Ross Sandler

Ross Sandler from Barclays followed up on advertising, asking how emerging brands and new off-site retail media partnerships with platforms like Pinterest and The Trade Desk are contributing to growth and when they might become significant enough to offset weakness from large CPGs.

Answer

CEO & Chair Fidji Simo confirmed that the diversification strategy is working, as growth from emerging and mid-sized brands more than compensated for a pullback from a large CPG partner. She noted that off-platform advertising is at an earlier stage; while foundational partnerships are in place and performing well, the focus is now on developing the right motion to scale these businesses. Simo believes the fundamentals are now nailed, positioning this channel for future growth.

Ross Sandler asked about the CPG advertising pipeline, the potential impact of the new "share of digital shelf" metric, and followed up with a question on how AI is used to improve inventory tracking and substitutions to drive customer retention.

Answer

CEO Fidji Simo noted strong diversification with 7,000 active brands and that new metrics help justify budgets. She elaborated on AI's critical role in improving order quality, citing 300 million replacements in 2024 with a 95% satisfaction rate, which she stated is absolutely critical for driving customer retention.

Ross Sandler questioned why some retailers are slow to adopt new features and asked if the growing share of non-exclusive GTV would increase transaction take rates.

Answer

CEO Fidji Simo clarified that slow adoption is not pushback but reflects long, complex integration cycles, which in turn create a competitive moat. CFO Emily Maher added that most retailers are already non-exclusive and that recent transaction revenue improvements came from shopper efficiencies, not contract changes. She stated they are happy with the current take rate and will continue reinvesting any gains back into the business through incentives or lower-cost products.

Ross Sandler from Barclays questioned the timing of Ziff Davis's strategic review, given the potential peak of Google referral traffic impact on the broader open web, and sought clarification on the Q4 advertising growth guidance.

Answer

CEO Vivek Shah countered that the AI overview narrative is not broadly relevant to Ziff Davis's businesses, citing strong performance in Health & Wellness (13% revenue growth, 18% adjusted EBITDA growth in Q3). He highlighted that two segments, Connectivity and Cybersecurity & Martech, are not Google-dependent, and other brands like RetailMeNot have different dynamics. He suggested the public market undervalues these distinctions. CFO Bret Richter explained that the implied low single-digit advertising growth for Q4 is due to lapping the CNET acquisition, soft product launches in gaming, and search volatility, expecting subscription growth to outpace advertising growth.

Ross Sandler questioned the timing of putting the company 'for sale' if Google referral traffic impact is peaking, and whether the outlook for display growth has changed. He also asked for clarification on the Q4 advertising growth guidance.

Answer

CEO Vivek Shah clarified that the AIO review narrative is not relevant to Ziff Davis's businesses, citing strong performance in segments like Health and Wellness (13% revenue growth, 18% adjusted EBITDA growth in Q3). He highlighted that Connectivity and Cybersecurity & MarTech segments are not Google-dependent, suggesting the public market doesn't fully appreciate the diverse dynamics of Ziff Davis's businesses. CFO Brett Richter confirmed that a low single-digit advertising growth rate for Q4 is a fair implication, primarily due to lapping the CNET acquisition, and expects subscription growth to outpace advertising growth.

Ross Sandler questioned the source of EBITDA margin contraction in the Tech and Health segments despite strong revenue growth and asked for the outlook on incremental margins across the company.

Answer

CEO Vivek Shah and CFO Bret Richter clarified there were no structural changes to the cost profile. They attributed the quarterly margin fluctuations to the 'lumpiness' of smaller segments, mix dynamics, and M&A integration costs, such as with CNET. Shah also noted the sunsetting of a PC game investment business was a minor drag on the Tech and Shopping segment's margin.

Ross Sandler questioned the strength of the pharma advertising upfronts and the pipeline for other categories, and also asked about the rationale for suing OpenAI rather than pursuing a licensing deal.

Answer

CEO Vivek Shah confirmed that the pharma upfronts were strong, providing good full-year visibility, particularly with a recovery on the direct-to-provider side. He noted other ad categories lack this visibility due to shorter booking cycles. Regarding OpenAI, Shah stated that after good-faith negotiations failed to produce acceptable terms for the unauthorized use of their content, litigation became the necessary course of action to defend the company's intellectual property.

