 1,938 600 
Net income (loss)$69,417 $(100,748)$47,743 $(241,944)
Net income (loss) per share:
Basic
$0.11 $(0.17)$0.08 $(0.42)
Diluted$0.10 $(0.17)$0.07 $(0.42)
Weighted-average shares used in computing net income (loss) per share:
Basic
636,190 586,737 632,413 581,518 
Diluted
692,364 586,737 692,223 581,518 








The accompanying notes are an integral part of these condensed consolidated financial statements.

9


PINTEREST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)


Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Net income (loss) $69,417 $(100,748)$47,743 $(241,944)
Other comprehensive income (loss), net of taxes:
Change in unrealized gain (loss) on available-for-sale marketable securities (354)5,941 (1,341)3,406 
Change in foreign currency translation adjustment 189 3 9 (316)
Comprehensive income (loss) $69,252 $(94,804)$46,411 $(238,854)








The accompanying notes are an integral part of these condensed consolidated financial statements.

10


Pinterest, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands)
(Unaudited)


Three Months Ended June 30, 2021
 
Class A and Class B Common Stock
Additional
Paid-In Capital
Accumulated Other Comprehensive Income (Loss)Accumulated DeficitStockholders’ Equity
SharesAmount
Balance as of March 31, 2021635,329 $6 $4,684,227 $1,313 $(2,356,723)$2,328,823 
Release of restricted stock units
5,613 — — — — — 
Issuance of common stock for cash upon exercise of stock options, net
1,846 — 5,591 — — 5,591 
Share-based compensation— — 100,261 — — 100,261 
Other comprehensive loss— — — (165)— (165)
Net income— — — — 69,417 69,417 
Balance as of June 30, 2021642,788 $6 $4,790,079 $1,148 $(2,287,306)$2,503,927 

Three Months Ended June 30, 2020
 
Class A and Class B Common Stock
Additional
Paid-In Capital
Accumulated Other Comprehensive Income (Loss)Accumulated DeficitStockholders’ Equity
SharesAmount
Balance as of March 31, 2020581,840 $6 $4,288,603 $(2,207)$(2,347,922)$1,938,480 
Release of restricted stock units
5,230 — — — — — 
Shares repurchased for tax withholdings on release of restricted stock units— — (12,797)— — (12,797)
Issuance of common stock for cash upon exercise of stock options, net
6,595 — 12,402 — — 12,402 
Issuance of common stock related to charitable contributions50 — 1,204 — — 1,204 
Issuance of restricted stock awards
2,549 — — — — — 
Share-based compensation— — 62,145 — — 62,145 
Other comprehensive income— — — 5,944 — 5,944 
Net loss — — — — (100,748)(100,748)
Balance as of June 30, 2020596,264 $6 $4,351,557 $3,737 $(2,448,670)$1,906,630 







The accompanying notes are an integral part of these condensed consolidated financial statements.

11


Pinterest, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands)
(Unaudited)


Six Months Ended June 30, 2021
 
Class A and Class B Common Stock
Additional
Paid-In Capital
Accumulated Other Comprehensive Income (Loss)Accumulated DeficitStockholders’ Equity
SharesAmount
Balance as of December 31, 2020626,372 $6 $4,574,934 $2,480 $(2,335,049)$2,242,371 
Release of restricted stock units
11,323 — — — — — 
Issuance of common stock for cash upon exercise of stock options, net
4,843 — 14,935 — — 14,935 
Issuance of common stock related to charitable contributions
250 — 20,490 — — 20,490 
Share-based compensation— — 179,720 — — 179,720 
Other comprehensive loss— — — (1,332)— (1,332)
Net income — — — — 47,743 47,743 
Balance as of June 30, 2021642,788 $6 $4,790,079 $1,148 $(2,287,306)$2,503,927 

Six Months Ended June 30, 2020
Class A and Class B Common StockAdditional
Paid-In Capital
Accumulated Other Comprehensive IncomeAccumulated DeficitStockholders’ Equity
SharesAmount
Balance as of December 31, 2019569,904 $6 $4,229,778 $647 $(2,206,726)$2,023,705 
Release of restricted stock units
8,143 — — — — — 
Shares repurchased for tax withholdings on release of restricted stock units— — (56,887)— — (56,887)
Issuance of common stock for cash upon exercise of stock options, net
15,518 — 32,749 — — 32,749 
Issuance of common stock related to charitable contributions
150 — 2,748 — — 2,748 
Issuance of restricted stock awards
2,549 — — — — — 
Share-based compensation— — 143,169 — — 143,169 
Other comprehensive income— — — 3,090 — 3,090 
Net loss— — — — (241,944)(241,944)
Balance as of June 30, 2020596,264 $6 $4,351,557 $3,737 $(2,448,670)$1,906,630 








The accompanying notes are an integral part of these condensed consolidated financial statements.

