SEC Info - Pinterest, Inc. - ‘10-K’ for 12/31/22


60

Part II

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, 2022, 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, 2022, 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, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 6, 2023 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

Incorporated by Reference


61

Part II

Pinterest, Inc.
Consolidated balance sheets

(In thousands, except par value)


	December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	i 1,611,063	$	i 1,419,630
Marketable securities	i 1,087,164		i 1,060,488
Accounts receivable, net of allowances of $ i 12,672 and $ i 8,282 as of December 31, 2022 and 2021, respectively	i 681,532		i 653,355
Prepaid expenses and other current assets	i 74,918		i 48,090
Total current assets	i 3,454,677		i 3,181,563
Property and equipment, net	i 59,575		i 53,401
Operating lease right-of-use assets	i 206,253		i 227,912
Goodwill and intangible assets, net	i 124,822		i 61,115
Other assets	i 17,403		i 13,247

Total assets	$	i 3,862,730	$	i 3,537,238
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	i 87,920	$	i 17,675
Accrued expenses and other current liabilities	i 292,611		i 242,131
Total current liabilities	i 380,531		i 259,806
Operating lease liabilities	i 178,694		i 209,181
Other liabilities	i 21,851		i 29,508
Total liabilities	i 581,076		i 498,495

Commitments and contingencies	i		i



Stockholders’ equity:

Class A common stock, $ i i 0.00001 / par value, i i 6,666,667 / shares authorized, i i 593,918 / and i i 568,228 / shares issued and outstanding as of December 31, 2022 and 2021, respectively; Class B common stock, $ i i 0.00001 / par value, i i 1,333,333 / shares authorized, i i 89,284 / and i i 88,644 / shares issued and outstanding as of December 31, 2022 and 2021, respectively	i 7		i 7
Additional paid-in capital	i 5,407,724		i 5,059,528
Accumulated other comprehensive loss	( i 11,419)		( i 2,181)
Accumulated deficit	( i 2,114,658)		( i 2,018,611)
Total stockholders’ equity	i 3,281,654		i 3,038,743
Total liabilities and stockholders’ equity	$	i 3,862,730	$	i 3,537,238

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


62

Part II

Pinterest, Inc.
Consolidated statements of operations

(In thousands, except per share amounts)

Year Ended December 31,

2022

2021

2020

Revenue

i 2,802,574

i 2,578,027

i 1,692,658

Costs and expenses:

Cost of revenue

i 678,597

i 529,320

i 449,358

Research and development

i 948,980

i 780,264

i 606,194

Sales and marketing

i 933,133

i 641,279

i 442,807

General and administrative

i 343,541

i 300,977

i 336,803

Total costs and expenses

i 2,904,251

i 2,251,840

i 1,835,162

Income (loss) from operations

( i 101,677)

i 326,187

( i 142,504)

Interest income

i 30,943

i 4,204

i 16,119

Interest expense and other income (expense), net

( i 15,210)

( i 9,420)

( i 635)

Income (loss) before provision for income taxes

( i 85,944)

i 320,971

( i 127,020)

Provision for income taxes

i 10,103

i 4,533

i 1,303

Net income (loss)

( i 96,047)

i 316,438

( i 128,323)

Net income (loss) per share attributable to common stockholders:

Basic

( i 0.14)

i 0.49

( i 0.22)

Diluted

( i 0.14)

i 0.46

( i 0.22)

Weighted-average shares used in computing net income (loss) per share attributable to common stockholders:

Basic

i 665,732

i 640,030

i 596,264

Diluted

i 665,732

i 691,651

i 596,264

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


63

Part II

Pinterest, Inc.
Consolidated statements of comprehensive income (loss)

(In thousands)

Year Ended December 31,

2022

2021

2020

Net income (loss)

( i 96,047)

i 316,438

( i 128,323)

Other comprehensive income (loss), net of taxes:

Change in unrealized gain (loss) on available-for-sale marketable securities

( i 8,334)

( i 4,252)

i 1,670

Change in foreign currency translation adjustment

( i 904)

( i 409)

i 163

Comprehensive income (loss)

( i 105,285)

i 311,777

( i 126,490)

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


64

Part II

Pinterest, Inc.
Consolidated statements of stockholders’ equity

(in thousands, except per share amounts)

Common Stock

Additional
Paid-In
Capital

Accumulated Other Comprehensive Income (Loss)

Accumulated Deficit

Stockholders’ Equity

Amount

Balance as of December 31, 2019

i 569,904

i 6

i 4,229,778

i 647

( i 2,206,726)

i 2,023,705

Release of restricted stock units and issuance of restricted stock awards, net

i 22,169

i —

—

i —

Shares repurchased for tax withholdings on release of restricted stock units and restricted stock awards

—

( i 56,894)

—

( i 56,894)

Issuance of common stock for cash upon exercise of stock options, net

i 34,149

—

i 78,282

—

i 78,282

Issuance of common stock related to charitable contributions

i 150

—

i 2,748

—

i 2,748

Share-based compensation

—

i 321,020

—

i 321,020

Other comprehensive income

—

i 1,833

—

i 1,833

Net loss

—

( i 128,323)