Ross Sandler inquired about the macroeconomic environment for 2025, the potential impact of AI tools from walled gardens on open web advertising, and the underlying organic growth assumptions within the 4-5% advertising growth forecast.

Answer

CEO Vivek Shah explained that the ad business outlook is viewed categorically, with strength in tech and gaming continuing from 2024 and an expected rebound in Health & Wellness after a strong upfront season. He noted a planned revenue reduction in the B2B business creates a 150 basis point headwind. Shah emphasized that Ziff Davis's leadership in endemic categories provides a buffer against shifts seen in the broader open web. CFO Bret Richter added that their 2025 plan assumes a benign macro environment, similar to 2024.

Ross Sandler asked about the sustainability of the advertising business's growth into 2025 and if the CNET acquisition is changing conversations with advertisers. He also questioned the drivers behind the strong EBITDA to free cash flow conversion.

Answer

CEO Vivek Shah explained that the newly formed CNET Group provides unique scale that is changing advertiser conversations, with tailwinds from consumer tech and AI interest. While not giving 2025 guidance, he expressed bullishness on bottom-line growth. CFO Bret Richter attributed the high free cash flow conversion to strong EBITDA, working capital improvements, and payment timing, while reaffirming the long-term target in the mid-50% range.

Ross Sandler from Barclays asked Evan Spiegel about Spectacles, specifically regarding recent press reports on potential financial partners for manufacturing or distribution. He also inquired about Snap's strategy for leveraging its advanced AR software stack versus the hardware side, seeking updated thinking.

Answer

CEO Evan Spiegel stated that Snap is preparing for the public release of Spectacles next year, leveraging its technical leadership in AR, Lens Core, developer tools, and Snap OS. He mentioned that Spectacles have been placed into a 100% owned standalone subsidiary to create optionality for potential partnerships to accelerate leadership. He reiterated belief that lenses are the "killer use case" for Spectacles.

Ross Sandler inquired about the early performance and long-term strategy for the new Sponsored Snaps ad unit, and also asked for clarification on the Q2 auction pricing issue and its impact on ad revenue growth.

Answer

CEO Evan Spiegel explained that Sponsored Snaps are showing very positive early signs, with significantly higher user engagement and conversion rates compared to other ad placements. CFO Derek Andersen detailed that Q2 revenue growth was impacted by the ad platform issue, Ramadan timing, and de minimis changes. He noted that after reverting the platform change, ad revenue growth recovered from approximately 1% in April to a rate of 3-4% in June and July.

Ross Sandler inquired about the early performance and long-term strategy for the new Sponsored Snaps ad unit, and asked for details on the Q2 auction pricing issue and its impact on ad revenue.

Answer

CEO Evan Spiegel described Sponsored Snaps as a "profound evolution" of the ad business, citing early data showing a 2x increase in conversions and higher engagement. CFO Derek Andersen explained that an ad platform issue, combined with other factors, caused ad revenue growth to slow to 1% in April before recovering. He noted that post-reversion, ad revenue growth was in the 3-4% range in June and July.

Ross Sandler inquired about the macroeconomic impact on brand and direct response advertising observed in the second quarter and asked if the modest expense reduction reflects a similar softening in revenue expectations.

Answer

CFO Derek Andersen acknowledged that the macro environment is changing quickly and that while Snap is still growing in Q2, they have seen some headwinds. He noted that it's prudent to lower full-year operating expense guidance by $50 million to maintain healthy flow-through and progress toward profitability, reflecting a balance between investment and realized revenue growth.

Ross Sandler asked about the investment level and timeline for Spectacles becoming a consumer product, and how competitive launches, like from Meta, might impact Snap's strategy and pace.

Answer

CEO Evan Spiegel stated that the immediate focus is on building the developer ecosystem to solve the 'chicken and egg' problem of content availability for new hardware. He emphasized Snap's unique assets like Lens Studio and its decade-long vision for AR. He affirmed the company will remain focused on its own strategy and execution, without directly commenting on competitive timelines.