12


PINTEREST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)





Six Months Ended June 30,
20212020
Operating activities
Net income (loss) $47,743 $(241,944)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 13,537 20,231 
Share-based compensation 179,720 143,169 
Non-cash charitable contributions20,490 2,748 
Other 9,398 1,063 
Changes in assets and liabilities:
Accounts receivable 98,686 103,544 
Prepaid expenses and other assets (18,342)(7,180)
Operating lease right-of-use assets20,643 21,456 
Accounts payable (1,498)9,780 
Accrued expenses and other liabilities 25,662 (7,743)
Operating lease liabilities(20,646)(24,357)
Net cash provided by operating activities 375,393 20,767 
Investing activities
Purchases of property and equipment and intangible assets(3,428)(11,325)
Purchases of marketable securities (571,216)(308,612)
Sales of marketable securities 154,586 113,184 
Maturities of marketable securities 373,162 422,266 
Other investing activities  316 
Net cash (used in) provided by investing activities (46,896)215,829 
Financing activities
Proceeds from exercise of stock options, net
14,935 32,749 
Shares repurchased for tax withholdings on release of restricted stock units (56,887)
Net cash provided by (used in) financing activities 14,935 (24,138)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(305)(150)
Net increase in cash, cash equivalents and restricted cash343,127 212,308 
Cash, cash equivalents and restricted cash, beginning of period678,911 677,743 
Cash, cash equivalents and restricted cash, end of period$1,022,038 $890,051 
Supplemental cash flow information
Accrued property and equipment$905 $4,453 
Operating lease right-of-use assets obtained in exchange for operating lease liabilities$1,657 $4,121 

Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets
Cash and cash equivalents$1,012,928 $863,620 
Restricted cash included in prepaid expenses and other current assets299 3,210 
Restricted cash included in other assets8,811 23,221 
Total cash, cash equivalents and restricted cash$1,022,038 $890,051 








The accompanying notes are an integral part of these condensed consolidated financial statements.

13


PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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 condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). The condensed consolidated financial statements include the accounts of Pinterest, Inc. and its wholly owned subsidiaries. We have eliminated all intercompany balances and transactions.
The condensed consolidated balance sheet as of December 31, 2020 included herein was derived from the audited financial statements as of that date. We have condensed or omitted certain information and notes normally included in complete financial statements prepared in accordance with GAAP. As such, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 31, 2020, which are included in our Annual Report on Form 10-K.
In our opinion, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the results for the interim periods presented, but they are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2021.
Reclassifications
We have reclassified certain amounts in prior periods to conform with current presentation.
Use of Estimates
Preparing our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect amounts reported in the condensed 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, 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.
Some of our estimates require increased judgment due to the significant volatility, uncertainty and economic disruption of the COVID-19 pandemic. We continue to monitor the effects of the COVID-19 pandemic, and our estimates and judgments may change materially as new events occur or additional information becomes available to us.
Significant Accounting Policies
There have been no material changes to our significant accounting policies from our Annual Report on Form 10-K for the year ended December 31, 2020.





14



PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. 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):
June 30, 2021
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds $226,536 $ $ $226,536 
Commercial paper  43,810  43,810 
Marketable securities:
Corporate bonds  457,567  457,567 
U.S. treasury securities 285,236   285,236 
Commercial paper  195,339  195,339 
Certificates of deposit  136,968  136,968 
Municipal securities 40,622  40,622 
Non-U.S. government and supranational bonds 12,399  12,399 
Asset-backed securities 1,267  1,267 
U.S. agency bonds 1,000  1,000 
Prepaid expenses and other current assets:
Certificates of deposit  299  299 
Other assets:
Certificates of deposit $ $8,811 $ $8,811 
December 31, 2020
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds $225,643 $ $ $225,643 
Commercial paper 48,532  48,532 
U.S. treasury securities39,998   39,998 
Certificates of deposit 2,996  2,996 
Marketable securities:
Corporate bonds  454,487  454,487 
Commercial paper 234,253  234,253 
U.S. treasury securities203,054   203,054 
Certificates of deposit 134,882  134,882 
Municipal securities 17,619  17,619 
U.S. agency bonds 16,018  16,018 
Non-U.S. government and supranational bonds 15,950  15,950 
Asset-backed securities 14,813  14,813 
Prepaid expenses and other current assets:
Certificates of deposit  571  571 
Other assets:
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.
15


PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Gross unrealized gains and losses on our marketable securities were immaterial in the aggregate as of June 30, 2021 and December 31, 2020. We evaluated all available evidence and did not recognize any allowance for credit losses for our marketable securities as of June 30, 2021 and December 31, 2020. We continue to monitor the effects of the COVID-19 pandemic on expected credit losses.
The fair value of our marketable securities by contractual maturity is as follows (in thousands):
June 30, 2021
Due in one year or less $743,654 
Due after one to five years 386,744 
Total $1,130,398 
Net realized gains and losses from sales of available-for-sale securities were not material for any period presented.
3. Commitments and Contingencies
Purchase Commitments
In April 2021, we entered into a new private pricing addendum with Amazon Web Services (“AWS”), which governs our use of cloud computing infrastructure provided by AWS. Under the new pricing addendum, we are required to purchase at least $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 June 30, 2021, our remaining contractual commitment is $3,180.8 million. We expect to meet our remaining commitment.
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 alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and alleges that defendants made material false and misleading public statements about our revenue and user growth in 2019. The complaint seeks damages, litigation costs, and interest. On May 28, 2021, defendants filed a motion to dismiss the complaint, which is currently scheduled to be heard on September 15, 2021. 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 November and December 2020, certain of our executives and members of our board of directors were named as defendants in 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 June 1, 2021, the court referred the lawsuit to a magistrate judge for mediation and vacated other pending deadlines. On July 14, 2021, another derivative complaint with similar allegations was filed in the same court. 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 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,
16


PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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.
4. Share-Based Compensation
Equity Incentive Plan
In June 2009, our board of directors adopted and approved our 2009 Stock Plan (the "2009 Plan"), which provides for the issuance of stock options, Restricted Stock Awards ("RSAs") and Restricted Stock Units ("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 June 30, 2021.
Our 2019 Plan became effective upon closing of our initial public offering and succeeds our 2009 Plan. Our 2019 Omnibus Incentive Plan (the "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 less than 100% of the fair market value of our common stock on the date of grant. 127,224,592 shares of our Class A common stock were reserved for future issuance under our 2019 Plan as of June 30, 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 six months ended June 30, 2021, was as follows (in thousands, except per share amounts):
Stock Options Outstanding
SharesWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Term
Aggregate Intrinsic
Value (1)
(in years)
Outstanding as of December 31, 202023,947$3.15 2.9$1,502,604 
Exercised (4,843)3.08 
Outstanding as of June 30, 202119,104$3.17 2.4$1,447,698 
Exercisable as of June 30, 202118,398$2.43 2.2$1,407,707 
(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 six months ended June 30, 2021 and 2020, was $1.6 million and $1.7 million, respectively. The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2021 and 2020, was $349.2 million and $303.1 million, respectively.

No stock options were granted during the six months ended June 30, 2021. The total grant-date fair value of stock options granted during the six months ended June 30, 2020 was not material.
17


PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Restricted Stock Unit and Restricted Stock Award Activity
RSU and RSA activity during the six months ended June 30, 2021, was as follows (in thousands, except per share amounts):
Restricted Stock Units and Restricted Stock Awards Outstanding
SharesWeighted Average Grant Date Fair Value
Outstanding as of December 31, 202054,079$20.45 
Granted 5,94775.54 
Released(11,472)21.72 
Forfeited(2,052)23.49 
Outstanding as of June 30, 202146,502$27.05 
Share-Based Compensation
Share-based compensation expense during the three and six months ended June 30, 2021 and 2020, was as follows (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Cost of revenue $2,180 $2,325 $3,492 $3,751 
Research and development70,729 46,358 127,204 95,264 
Sales and marketing (1)
13,996 (2,074)25,887 11,845 
General and administrative 13,356 15,536 23,137 32,309 
Total share-based compensation $100,261 $62,145 $179,720 $143,169 
(1)Share-based compensation expense was negative for the three months ended June 30, 2020 due to the reversal of previously recognized share-based compensation expense related to unvested RSUs forfeited by our former Chief Operating Officer.
As of June 30, 2021, we had $963.8 million of unrecognized share-based compensation expense, which we expect to recognize over a weighted-average period of 3.0 years.
5. Net Income (Loss) Per Share
We present net income (loss) per share 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.
We calculate basic net income (loss) per share by dividing net income (loss) 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 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.
We calculated basic and diluted net income (loss) per share as follows (in thousands, except per share amounts):


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PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Class AClass BClass AClass BClass AClass BClass AClass B
Basic net income (loss) per share:
Numerator:
Net income (loss)$59,651 $9,766 $(70,961)$(29,787)$40,817 $6,926 $(165,255)$(76,689)
Denominator:
Weighted-average shares used in computing net income (loss) per share, basic546,687 89,504 413,262 173,475 540,666 91,747 397,194 184,324 
Basic net income (loss) per share$0.11 $0.11 $(0.17)$(0.17)$0.08 $0.08 $(0.42)$(0.42)
Diluted net income (loss) per share:
Numerator:
Net income (loss)$59,651 $9,766 $(70,961)$(29,787)$40,817 $6,926 $(165,255)$(76,689)
Reallocation of net income as a result of conversion of Class B to Class A common stock 9,766    6,926    
Reallocation of net income to Class B common stock  (792)   (598)  
Diluted net income (loss)$69,417 $8,974 $(70,961)$(29,787)$47,743 $6,328 $(165,255)$(76,689)
Denominator
Weighted-average shares used in computing net income (loss) per share546,687 89,504 413,262 173,475 540,666 91,747 397,194 184,324 
Conversion of Class B to Class A common stock89,504    91,747    
Weighted average effect of dilutive potential common stock 56,173    59,810    
Weighted-average shares used in computing net income (loss) per share, diluted692,364 89,504 413,262 173,475 692,223 91,747 397,194 184,324 
Diluted net income (loss) per share$0.10 $0.10 $(0.17)$(0.17)$0.07 $0.07 $(0.42)$(0.42)
    
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 because these would be anti-dilutive (in thousands):
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PINTEREST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)