Balance as of December 31, 2020

i 626,372

i 6

i 4,574,934

i 2,480

( i 2,335,049)

i 2,242,371

Release of restricted stock units and issuance of restricted stock awards, net

i 21,944

i 1

—

i 1

Issuance of common stock for cash upon exercise of stock options, net

i 7,806

—

i 23,912

—

i 23,912

Issuance of common stock related to charitable contributions

i 750

—

i 45,300

—

i 45,300

Share-based compensation

—

i 415,382

—

i 415,382

Other comprehensive loss

—

( i 4,661)

—

( i 4,661)

Net income

—

i 316,438

Balance as of December 31, 2021

i 656,872

i 7

i 5,059,528

( i 2,181)

( i 2,018,611)

i 3,038,743

Release of restricted stock units and issuance of restricted stock awards, net

i 17,435

i —

—

i —

Shares repurchased for tax withholdings on release of restricted stock units and restricted stock awards

—

( i 161,809)

—

( i 161,809)

Issuance of common stock for cash upon exercise of stock options, net

i 8,895

—

i 12,882

—

i 12,882

Share-based compensation

—

i 497,123

—

i 497,123

Other comprehensive loss

—

( i 9,238)

—

( i 9,238)

Net loss

—

( i 96,047)

Balance as of December 31, 2022

i 683,202

i 7

i 5,407,724

( i 11,419)

( i 2,114,658)

i 3,281,654

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


65

Part II

Pinterest, Inc.
Consolidated statements of cash flows

(in thousands)

Year Ended December 31,

2022

2021

2020

Operating activities

Net income (loss)

( i 96,047)

i 316,438

( i 128,323)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

i 46,489

i 27,500

i 36,988

Share-based compensation

i 497,123

i 415,382

i 321,020

Non-cash charitable contributions

i —

i 45,300

i 2,748

Other

( i 13,889)

i 9,607

i 8,332

Changes in assets and liabilities:

Accounts receivable

( i 28,856)

( i 88,862)

( i 253,173)

Prepaid expenses and other assets

( i 30,214)

( i 14,727)

i 4,128

Operating lease right-of-use assets

i 56,024

i 43,995

i 41,898

Accounts payable

i 70,777

( i 33,451)

i 15,721

Accrued expenses and other liabilities

i 20,627

i 82,435

i 23,647

Operating lease liabilities

( i 52,832)

( i 50,710)

( i 44,160)

Net cash provided by operating activities

i 469,202

i 752,907

i 28,826

Investing activities

Purchases of property and equipment and intangible assets

( i 28,984)

( i 9,031)

( i 17,401)

Purchases of marketable securities

( i 1,028,480)

( i 1,104,087)

( i 1,216,260)

Sales of marketable securities

i 7,417

i 274,654

i 265,422

Maturities of marketable securities

i 1,007,861

i 849,520

i 920,300

Acquisition of business, net of cash acquired

( i 86,059)

( i 36,914)

i —

Other investing activities

i —

i 316

Net cash used in investing activities

( i 128,245)

( i 25,858)

( i 47,623)

Financing activities

Proceeds from exercise of stock options, net

i 12,882

i 23,912

i 78,282

Shares repurchased for tax withholdings on release of restricted stock units and restricted stock awards

( i 161,809)

i —

( i 56,894)

Payment of deferred offering costs and other financing activities

i —

( i 1,750)

Net cash (used in) provided by financing activities

( i 148,927)

i 22,162

i 19,638

Effect of exchange rate changes on cash, cash equivalents and restricted cash

( i 1,434)

( i 1,058)

i 327

Net increase in cash, cash equivalents and restricted cash

i 190,596

i 748,153

i 1,168

Cash, cash equivalents and restricted cash, beginning of period

i 1,427,064

i 678,911

i 677,743

Cash, cash equivalents and restricted cash, end of period

i 1,617,660

i 1,427,064

i 678,911

Supplemental cash flow information

Operating lease right-of-use assets obtained in exchange for operating lease liabilities

i 31,515

i 118,977

i 15,089

Reconciliation of cash, cash equivalents and restricted cash to consolidated balance sheets

Cash and cash equivalents

i 1,611,063

i 1,419,630

i 669,230

Restricted cash included in prepaid expenses and other current assets

i 1,067

i 1,137

i 571

Restricted cash included in other assets

i 5,530

i 6,297

i 9,110

Total cash, cash equivalents and restricted cash

i 1,617,660

i 1,427,064

i 678,911

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


66

Part II

Pinterest, Inc.
Notes to consolidated financial statements

1. i 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.

i i 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, 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.

i 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 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, 2022 and 2021.


67

Part II

Cost of revenue

Cost of revenue consists primarily of expenses associated with the delivery of our service, including the cost of hosting our website and mobile application. Cost of revenue also includes personnel-related expense, including salaries, benefits and share-based compensation for employees on our operations teams, payments associated with partner arrangements, credit card and other transaction processing fees, amortization of acquired intangible assets and allocated facilities and other supporting overhead costs.

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 i 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 record the remaining unrecognized share-based compensation expense over the remainder of the requisite service period.

RSUs, restricted stock awards ("RSAs"), and stock options granted under our 2019 Omnibus Incentive Plan (the "2019 Plan") are subject only to a service condition, which is typically satisfied over i four years. We record share-based compensation expense for these RSUs, RSAs and stock options 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 stock options based on their estimated grant date fair values, which we determine using the Black-Scholes option-pricing model. We record the resulting expense in our consolidated statements of operations over the requisite service period, which is generally i four years, and we account for forfeitures as they occur.