Ross Sandler asked Julia Donnelly about 2026 investment priorities and the pace of EBITDA margin expansion, and Bill Ready about the implications of Walmart's ChatGPT integration for Pinterest's ad budget.

Answer

CFO Julia Donnelly discussed 2026 investment priorities in AI and Performance ads, reiterating long-term Adjusted EBITDA margin targets of 30-34% and cost of revenue expectations. CEO Bill Ready addressed agentic commerce, emphasizing Pinterest's distinct visual-first shopping journey and unique signal, separate from traditional search or chatbots.

Ross Sandler asked about key investment priorities for 2026 and the pace of EBITDA margin expansion, and followed up on agentic commerce regarding Walmart's integration with ChatGPT and its potential impact on Pinterest's ad budget.

Answer

CFO Julia Donnelly discussed 2026 investment priorities in AI and Performance Ads, reiterating long-term EBITDA margin targets of 30-34% and noting thoughtful investment. She also addressed cost of revenue, emphasizing efficiency through AI use cases and open-source models. CEO Bill Ready viewed Walmart's integration as part of a market-expanding moment for search, distinguishing Pinterest's visual-first, 'I'll know it when I see it' shopping journey from traditional search and chatbots, and highlighting its unique signal and strong user growth.

Ross Sandler of Barclays inquired about investment priorities for the second half of the year, the expected pace of margin improvement, and requested more details on the new strategic partnership with Instacart.

Answer

CFO Julia Donnelly stated that while margin expansion will continue, it will be at a lower rate than the first half as Pinterest invests in R&D and sales capacity. CEO Bill Ready explained the Instacart partnership will make food and beverage content actionable, allowing users to order recipe ingredients for delivery, similar to how direct links work for retail.

Ross Sandler of Barclays PLC asked about investment priorities and the margin outlook for the second half of the year, and also requested more detail on the new strategic partnership with Instacart.

Answer

CFO Julia Donnelly stated that 2025 margin expansion will be more modest than in 2024 due to planned investments in R&D (AI) and sales capacity. CEO Bill Ready explained the Instacart partnership will make food and beverage content actionable by allowing users to order recipe ingredients for delivery, opening up a large, endemic category for monetization through seamless purchase handoffs.

Ross Sandler inquired about Pinterest's Q2 guidance, asking about its resilience given the macro environment and potential softness in retail categories exposed to high tariffs.

Answer

CFO Julia Donnelly responded that while overall business trends remain healthy, the Q2 guidance reflects a slightly expanded range due to a fluid environment. She confirmed a reduction in spend from some Asia-based e-commerce retailers in the U.S. but noted this was partially offset by their diversification into Pinterest's European and Rest of World markets.

Ross Sandler inquired about the Q4 revenue guidance, which suggests a slight deceleration, asking for details on quarter-to-date trends and the general business outlook for 2025.

Answer

CFO Julia Donnelly clarified that the Q4 guidance of 15-17% growth continues Q3's momentum, driven by lower-funnel strength and ramping partnerships. She noted that softness in the CPG food and beverage vertical is an ongoing headwind. Donnelly also stated that the full impact of the new Performance Plus ad product is expected in 2025, as advertiser adoption is typically slower during the peak holiday season.

Ross Sandler from Barclays asked about the outlook for Open Web Display, specifically addressing forecasts of significant decline due to GenAI, and what agencies and brands are communicating to People Inc. He also inquired about People Inc.'s growth relative to the industry in 2026 and its growth rate when stripping out the impact from Google traffic.

Answer

Neil Vogel, CEO of People Inc., stated that they are not hearing forecasts of a 30% decline in Open Web Display and that their conversations with agencies and brands indicate strong energy around their business due to scale, brands, ad performance, and new initiatives. He believes People Inc. is more likely to be a 'share taker' in the market. Barry Diller, Chairman and Senior Executive of IAC, reinforced this, highlighting People Inc.'s consistent growth over eight quarters despite challenges and its strong execution while building new businesses.

Ross Sandler asked about People Inc.'s outlook on Open Web Display advertising, given forecasts of significant declines due to GenAI, and how People Inc.'s growth in 2026 is expected to compare to the broader industry, especially when stripping out Google's impact.