Income taxes

i 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 as incurred.

i Advertising expenses

We record advertising expenses as incurred and include these in sales and marketing in the consolidated statements of operations. Advertising expenses were $ i 139.7 million, $ i 94.7 million and $ i 30.3 million for the years ended December 31, 2022, 2021 and 2020, 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 loss in stockholders’ equity. 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.


68

Part II

Fair value measurements

We account for certain assets and liabilities at fair value, which is the amount we believe market participants would be willing to 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

i i

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						Useful Life
Computer and network equipment						i 3 years
Furniture and fixtures						i 4 years
Leasehold improvements						Lesser of estimated useful life or remaining lease term

/ / i

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.


69

Part II

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 i 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. In the fourth quarter of 2022 we recorded $ i 9.4 million of impairment charges for acquired intangible assets. We did not record any other 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.

/ i

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 loss in stockholders’ equity. 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.


70

Part II

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, 2022, 2021 and 2020.

i 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, 2022, 2021 and 2020.

2. i Cash, cash equivalents and marketable securities

Cash, cash equivalents and marketable securities consist of the following (in thousands):

December 31, 2022

Amortized Cost

Unrealized Gains

Unrealized Losses

Fair Value

Cash and cash equivalents:

Cash

i 474,365

i —

i 474,365

Money market funds

i 1,017,191

i —

i 1,017,191

Commercial paper

i 111,996

i —

( i 21)

i 111,975

Corporate bonds

i 1,542

i —

i 1,542

U.S. treasury securities

i 5,988

i 2

i —

i 5,990

Total cash and cash equivalents

i 1,611,082

i 2

( i 21)

i 1,611,063

Marketable securities:

Corporate bonds

i 370,445

i 172

( i 7,542)

i 363,075

Commercial paper

i 241,407

i 71

( i 286)

i 241,192

U.S. treasury securities

i 244,056

i 33

( i 1,173)

i 242,916

Certificates of deposit

i 158,607

i 60

( i 421)

i 158,246

Municipal securities

i 28,029

i 4

( i 584)

i 27,449

Non-U.S. government and supranational bonds

i 23,228

i —

( i 629)

i 22,599

U.S. agency bonds

i 31,695

i 40

( i 48)

i 31,687

Total marketable securities

i 1,097,467

i 380

( i 10,683)

i 1,087,164

Total

i 2,708,549

i 382

( i 10,704)

i 2,698,227


71

Part II

December 31, 2021

Amortized Cost

Unrealized Gains

Unrealized Losses

Fair Value

Cash and cash equivalents:

Cash

i 589,156

i —

i 589,156

Money market funds

i 711,188

i —

i 711,188

Commercial paper

i 114,972

i 4

i —

i 114,976

Corporate bonds

i 4,310

i —

i 4,310

Total cash and cash equivalents

i 1,419,626

i 4

i —

i 1,419,630

Marketable securities:

Corporate bonds

i 450,746

i 181

( i 1,510)

i 449,417

Commercial paper

i 247,623

i 15

( i 78)

i 247,560

U.S. treasury securities

i 189,325

i 19

( i 334)

i 189,010

Certificates of deposit

i 82,504

i 19

( i 37)

i 82,486

Municipal securities

i 49,470

i 11

( i 150)

i 49,331

Non-U.S. government and supranational bonds

i 41,812

i 3

( i 131)

i 41,684

U.S. agency bonds

i 1,000

i —

i 1,000

Total marketable securities

i 1,062,480

i 248

( i 2,240)

i 1,060,488

Total

i 2,482,106

i 252

( i 2,240)

i 2,480,118

Our allowance for credit losses for our marketable securities was not material as of December 31, 2022 and 2021.

The fair value of our marketable securities by contractual maturity is as follows (in thousands):


	December 31, 2022
Due in one year or less	$	i 951,486
Due after one to five years	i 135,678
Total	$	i 1,087,164

Net realized gains and losses from sales of available-for-sale securities were not material for any period presented.


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3. i 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):

December 31, 2022

Level 1

Level 2

Level 3

Total

Cash equivalents:

Money market funds

i 1,017,191

i —

i 1,017,191

Commercial paper

i —

i 111,975

i —

i 111,975

U.S. treasury securities

i 5,990

i —

i 5,990

Marketable securities:

Corporate bonds

i —

i 363,075

i —

i 363,075

Commercial paper

i —

i 241,192

i —

i 241,192

U.S. treasury securities

i 242,916

i —

i 242,916

Certificates of deposit

i —

i 158,246

i —

i 158,246

Municipal securities

i —

i 27,449

i —

i 27,449

Non-U.S. government and supranational bonds

i —

i 22,599

i —

i 22,599

U.S. agency bonds

i —

i 31,687

i —

i 31,687

Prepaid expenses and other current assets:

Certificates of deposit

i —

i 1,067

i —

i 1,067

Restricted cash:

Certificates of deposit

i —

i 5,530

i —

i 5,530

December 31, 2021

Level 1

Level 2

Level 3

Total

Cash equivalents:

Money market funds

i 711,188

i —

i 711,188

Commercial paper

i —

i 114,976

i —

i 114,976

Corporate bonds

i —

i 4,310

i —

i 4,310

Marketable securities:

Corporate bonds

i —

i 449,417

i —

i 449,417

Commercial paper

i —

i 247,560

i —

i 247,560

U.S. treasury securities

i 189,010

i —

i 189,010

Certificates of deposit

i —

i 82,486

i —

i 82,486

Municipal securities

i —

i 49,331

i —

i 49,331

Non-U.S. government and supranational bonds

i —

i 41,684

i —

i 41,684

U.S. agency bonds

i —

i 1,000

i —

i 1,000

Prepaid expenses and other current assets:

Certificates of deposit

i —

i 1,137

i —

i 1,137

Restricted cash:

Certificates of deposit

i —

i 6,297

i —

i 6,297

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.


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4. i Other balance sheet components

Property and equipment, net

Property and equipment, net consists of the following (in thousands):



	December 31,
	2022		2021
Leasehold improvements	$	i 104,557	$	i 101,214

Furniture and fixtures	i 30,882		i 25,956
Computer and network equipment	i 32,845		i 32,020
Total property and equipment	i 168,284		i 159,190
Less: accumulated depreciation	( i 116,291)		( i 108,159)
Construction in progress	i 7,582		i 2,370
Property and equipment, net	$	i 59,575	$	i 53,401

Depreciation expense was $ i 21.6 million, $ i 26.2 million and $ i 36.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consists of the following (in thousands):

December 31,

2022

2021

Accrued hosting expenses

i 53,380

i 84,105

Accrued compensation

i 48,146

i 37,154

Operating lease liabilities

i 50,274

i 41,693

Other accrued expenses

i 140,811

i 79,179

Accrued expenses and other current liabilities

i 292,611

i 242,131

5. i Acquisition

On June 10, 2022, we acquired all outstanding shares of The Yes Platform, Inc. (“The Yes”), an AI powered shopping platform for fashion. We believe the acquisition of The Yes will help accelerate our vision for Pinterest to be the home of taste-driven shopping.

The total purchase consideration was $ i 87.6 million in cash. Of this, we attributed $ i 15.0 million to customer relationships, $ i 13.6 million to developed technology, and $ i 60.0 million to goodwill. Goodwill represents the synergies we expect to realize from the acquisition and the assembled workforce and is i not deductible for tax purposes.

We included the results of The Yes’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.

In the fourth quarter of 2022, we recorded impairment charges of $ i i 9.4 / million related to the customer relationships and developed technology. Refer to Note 6 for detail.

6. i Goodwill and intangible assets, net

i Changes in goodwill for the periods presented are as follows (in thousands):


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Balance as of December 31, 2021	$	i 40,208
Acquisitions	i 60,019

Balance as of December 31, 2022	$	i 100,227

Intangible assets, net consists of the following (in thousands):

December 31, 2022

Gross Carrying Amount

Accumulated Amortization(1)

Net Carrying Amount

Weighted-Average Useful Life(2)

Acquired technology, patents and other intangibles

i 39,907

( i 17,427)

i 22,480

i 4.9 years

Customer relationships

i 17,700

( i 15,585)

i 2,115

i 1.6 years

Total intangible assets, net

i 57,607

( i 33,012)

i 24,595

December 31, 2021

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Weighted-Average Useful Life(2)

Acquired technology, patents and other intangibles

i 26,307

( i 8,055)

i 18,252

i 5.8 years

Customer relationships

i 2,700

( i 45)

i 2,655

i 5.0 years

Total intangible assets, net

i 29,007

( i 8,100)

i 20,907

(1)Accumulated amortization includes a $ i 9.4 million of impairment charges for acquired intangible assets for the year ended December 31, 2022.

(2)Based on the weighted-average useful life established as of acquisition date.

Amortization expense was $ i 24.9 million, $ i 1.3 million, and $ i 1.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

During the fourth quarter of 2022, we evaluated the acquired intangible assets from The Yes for impairment due to the departure of certain key employees. We concluded that the fair values of the customer relationships and developed technology were impaired and recorded impairment charges of $ i 6.3 million and $ i 3.1 million to sales and marketing and cost of revenue, respectively.

i Estimated future amortization expense as of December 31, 2022, is as follows (in thousands):


	Intangible Asset Amortization
2023	$	i 7,359
2024	i 7,359
2025	i 5,464
2026	i 3,424
2027	i 476
Thereafter	i 513
Total	$	i 24,595

7. i Commitments and contingencies


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i As of December 31, 2022, our non-cancelable contractual commitments are as follows (in thousands):

Purchase Commitments

Operating Leases

Total Commitments

2023

i —

i 58,990

2024

i —

i 37,628

2025

i —

i 29,756

2026

i —

i 30,443

2027

i —

i 27,892

Thereafter

i 2,357,100

i 85,891

i 2,442,991

Total

i 2,357,100

i 270,600

i 2,627,700

Purchase commitments

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 $ i 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, 2022, our remaining contractual commitment is $ i 2,357.1 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.

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 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. A final approval for the settlement was granted on May 26, 2022. The court granted a portion of the attorneys' fees sought by Plaintiffs, while another portion remains contingent on certain conditions being fulfilled within two years of the settlement approval. We don't believe that these fees will be material to our financial position.

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 alleged 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. The complaint sought damages, litigation costs, and interest. On May 10, 2021, the court stayed this lawsuit in light of the related pending case in the Northern District of California. On July 21, 2022 the matter was dismissed.