Answer

Neil Vogel, CEO of People Inc., stated that the company is not hearing forecasts of a 30% decline in Open Web Display and expects to be a 'share taker' in the market due to its scale, brands, and new initiatives. Barry Diller, Chairman and Senior Executive of IAC, emphasized People Inc.'s consistent execution and growth over eight consecutive quarters despite industry challenges, highlighting its strong position.

Ross Sandler asked for more details on Dotdash Meredith's new direct-to-consumer experiences, like the People app, and their expected impact on growing owned and operated inventory.

Answer

Neil Vogel, CEO of Dotdash Meredith, explained that the core strategy is to build direct relationships with audiences, reducing reliance on third-party platforms. He noted that traffic from Google search has fallen from ~60% to ~33% of the mix while overall traffic has grown, validating this approach. He positioned the People app and My Recipes project as major initiatives in this direct-to-consumer push, with more to come.

Ross Sandler asked Barry Diller about his planned level of day-to-day involvement at IAC and his view on the new management structure. He also inquired about the potential for the D/Cipher Plus product to be a material contributor in 2025 and its impact on DDM's profitability.

Answer

Barry Diller, Senior Executive and Chairman, expressed great confidence in his colleagues and described his role as stimulating the process, focusing on capital allocation, and seeking new opportunities. Christopher Halpin, an IAC executive, described D/Cipher Plus as a powerful growth driver that can rapidly scale revenue by accessing new inventory pools, stating it will be supportive of DDM's target for 40%+ digital incremental EBITDA margins.

Ross Sandler inquired about how DDM's D/Cipher ad product has changed with its OpenAI integration and the potential to expand this technology to third-party inventory.

Answer

IAC CEO Joey Levin explained that the OpenAI integration allows D/Cipher to map and score inventory beyond DDM's own sites, creating an opportunity to sell larger ad packages across 30 million more URLs. Executive Christopher Halpin added that while D/Cipher covers all of DDM's supply, it currently only addresses about half of its demand. He highlighted that D/Cipher campaigns are growing 25% versus 5% for non-D/Cipher campaigns, with a roadmap to expand its reach into programmatic channels.

Ross Sandler asked about the drivers behind Dotdash Meredith's (DDM) strong Q3 growth forecast of 15% or better, contrasting with the broader digital ad market, and questioned the contribution of recent AI licensing deals to DDM's licensing revenue.

Answer

IAC CEO Joey Levin attributed DDM's outperformance to strong traffic growth from content investment and distribution diversification (email, social, Apple News) and robust monetization from both direct and programmatic advertising. IAC Executive Christopher Halpin clarified that about half of the licensing line's dollar growth came from the OpenAI deal, which only represented a partial quarter of revenue.

Ross Sandler inquired about Uber's new 'multiple gigs' initiative, including the types of new work opportunities being explored and its potential impact on driver retention and overall profitability.

Answer

CEO Dara Khosrowshahi explained that offering multiple gig opportunities, similar to cross-platform consumer engagement, leads to better earner retention. He detailed Uber AI Solutions, which provides work like training AI models, annotating videos, and judging query responses, available to earners globally. He sees this as a significant new earnings opportunity for various skill levels, including those requiring PhDs, and believes it can become another profitable line of business with enormous potential.

Ross Sandler inquired about Uber's new multiple gigs initiative, specifically the types of new work and earning potential being explored. He also asked how this initiative might influence driver retention and Uber's overall profitability.

Answer

CEO Dara Khosrowshahi explained that multiple gigs, such as those offered through Uber AI Solutions, aim to embed earners more deeply within the platform, thereby improving retention. He described new work opportunities including training AI models, annotating videos, and judging query responses, which are available globally and are expected to become a profitable line of business, with some roles requiring specialized skills and offering higher pay.

Ross Sandler asked for a framework to quantify the vehicle commitment from OEM partnership deals, specifically how much of the 20,000 Lucid vehicle commitment Uber might take on. He also questioned the importance of expanding the asset-light partnership model with Waymo into new cities.