Revolving credit facility

In October 2022, we entered into an amended and restated i five-year $ i 400.0 million revolving credit facility (the “2022 revolving credit facility”), which replaced our previous $ i 500.0 million revolving credit facility entered into in November 2018. The 2022 revolving credit facility also contains an accordion option which, if exercised, would allow us to increase the aggregate commitments by up to $ i 405.0 million provided we are able to secure additional lender commitments and satisfy certain other conditions. Interest on any borrowings under the 2022 revolving credit facility accrues at either an adjusted term Secured Overnight Financing Rate ("SOFR") plus i 0.10% and a margin of i 1.50% or at an alternative base rate


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plus a margin of i 0.50%, at our election, and we are required to pay an annual commitment fee that accrues at i 0.15% per annum on the unused portion of the aggregate commitments under the 2022 revolving credit facility.

The 2022 revolving credit facility also allows us to issue letters of credit, which reduce the amount we can borrow. We are required to pay a fee that accrues at i 0.125% per annum on the average aggregate daily maximum amount available to be drawn under any outstanding letters of credit.

The 2022 revolving credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict our ability to incur indebtedness, grant liens, make distributions to holders of our stock or the stock of our subsidiaries, make investments or engage in transactions with our affiliates. The 2022 revolving credit facility also contains a financial maintenance covenant: a maximum net leverage ratio of consolidated debt to consolidated EBITDA no greater than i 3.50 to 1.00, subject to an increase up to i 4.00 to 1.00 for a certain period following an acquisition. The obligations under the 2022 revolving credit facility are secured by liens on substantially all of our domestic assets, including certain domestic intellectual property assets.

Our total borrowing capacity under the revolving credit facility is $ i 400.0 million as of December 31, 2022. We have not issued any letters of credit and there are no amounts outstanding under the 2022 revolving credit facility as of December 31, 2022.

8. i Leases

We have entered into various non-cancelable office space operating leases with original lease periods expiring between 2023 and 2033. These do not contain material variable rent payments, residual value guarantees, covenants or other restrictions. i Operating lease costs for the years ended December 31, 2022, 2021 and 2020, are as follows (in thousands):

Year Ended December 31,

2022

2021

2020

Lease cost:

Operating lease cost

i 66,022

i 53,691

i 51,285

Short-term lease cost

i 2,809

i 1,434

i 3,933

Total

i 68,831

i 55,125

i 55,218

The weighted-average remaining term of our operating leases was i 6.8 years and i 7.5 years, and the weighted-average discount rate used to measure the present value of our operating lease liabilities was i 4.1% and i 4.2% as of December 31, 2022 and 2021, respectively.

i Maturities of our operating lease liabilities, which do not include short-term leases, as of December 31, 2022, are as follows (in thousands):


	Operating Leases
2023	$	i 58,990
2024	i 37,628
2025	i 29,756
2026	i 30,443
2027	i 27,892
Thereafter	i 85,891
Total lease payments	i 270,600
Less imputed interest	( i 41,632)
Total operating lease liabilities	$	i 228,968

Cash payments included in the measurement of our operating lease liabilities were $ i 64.0 million, $ i 59.0 million and $ i 54.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.

As of December 31, 2022, operating leases that have not yet commenced were not material and are excluded from the table above.


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9. i 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 i 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 i seven years. i No shares of our common stock were reserved for future issuance under our 2009 Plan as of December 31, 2022.

Our 2019 Plan became effective upon closing of our initial public offering 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 i 10 years and an exercise price not less than 100% of the fair market value of our common stock on the date of grant. i 117,384,569 shares of our Class A common stock were reserved for future issuance under our 2019 Plan as of December 31, 2022.

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 i 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, 2022, was as follows (in thousands, except per share amounts):

Stock Options Outstanding

Weighted-Average

Exercise Price

Weighted-Average

Remaining

Contractual Term

Aggregate Intrinsic

Value (1)

(in years)

Outstanding as of December 31, 2021

i 16,141

i 3.19

i 1.9

i 535,118

Granted

i 8,553

i 19.96

Exercised

( i 8,895)

i 1.45

Outstanding as of December 31, 2022

i 15,799

i 13.25

i 6.1

i 174,165

Exercisable as of December 31, 2022

i 7,498

i 5.74

i 2.4

i 138,979

(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, 2022, 2021 and 2020 was $ i 9.5 million, $ i 3.2 million and $ i 3.3 million, respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2022, 2021 and 2020 was $ i 180.2 million, $ i 511.4 million and $ i 1,023.9 million, respectively.


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Restricted stock unit and restricted stock award activity

RSU and RSA activity during the year ended December 31, 2022, was as follows (in thousands, except per share amounts):


	Restricted Stock Units and Restricted Stock Awards Outstanding
	Shares	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2021	i 36,258	$	i 30.84
Granted	i 52,480	i 21.91
Released	( i 22,763)	i 25.41
Forfeited	( i 11,457)	i 26.31
Outstanding as of December 31, 2022	i 54,518	$	i 25.46

Share-based compensation

Share-based compensation expense during the years ended December 31, 2022, 2021 and 2020, was as follows (in thousands):

Year Ended December 31,

2022

2021

2020

Cost of revenue

i 7,629

i 7,438

i 7,865

Research and development

i 324,161

i 309,715

i 218,718

Sales and marketing

i 99,467

i 52,691

i 35,645

General and administrative

i 65,866

i 45,538

i 58,792

Total share-based compensation

i 497,123

i 415,382

i 321,020

As of December 31, 2022, we had $ i 1,302.8 million of unrecognized share-based compensation expense, which we expect to recognize over a weighted-average period of i 2.9 years.

Fair value of stock options

We measure stock options based on their estimated grant date fair values, which we determine using the Black-Scholes option-pricing model, and we record the resulting expense in our consolidated statements of operations over the requisite service period, which is generally i four years.

We estimated the fair value of the stock options granted during the year ended December 31, 2022, using the Black‑Scholes option-pricing model with the following assumptions:


	Year Ended December 31, 2022
Expected term (in years)	i 6.1
Risk-free interest rate	i 3.2	%
Expected volatility	i 61.1	%
Dividend yield	i —	%

The key inputs we used in the Black-Scholes model are:

•Expected term – The expected term represents the period we expect our share-based awards to be outstanding, which is also the period we used to measure risk-free interest rates and expected volatility. We estimated the expected term using the simplified method as we do not have sufficient historical stock option exercise data.

•Risk-free interest rate – We estimated the risk-free interest rate based on zero-coupon U.S. Treasury notes.

•Expected volatility – We estimated expected volatility based on a combination of our historical volatility and that of comparable publicly-traded companies.

•Dividend yield – We applied a dividend yield of i zero because we have never paid or declared dividends, and we have no plan to do so in the foreseeable future.


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The weighted-average grant-date fair value of stock options granted during the year ended December 31, 2022 was $ i 11.79. Stock options granted during the years ended December 31, 2021 and 2020 were not material.

10. i 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):

Year Ended December 31,

2022

2021

2020

Class A

Class B

Class A

Class B

Class A

Class B

Basic net income (loss) per share:

Numerator:

Net income (loss)

( i 83,110)

( i 12,937)

i 274,699

i 41,739

( i 96,499)

( i 31,824)

Denominator:

Basic weighted-average shares used in computing net income (loss) per share

i 576,061

i 89,671

i 555,608

i 84,422

i 448,392

i 147,872

Basic net income (loss) per share

( i 0.14)

i 0.49

( i 0.22)

Diluted net income (loss) per share:

Numerator:

Net income (loss)

( i 83,110)

( i 12,937)

i 274,699

i 41,739

( i 96,499)

( i 31,824)

Reallocation of net income as a result of conversion of Class B to Class A common stock

i —

i 41,739

i —

Reallocation of net income to Class B common stock

i —

( i 3,115)

i —

Diluted net income (loss)

( i 83,110)

( i 12,937)

i 316,438

i 38,624

( i 96,499)

( i 31,824)

Denominator:

Basic weighted-average shares used in computing net income (loss) per share

i 576,061

i 89,671

i 555,608

i 84,422

i 448,392

i 147,872

Conversion of Class B to Class A common stock

i —

i 84,422

i —

Weighted average effect of dilutive potential common stock

i —

i 51,621

i —

Diluted weighted-average shares used in computing net income (loss) per share

i 576,061

i 89,671

i 691,651

i 84,422

i 448,392

i 147,872

Diluted net income (loss) per share

( i 0.14)

i 0.46

( i 0.22)


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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):

Year Ended December 31,

2022

2021

2020

Outstanding stock options

i 17,405

i —

i 40,067

Unvested restricted stock units and restricted stock awards

i 52,256

i 3,271

i 63,603

Total

i 69,661

i 3,271

i 103,670

11. i Income taxes

The components of income (loss) before provision for income taxes are as follows (in thousands):


	Year Ended December 31,
	2022		2021		2020
United States	$	i 29,108	$	i 331,447	$	i 49,973
Foreign	( i 115,052)		( i 10,476)		( i 176,993)
Income (loss) before provision for income taxes	$	( i 85,944)	$	i 320,971	$	( i 127,020)

/ i

Provision for income taxes consists of the following (in thousands):

Year Ended December 31,

2022

2021

2020

Current:

Federal

i 1,681

i —

State

i 7,385

i 2,303

i 79

Foreign

i 4,381

i 2,957

i 691

Total current tax expense

i 13,447

i 5,260

i 770

Deferred:

Federal

( i 1,861)

i 6

i 654

State

( i 356)

i 6

i 5

Foreign

( i 1,127)

( i 739)

( i 126)

Total deferred tax expense (benefit)

( i 3,344)

( i 727)

i 533

Provision for income taxes

i 10,103

i 4,533

i 1,303


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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):

Year Ended December 31,

2022

2021

2020

Tax at U.S. statutory rate

( i 18,048)

i 67,404

( i 26,674)

State income taxes, net of benefit

i 5,502

i 2,307

i 84

Foreign operations

i 26,985

i 4,448

i 37,716

Permanent book/tax differences

i 6,598

i 409

i 1,927

Legal settlement

i —

i 2,290

Share-based compensation

( i 20,663)

( i 269,009)

( i 303,245)

Change in valuation allowance

i 62,048

i 278,761

i 352,410

Tax credits

( i 52,319)

( i 79,787)

( i 63,205)

Provision for income taxes

i 10,103

i 4,533

i 1,303

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 and for the year ended December 31, 2022 includes the effects of the capitalization and amortization of research and development expenses as required by the 2017 Tax Cuts and Jobs Act.