Answer

CFO Prashanth Mahendra-Rajah did not provide a specific vehicle number but emphasized that at least half of free cash flow is committed to share repurchases, framing AV investments as a 'modest redeployment' of capital. He also suggested the Nuro/Lucid deal could yield better economics for Uber due to its structure. CEO Dara Khosrowshahi stated that while expanding with Waymo is desirable, the current focus is on execution. He then outlined three potential AV business models: a merchant model (fixed payment to partner), an agency model (revenue share), and an asset ownership model (Uber or a partner owns vehicles).

Ross Sandler questioned the drivers behind Delivery margins, asking about the profit cadence for grocery and retail and the extent to which advertising contributes to the high margins in restaurant delivery.

Answer

CFO Prashanth Mahendra-Rajah attributed the strong Delivery margin expansion (3.7% of Gross Bookings) primarily to advertising growth and operating leverage from scale. He noted that the grocery and retail business is now accretive at a variable contribution level after hitting breakeven in Q4, signaling significant future upside. He highlighted a 9% incremental margin for Delivery in Q1 but advised modeling for steady, not accelerated, long-term margin expansion.

Ross Sandler questioned why the Waymo partnership is limited to two cities and asked for an outlook on when the 'second tier' of robotaxi companies might appear on the Uber network.

Answer

CEO Dara Khosrowshahi explained that the two-city focus with Waymo is to ensure proper liquidity and a return on the significant investment required to launch each city, including mapping and infrastructure. Regarding other AV players, he acknowledged Waymo as the leader but stated that other partners are developing technology globally. He expects to see deployments from other AV partners on the Uber network, particularly outside the U.S., in 2025, positioning Uber as the ideal partner for driving utilization.

Ross Sandler (Barclays) asked CEO Mark Zuckerberg about Meta's approach to balancing ambitious AI research goals, such as AGI, with the development of immediate revenue-generating products. He also inquired if the vision of providing billions with a personal AI remains central, or if other areas like generative content (Vibes, Sora) are gaining importance.

Answer

CEO Mark Zuckerberg explained that research enables new technological capabilities, which then translate into various products. He cited intelligent reasoning as beneficial for assistants, business AI, and ad ranking, while high-quality video generation enhances creative tools, content inventory, and advertiser creative. Mark Zuckerberg emphasized that Meta aims to build novel capabilities, not just replicate others, and scale them to billions of people, expecting this approach to yield both new products and significant improvements to the existing business.

Ross Sandler questioned the goals of Meta's AI labs, specifically whether they prioritize achieving AGI or revenue-generating products, and if the personal AI vision for billions of people remains the primary direction, or if other content types like Vibes are gaining importance.

Answer

CEO Mark Zuckerberg explained that research enables new technological capabilities (e.g., reasoning, high-quality video production) which can be integrated into various products, from assistants and business AI to ad agents and content creation tools. He emphasized that being the best in specific AI capabilities will drive significant returns, and Meta aims to build novel capabilities and scale them to billions of people, improving both existing and new businesses.

Ross Sandler questioned when the bottleneck from AI capacity constraints might ease, noting that even ad ranking tests are being delayed, and asked for an assessment of where Meta stands in improving its ad ranking system three years after the IDFA impact.

Answer

CFO Susan Li described the capacity landscape as dynamic, with both supply and demand being fluid, and stated there is no fixed timeline for meeting all internal compute demand. On ad performance, she highlighted that conversion growth remains strong and outpaces impression growth, driven by innovations like the new GEM model. She emphasized that advertising is a relative performance game and Meta continues to invest heavily in improvements.

Ross Sandler of Barclays asked how Meta is thinking about the monetization potential of Meta AI as the industry shifts towards agentic AI, and how Llama 4's reasoning capabilities will support these new experiences.

Answer

CEO Mark Zuckerberg explained that agentic AI involves performing multi-step tasks, which will make current products feel smarter and create new form factors beyond simple chat. However, he reiterated Meta's standard process: build, scale to a billion users, and then focus on monetization. He cautioned that while Meta AI will scale this year, a meaningful business contribution is not expected in 2025, as the near-term business impact comes from applying AI to core ads and feeds.

Ross Sandler asked how the industry standardization of Llama flows back to benefit Meta's core business and questioned how quickly Meta could scale its compute infrastructure to meet ambitious long-term AI goals.