Significant components of our deferred tax assets and liabilities are as follows (in thousands):


	December 31,
	2022		2021
Deferred tax assets:
Net operating loss carryforwards	$	i 900,200	$	i 1,036,254
Research tax credits	i 473,248		i 401,219
Reserves, accruals, and other	i 31,502		i 29,641
Lease obligation	i 56,185		i 58,860
Share-based compensation	i 40,976		i 63,798
Research capitalization and amortization	i 208,373		i —
Total deferred tax assets	i 1,710,484		i 1,589,772
Less: valuation allowance	( i 1,660,609)		( i 1,539,889)
Deferred tax assets, net of valuation allowance	i 49,875		i 49,883
Deferred tax liabilities:
Depreciation and amortization	( i 44,790)		( i 47,952)
Prepaid expenses	( i 4,190)		( i 2,036)
Total deferred tax liabilities	( i 48,980)		( i 49,988)
Deferred tax assets (liabilities)	$	i 895	$	( i 105)

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, 2022. Accordingly, we have established a full valuation allowance on our U.S. and Irish deferred tax assets. Our valuation allowance increased by $ i 120.7 million during the year ended December 31, 2022, primarily due to U.S. federal and state tax credits and the effects of the capitalization and amortization of research and development expenses as required by the 2017 Tax Cuts and Job Act. Our valuation allowance increased by $ i 363.0 million during the year ended December 31, 2021, primarily due to U.S. federal and state tax losses and credits incurred during the period.

As of December 31, 2022, we had federal, California and other state net operating loss carryforwards of $ i 3,636.5 million, $ i 551.8 million and $ i 1,501.5 million, respectively. Our federal carryforwards do not expire. If not utilized, our California and other state carryforwards will begin to expire in 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


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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, 2022, we had $ i 173.2 million and $ i 5.6 million of Irish and Other Foreign net operating loss carryforwards, respectively that can be carried forward indefinitely.

As of December 31, 2022, we had federal and California research and development credit carryforwards of $ i 426.5 million and $ i 319.3 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):


	Gross Unrecognized Tax Benefits
Balance as of December 31, 2020	$	i 140,160
Increases for tax positions of prior years	i 2,906

Increases for tax positions of current year	i 61,993
Balance as of December 31, 2021	$	i 205,059
Increases for tax positions of prior years	i —
Decreases for tax positions of prior years	( i 3,347)
Increases for tax positions of current year	i 38,226
Balance as of December 31, 2022	$	i 239,938

Recognizing the $ i 239.9 million of gross unrecognized tax benefits we had as of December 31, 2022 would affect our effective tax rate by $ i 3.2 million. The remaining $ i 236.7 million of gross unrecognized tax benefits would be offset by 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, 2022 and 2021.

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 2017 and forward. We are currently under examination of our U.S. consolidated federal income tax return by the Internal Revenue Service for 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, 2022, the residual taxes would not be material.


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Part II

12. i Geographical information

Revenue disaggregated by geography based on our customers’ billing addresses is as follows (in thousands):

Year Ended December 31,

2022

2021

2020

U.S. and Canada(1)

i 2,264,640

i 2,109,089

i 1,464,344

Europe(2)

i 410,516

i 384,657

i 191,767

Rest of World

i 127,418

i 84,281

i 36,547

Total revenue

i 2,802,574

i 2,578,027

i 1,692,658

(1)United States revenue was $ i 2,144.3 million, $ i 2,003.6 million and $ i 1,404.3 million as of December 31, 2022 and 2021 and 2020, respectively. No individual country other than the United States exceeded 10% of our total revenue for any period presented.

(2)Europe includes Russia and Turkey.

/ i

Property and equipment, net and operating lease right-of-use assets by geography is as follows (in thousands):

December 31,

2022

2021

United States

i 205,374

i 247,975

International(1)

i 60,454

i 33,338

Total property and equipment, net and operating lease right-of-use assets

i 265,828

i 281,313

(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.

13. i Subsequent events

On February 2, 2023, our board of directors authorized a stock repurchase program of up to $ i 500 million of our Class A common stock over the next 12 months. Under the stock repurchase program, we are authorized to repurchase, from time-to-time, shares of our Class A common stock through open market purchases, in privately negotiated transactions or in other such manner as permitted by securities law and as determined by management at such time and in such amounts as management may decide. The program does not obligate us to repurchase any specific number of shares and may be modified, suspended or discontinued at any time. We have not repurchased any of our Class A common stock under the repurchase program as of February 6, 2023.


84

Part II

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, 2022, 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, 2022 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.

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.


85

Part II

Item 9B. Other information

None.

Item 9C. Disclosure regarding foreign jurisdictions that prevent inspections

None.


86

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 2023 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission (SEC) within 120 days of December 31, 2022 (the "2023 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 2023 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 2023 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 2023 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 2023 Proxy Statement.


87

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

Form

File No.

Exhibit

Filing Date

3.1

Amended and Restated Certificate of Incorporation of the Company.

8-K

Certificate of Change of Registered Agent

3.2

April 23, 2019

3.2

8-K

Amended and Restated Bylaws of the Company

3.1

December 15, 2021

3.3

8-K

Description of our Common Stock.

3.1

November 22, 2022

4.1

10-K

4.2

4.2

10-K

4.3

10.1

Form of Indemnification Agreement between the Company and each of its directors and executive officers.

S-1/A

Form of Executive Severance & Change in Control Agreement (CEO).

10.1

April 8, 2019

10.2+

S-1/A

Form of Amended and Restated Executive Severance & Change in Control Agreement (Non-CEO).