Answer

CEO Mark Zuckerberg explained that Llama's open-source nature drives quality and efficiency improvements from the community that Meta can incorporate. More importantly, it encourages hardware makers like NVIDIA and AMD to optimize chips for Llama, reducing costs. He expressed confidence in the infrastructure team's execution, noting they are building out capacity faster than initially expected, which enables the delivery of world-class models.

Ross Sandler inquired about the specific algorithmic changes that enabled the rapid growth of 'Grow a Garden' and asked how the platform retains these new users and encourages them to explore other experiences.

Answer

Founder and CEO David Baszucki explained that the game's discovery was driven by their core recommendation algorithm, which is inherently repeatable and continuously improving at projecting long-term user value. CFO Naveen Chopra provided a key data point, stating that 75% of 'Grow a Garden's' daily users also engage with at least one other experience, demonstrating the platform's 'flywheel' effect is successfully driving cross-game discovery.

Ross Sandler inquired about the rapid ascent of 'Grow a Garden,' asking if algorithmic changes enabled its speed and if this virality is repeatable. He also asked how Roblox retains these new users.

Answer

CEO David Baszucki stated that the game's discovery was driven by their recommendation system, which is intrinsically repeatable and constantly improving at projecting long-term user value. CFO Naveen Chopra noted that cross-pollination is working, as 75% of 'Grow a Garden's' daily users also engage with at least one other experience on the platform.

Ross Sandler from Barclays asked how rapid improvements in AI model capabilities and latency are influencing Duolingo's service evolution. He also inquired about the specific behind-the-scenes improvements being made to the 'video call' feature to drive higher Max adoption.

Answer

CEO Luis von Ahn explained that AI model improvements have varied impacts: minimal for generating language content but significant for math content. He noted that falling costs of older, still-powerful models are a major benefit. To improve 'video call,' von Ahn said the company is fine-tuning its own models for engagement and is now optimizing for a new key metric: 'average number of words spoken per max subscriber.' This metric encourages the AI to ask open-ended questions and create better conversations, leading to weekly improvements in the user experience.

Ross Sandler of Barclays inquired how rapid improvements in AI model capabilities and latency are influencing Duolingo's product evolution. He also asked for details on behind-the-scenes improvements to the 'video call' feature aimed at driving Max adoption.

Answer

CEO Luis von Ahn explained that AI advancements help differently across the product; they are very useful for creating math content but less so for language content where models were already strong. For 'video call,' he highlighted that they are fine-tuning their own models and have adopted a new key metric: 'average number of words spoken per max subscriber.' Optimizing for this metric is making conversations more engaging, adaptive, and effective for learning.

Ross Sandler from Barclays asked about the potential impact of the recent Epic v. Apple court ruling, specifically regarding redirecting users to off-platform payments, and what portion of COGS is represented by app store fees.

Answer

CEO Luis von Ahn called the ruling 'brand new' and said they would be 'foolish not to test' alternative payment flows, while acknowledging the conversion benefits of frictionless in-app payments. CFO Matt Skaruppa confirmed that payments to providers are 'well over a majority' of COGS, meaning any shift would be accretive to gross margins, but emphasized it is early days.

Ross Sandler requested more detail on Duolingo Max penetration across different English-learning corridors and asked how the new 'course units published' chart correlates with key business metrics.

Answer

CEO Luis von Ahn explained that Max penetration is correlated with Super penetration but is boosted among English learners, citing Japan as a highly penetrated market. He clarified that the growth in published course units translates to KPIs by adding new courses, which increases the user base, and by adding more advanced content, which helps attract and retain more advanced learners, particularly in English.

Ross Sandler sought clarification on the unit economics of Duolingo Max, asking if it's accretive to margin despite higher COGS. He also asked how falling AI inference costs might impact the Max rollout and future features.

Answer

CFO Matt Skaruppa and CEO Luis von Ahn Arellano clarified that Max generates more gross profit dollars per subscriber than Super, but has a lower gross margin percentage due to LLM costs. The higher price point makes it accretive to overall profitability. Von Ahn added that expected decreases in AI costs will allow them to offer Max at more attractive prices in developing countries, unlocking a significant opportunity among English learners.

Ross Sandler from Barclays questioned if the U.S. strength was influenced by competitor challenges and sought to understand the drivers of collectibles growth (share gain vs. category strength). He also asked about the potential scale of the fashion category opportunity.

Answer

President & CEO Jamie Iannone clarified that ASP growth was driven by factors like the Klarna partnership, not competitor issues. He noted collectibles growth was broad-based across subcategories. Regarding fashion, he expressed significant optimism, highlighting it's already a $10B+ business for eBay and that new technologies like generative AI and targeted marketing efforts are just beginning to unlock its full potential.

Ross Sandler from Barclays asked about the extent to which non-China sellers source from China and how eBay's current category mix, with more collectibles and luxury, might perform in a recession.

Answer

CFO Stephen Priest acknowledged that U.S. sellers sourcing from China is a factor contemplated in their tariff scenario planning. CEO Jamie Iannone added that eBay is more resilient in a downturn due to its value-oriented inventory. He noted that focus categories like luxury and collectibles often attract higher-income buyers who are less subject to demand elasticity, and the strategic pivot to non-new in season goods has diversified the business.

Ross Sandler asked how the U.K. C2C growth acceleration compares to the initial results in Germany and when the revenue take rate would normalize. He also sought clarification on whether the full-year operating margin guidance implies flat or increasing margins.

Answer

CEO Jamie Iannone noted the U.K. results are similar to Germany's, with a 20-point improvement in new listers and seller reactivations. CFO Stephen Priest clarified that due to the phasing of buyer fees and managed shipping, there is a temporary take rate headwind. However, for the full year, he expects the U.K. C2C take rate to be slightly higher than pre-initiative levels. He also confirmed that full-year operating margins are expected to be relatively flat despite net headwinds of about 70 basis points.

Ross Sandler asked about the cost efficiency of Google's TPU stack for AI inference compared to peers and requested quantification of the headwind for Search from lapping 2024's strength in the financial services vertical.

Answer

CEO Sundar Pichai highlighted that their end-to-end stack provides a meaningful advantage in cost and performance, which is passed on to developers, driving adoption. CFO Anat Ashkenazi clarified the financial services strength was a one-time step-up in insurance and declined to quantify the 2025 impact, instead pointing to FX and leap year headwinds for Q1.

Ross Sandler asked about the strategy to increase Gemini's daily active users, noting it trails competitors, and also inquired about the performance of brand advertising on YouTube in Q1 and early Q2 amidst macro concerns.

Answer

CEO Sundar Pichai addressed the Gemini question by pointing to recent product momentum and model advancements, stating that having the best model will drive adoption. He reiterated that 1.5 billion users interact with their AI via AI Overviews. Philipp Schindler, SVP and Chief Business Officer, commented that YouTube's brand advertising had solid growth in Q1, driven by cultural moments and strong contributions from finance and retail, but noted it was too early to comment on Q2.

Ross Sandler asked for usage milestones for the Gemini app compared to competitors and questioned Alphabet's contingency plans if its search distribution agreements were impacted by the DOJ trial.

Answer

CEO Sundar Pichai highlighted strong momentum for Gemini across all touchpoints, including a 14x growth in API calls in six months, but avoided a direct competitive comparison. Regarding the DOJ trial, he stated that Google will vigorously defend its position, arguing that users choose its products for their quality and that the proposed remedies could harm the tech sector.

Ross Sandler asked about the risk of the hyperscaler industry overbuilding AI capacity, the return on AI CapEx, and whether the AI industry is approaching a limit on foundation model improvement due to data constraints.

Answer

CEO Sundar Pichai asserted that for a transformative technology like AI, the risk of under-investing is significantly greater than over-investing, noting the infrastructure has long-term utility. He added that progress is not hitting a wall, as there are still major optimizations and real-world use cases to develop, regardless of how scaling laws evolve.

Ross Sandler asked about the expected performance of the Insurance vertical in the coming quarters, its composition (auto, life, pet), the potential for a steady-state growth rate after lapping tough comps, and if performance marketing leverage could increase as the vertical matures.

Answer

Co-Founder and CEO Tim Chen attributed the 246% YoY Insurance growth to funnel improvements and market normalization, noting growth will moderate. Auto insurance is the largest component, but opportunities exist in home. CFO Jun Lee added that the updated full-year guidance accounts for this normalization. Tim Chen clarified that performance marketing is managed for in-quarter profitability and does not anticipate a material change in leverage as comps get tougher.