10.14

April 8, 2019

10.3+

10-K

Employment Agreement by and between Cold Brew Labs Inc. and Benjamin Silbermann, dated as of July 14, 2009.

10.3

February 3, 2022

10.4+

S-1/A

10.3

Confidential Information and Invention Assignment Agreement by and between Cold Brew Labs Inc. and Benjamin Silbermann, dated as of October 28, 2008.

10.5+

S-1/A

10.4

Offer Letter and Confidential Agreement and Invention Assignment Agreement by and between the Company and Todd Morgenfeld, dated as of September 19, 2016.

10.6+

S-1/A

10.5

Pinterest, Inc. 2009 Stock Plan, as amended.

10.7+

S-1

10.7

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.

10.8+

S-1

10.8

Form of Pinterest, Inc. 2009 Stock Plan Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement


88

Part IV

10.9+

S-1

10.9

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.

10.10+

S-1

10.10

Pinterest, Inc. 2019 Omnibus Incentive Plan.

10.11+

S-1/A

10.11

Form of Pinterest, Inc. 2019 Omnibus Incentive Plan Restricted Stock Unit Grant Notice and Agreement.

10.12+

S-1/A

Form of Pinterest, Inc. 2019 Omnibus Incentive Plan Restricted Stock Grant Notice and Agreement.

10.12

April 8, 2019

10.13+

10-K

Form of Pinterest, Inc. 2019 Omnibus Incentive Plan Stock Option Grant Notice and Agreement.

10.14

February 7, 2020

10.14+

10-K

Non-Employee Director Compensation Policy.

10.15

February 7, 2020

10.15+

10-Q

Pinterest, Inc. 2009 Stock Plan Notice of Stock Option Grant and Stock Option Agreement.

10.1

April 28, 2021

10.16+

S-8

333-230999

4.3

April 23, 2019

10.17+

Employment Agreement between Pinterest, Inc. and Christine Flores dated as of February 27, 2017

10-Q

Employment Agreement between Cold Brew Labs Inc. and Evan Sharp dated as of May 13, 2011

10.2

April 28, 2021

10.18+

10-Q

Consulting Agreement dated October 13th, 2021 and effective October 15, 2021, Evan Sharp

10.3

April 28, 2021

10.19+

10-Q

Offer Letter, dated June 22, 2022, between Pinterest, Inc. and William Ready.

10.2

November 4, 2021

10.20+

8-K

Executive Severance and Change in Control Agreement, dated June 23, 2022 between Pinterest, Inc. and William Ready.

10.1

June 28, 2022

10.21+

8-K

Transition Letter, dated June 22, 2022 between Pinterest, Inc. and Ben Silbermann.

10.2

June 28, 2022

10.22+

8-K

Pinterest, Inc. 2019 Omnibus Incentive Plan Stock Option Grant Notice and Agreement by and between the Company and William Ready, dated as of June 29, 2022.

10.3

June 28, 2022

10.23+

10-Q

Pinterest, Inc. 2019 Omnibus Incentive Plan Restricted Stock Award Grant Notice and Agreement by and between Pinterest, Inc. and William Ready, dated as of August 31, 2022.

10.1

October 27, 2022

10.24+

10-Q

Employment Agreement between Pinterest, Inc. and Wanji Walcott dated as of November 14, 2022

10.1

October 27, 2022

10.25+

10.26+

Revolving Credit Agreement, by and among the Company, the Guarantors and JP Morgan Chase Bank, N.A., as administrative agent, dated as of October 25, 2022.

10-Q

Cooperation Agreement, dated December 6, 2022, by and among Elliott Associates, L.P., Elliott International L.P. and Pinterest, Inc.

10.2

October 27, 2022

10.27

8-K

List of Subsidiaries of Pinterest, Inc.

10.1

December 6, 2022

21.1

23.1

Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.


89

Part IV

24.1

Power of Attorney.

31.1

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.

31.2

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),

32.1

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.

101.INS

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.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

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.


90

Signatures

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.



		PINTEREST, INC.

Date: February 6, 2023	By:	/s/ *Todd Morgenfeld*
		Todd Morgenfeld
		Chief Financial Officer and Head of Business Operations
		(Principal Financial Officer)


91

Power of attorney

The undersigned directors and officers of Pinterest, Inc. hereby constitute and appoint William Ready, Todd Morgenfeld and Wanjiku Walcott, 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.


92

Power of attorney

Name

Title

Date

/s/ William Ready

Chief Executive Officer (Principal Executive Officer)

William Ready

/s/ Jeffrey Jordan

Director

Jeffrey Jordan

/s/ Leslie J. Kilgore

Director

Leslie J. Kilgore

/s/ Jeremy S. Levine

Director

Jeremy S. Levine

/s/ Gokul Rajaram

Director

Gokul Rajaram

/s/ Fredric G. Reynolds

Director

Fredric G. Reynolds

/s/ Evan Sharp

Director

Evan Sharp

/s/ Benjamin Silbermann

Director

Benjamin Silbermann

/s/ Salaam Coleman Smith

Director

Salaam Coleman Smith

/s/ Marc Steinberg

Director

Marc Steinberg

/s/ Andrea Wishom

Director

Andrea Wishom

/s/ Todd Morgenfeld

Chief Financial Officer and Head of Business Operations

Todd Morgenfeld

(Principal Financial Officer)

/s/ Andrea Acosta

Chief Accounting Officer (Principal Accounting Officer)