Ross Sandler inquired about the primary drivers of the significant growth in NerdWallet's insurance segment and the reasons for the guided Q1 margin contraction.

Answer

CEO Tim Chen attributed the 821% year-over-year growth in insurance to improved user flows, personalization, proficient performance marketing, and a strong end market with rising premiums. CFO Lauren St. Waugh explained that the Q1 margin guidance, which implies a contraction, is a result of increased year-over-year brand spend, including a Super Bowl ad, and a larger mix of revenue coming from performance marketing.

Ross Sandler from Barclays asked how Nerdy's new AI products are impacting consumer retention and requested an explanation for the gross margin and higher utilization dynamic seen in Q4, including why it is expected to improve.

Answer

CEO Chuck Cohn detailed that AI tools like Tutor Copilot and GenAI session summaries enhance session quality and demonstrate value to parents, which directly boosts engagement and retention. CFO Jason Pello added that while higher platform utilization and new tutor incentives temporarily pressure gross margins, they drive long-term retention and contribution profit. Pello projected sequential gross margin improvement throughout 2025 as higher prices for new customers blend into the revenue mix, forecasting margins to rise from 60% in Q1 to the 66% range by the second half of the year.

Ross Sandler asked CFO Jarrod Yahes about the cost structure for 2025, specifically the cloud costs for Unity Vector and the potential for high incremental margins as the new platform scales.

Answer

CFO Jarrod Yahes explained that the company has already been investing in Vector while expanding margins. He noted the business has high leverageability with 80%+ adjusted gross margins, which will make margin expansion easier as revenue growth accelerates. The near-term priority is investing for growth, but they will also continue to drive margin.

Ross Sandler posed a question about Generative AI, asking how Unity's customers are integrating it, how it might impact Unity's business model, and how Unity sees its role evolving with the rise of new AI creation tools.

Answer

CEO Matthew Bromberg positioned Unity as an agnostic "assembly point" for content, stating that the explosion of third-party AI tools is beneficial if it helps developers. He clarified that Unity's internal AI focus is on simplifying complex workflows within its editor to accelerate development, not competing on asset generation. He also noted that AI leaders like DeepMind are Unity customers, underscoring Unity's foundational role.

Ross Sandler asked about the company's growth strategy, questioning whether the bigger opportunity lies in increasing customer frequency or market penetration, and what the ultimate 'North Star' metrics look like in their most mature markets.

Answer

CEO Tony Xu responded that the opportunity is significant in both areas, stating that even in its oldest market, U.S. restaurants, DoorDash's penetration is still in the single-digit percentages of total industry sales, describing the company as a 'speck of dust' in the overall market. He emphasized that the path to growing both penetration and frequency is through continuous product improvements in selection, quality, and affordability.

Ross Sandler asked new CEO Spencer Rascoff about his motivation for joining Match Group and his perspective on the current state and future of the online dating industry.

Answer

CEO Spencer Rascoff explained his decision was driven by the company's compelling mission, the strength of its iconic brands, the transformative potential of AI to create a business inflection, and the large total addressable market (TAM) for online dating, which he believes is much larger than currently perceived.

Ross Sandler asked for more details on Tinder's weaker top-of-funnel trends, including the impact of iOS 18, and questioned if Tinder's 52% operating margin is at the right level for long-term growth.

Answer

CEO Bernard Kim attributed the MAU weakness to potential iOS issues and trust and safety enhancements, emphasizing a product-led strategy over marketing. CFO Gary Swidler explained that Tinder's high margins have already been reduced to fund product development and they will remain cautious with further investment until product improvements show tangible results.

Ross Sandler asked for a comparison of the margin profile for the new AI data centers versus the established AWS business, questioning how quickly the margin gap could close as AI revenue scales.

Answer

CEO Andy Jassy explained that the AI space is in an earlier, more dynamic phase with lower margins, similar to the early days of AWS. He expressed confidence that as the market matures and Amazon leverages its expertise in capacity management and logistics, the generative AI business will achieve very healthy margins over time.